Tuesday, July 29, 2008
By Howard J. Sewell, President of Connect Direct
The recent explosion of SaaS (hosted) solutions has brought about a resurgence in software vendors utilizing free trials as a primary means of acquiring new customers. Fortunately for them, these companies can now take full advantage of today’s sophisticated marketing automation technology that enables automatic, personalized, rules-based, follow-up e-mails to all trial registrants. However, even the best technology on the planet can’t convert prospects to customers if the underlying lead nurturing strategy is suspect.
Here are 7 tips for designing a lead nurturing strategy to maximize your conversion rate from a free trial program:
1. Know why people don’t convert.
There are plenty of potential reasons why free trials don’t convert. Maybe users just found the product too complicated. Or too expensive. Or they weren’t given enough time to fully evaluate the software. The most effective trial conversion strategy is one that addresses these objections head-on.
Step #1: identify what these issues are. Send an e-mail survey to every free trial prospect from the last 6 months who didn’t convert, and ask him or her to respond to a simple survey (2-3 questions at most.) Offer a free gift or prize drawing to drive response. (This is valuable data; don’t be stingy.) Then use the results to craft your follow-up strategy. If price is the primary objection, include a message about ROI. If complexity is the issue, send an e-mail with step-by-step instructions on how to complete a key task. And so on.
2. Keep your trial period to 2 weeks.
Perhaps the #1 mistake software vendors make in setting up free trial programs is that they allow the user too much time. Granted, some products are more complex than others, but for most, a trial period of 30 days is way too long. If you limit your trial period to two weeks, it creates urgency. When users feel they have plenty of time to evaluate your product, they’ll put off the evaluation. Pretty soon, a week has gone by and you’ve lost them.
When someone registers for a free trial, it’s an indication of immediate, perceived need. One of the keys to a successful trial strategy is to maintain that interest and ensure that the user acts upon it. Lose the momentum and you’ll lose the customer.
3. Make sure they use the product.
Your survey should bear this out, but one of the primary reasons trials don’t convert is because the user never got around to using the product. For that reason, it’s a good idea to focus at least one or two messages early in the trial period simply on how to use the software. Save the “why you should buy this” for later.
Evaluating even a relatively easy to use product can seem daunting. Outline a simple task that can be completed easily. It doesn’t have to be a task that encapsulates your entire value proposition; first and foremost, the purpose of the e-mail is to get the user to engage with your product. Once you’ve broken down that initial barrier, the chances are much greater that the person will evaluate the product more fully.
4. Be aggressive with frequency.
It’s natural to be wary about overwhelming a new user with a barrage of e-mails. I suggest, however, that free trials represent a scenario in which you can reasonably afford to be somewhat aggressive. We typically recommend one e-mail every 3-4 days at minimum. If you see a resulting spike in opt-out rates, or conversely, a drop-off in open rates, you can always dial back the schedule.
Keep in mind that trial users are getting something for free and so they’re likely to be more tolerant of your e-mails as part of the price they pay for that free service. This is another reason, however, to set the tone early on in your communication using e-mails that are useful and informative rather than overly “salesy.” If you hit each individual user with a hard sales message every 3 days, no amount of perceived value is going to prevent you wearing out your welcome quickly.
5. Ask for the sale every time.
This might seem contradictory with the advice above to maintain a service-like tone, but you can do little harm by at minimum giving the user the opportunity to order at every step in the follow-up process. For some companies, all it takes is one simple use of the software to make users fully appreciative of the value that software delivers. If you wait two weeks to ask for the sale, that initial enthusiasm may have waned, or the user may have moved on to other priorities.
Asking for the sale doesn’t have to be heavy handed. It could be as simple as a line of copy: “Ready to convert your trial account to a full subscription? Act now and we’ll make sure you receive credit for the remainder of your trial period.”
6. Test, test, test.
A trial program is a classic example of a repeatable process. It’s also an ideal platform, therefore, for a systematic, ongoing process of testing and optimization. When increasing conversion rates even by a percentage point or two could mean thousands of dollars in additional revenue to your company, the opportunity cost of not testing is enormous.
To be clear: it is not considered “testing” to simply evaluate the performance of each e-mail independently and make occasional adjustments, as in: “E-mail #5 isn’t performing well; let’s change the subject line.” Testing only works if you’re evaluating different strategies side-by-side on a randomized basis. Test subject line, frequency, interval, offer, everything (note: one variable at a time, please.)
7. Keep selling after the trial.
Don’t give up just because the trial period ended and you didn’t get the sale. Follow up with at least one or two e-mails after the expiration date – say, a week later and then two weeks after that. Maybe the prospect just hasn’t got around to placing the order, and your e-mail could be the reminder he needed. Consider sending a survey as the final communication asking why he/she didn’t buy. Depending on the response you get (particularly if the response is: “I just haven’t had the time”), you can trigger a follow-up call from inside sales.
Speaking of which, should you integrate telemarketing into your free trial nurturing strategy? The answer depends on whether you can prove telemarketing makes enough of a difference. Calling prospects will almost always increase conversion rates; the only question is whether the increased return outweighs the cost of that manpower. Take a month’s trials and call half of them. Measure the incremental conversions in terms of revenue to your company and compare that to the increased cost of sale.
Companies with marketing automation systems in place have the luxury of integrating telemarketing based on specific demographic or behavioral criteria. For example, you could choose to trigger follow up calls to only those trial users who haven’t purchased yet but who opened at least one of your follow-up e-mails, or indicated a company size of more than 100 employees, or work at a target account, or whatever other criteria you define that makes them worthy of additional effort. That way you’ll increase your conversion rate but also improve sales satisfaction by only sending your reps leads that truly merit follow-up.
Howard J. Sewell is president of Connect Direct (www.connectdirect.com), a full service agency with offices in Silicon Valley and Seattle that specializes in turnkey, integrated demand generation strategies for high-tech companies. He writes Direct Connections (http://connectdirect.wordpress.com/), a popular blog on direct response best practices.
Friday, July 25, 2008
By Nigel Edelshain, CEO of Sales 2.0
When I last held down a real job I worked in a small sales team of senior sales executives selling high-end, high-cost technology projects to Wall Street banks.
Like most sales teams we would have weekly sales meetings where the team and our sales manager met in a conference room and reviewed our sales pipeline and what needed to be done to move each opportunity forward.
I did not like these meetings much at all because I always seemed to have the smallest pipeline. Some of the other reps in the team had 30 or 40 opportunities in their pipeline report and I would sit there with 5 or 6. It made me feel inadequate. I was always thinking “how am I ever going to make my numbers with such a small number of opportunities?” Fast forward a year. I closed five large deals -- lifetime value $2-3 million dollars. The other reps from our team with the 30-40 opportunities in their pipeline still had 30-40 opportunities in their pipeline but zero to one deals worth a fraction of those I closed. What was wrong with this picture?
It turned out of course that the 30-40 deals in some reps pipelines were not well-qualified. These were not buyers who were really ready-and-able to buy. There was wishful thinking here on behalf of some of these reps. A buyer showed some interest so immediately the rep entered this opportunity into their pipeline report at "40% probability" (i.e. 40% likely to close). And that's where the opportunity typically stayed for weeks and months until it was blatantly obvious it never would close.
Meanwhile (without knowing it at the time) I was holding the opportunities in my pipeline to a higher standard. If I got interest from a prospect, I might enter an opportunity into my pipeline at 5% probability but then I would take that opportunity out again a week, or two, later if it did not progress. So my pipeline was small. I was constantly “culling” the dead opportunities and I was not overly optimistic about what I put in or at what percentage I put them in at.
My small pipeline allowed me to focus. Since I had so "few eggs in my basket" I focused my energy on these opportunities. I strategized how to move each deal forward. I "covered the bases" finding each person involved in the deal and worked with them to move the deal forward.
Meanwhile the reps with 30 or 40 opportunities in their pipeline felt overwhelmed with their bounty. They simply did not have time to strategize and set action plans for 30-40 deals. They took their "eye off the ball". They did not manage the sales process but rather they left it to chance whether prospects became deals. A majority of their prospects turned out not to be real, budgeted, ready to buy opportunities. Yet they invested their time equally between what turned out to be unqualified and qualified prospects. In short, they gambled.
Weed out the unqualified opportunities from your sales pipeline quickly (throw them back to the marketing/nurturing process). Then focus your full attention on the real opportunities that remain. In reality most sales people will never have enough real deals in their pipeline to gamble with them. Make sure those real opportunities you do “hatch.” Nigel
Edelshain is CEO of Sales 2.0 LLC, a company dedicated to taking the sales profession to another level. Sales 2.0 provides companies with a range of services and products to enable them to make their sales forces wildly more effective. To subscribe to Nigel’s Sales 2.0 Ideas newsletter, visit his site. http://www.sales2.com/home.shtml
Tuesday, July 1, 2008
By Andrew W. Sallay, Founder and CEO, GrowthInfusion
As the rough economy intensifies, you may ask if you’re taking key steps to keep your sales results on a safe course. A key decision point for many organizations is: what is the best way to structure and support building a pipeline of quality leads for field sales? Should you outsource? Should you improve your in-house lead generation process? Here are seven strategies to consider for optimizing your internal lead generation function and shoring up your pipeline of sales leads.
1. Maximize sales growth.. For inside sales to be effective, the telephone prospecting function must be run with the discipline of a military boot camp. Are your inside sales employees able to engage your prospects in 30 seconds or less? Do your telesales employees average 100 calls per day, the standard for building a successful lead generation pipeline? Are the volume and quality of leads sufficient to meet your sales forecast? Are your inside sales representatives continually trained on your value proposition and how that relates to your prospects’ pain points?
Your inside sales team must have the same unremitting focus on volume and quality results as would a lead generation outsourcer. The outsourcer’s sole responsibilities are producing quality, actionable leads for your sales pipeline. Period. The outsourcer’s managers are singularly focused on building and improving the processes required to deliver quality consistently. Ensure that your internal managers do not have multiple operational responsibilities.
Producing quality, actionable leads for a robust sales pipeline on a daily basis is an all encompassing function. The discipline of prospecting requires a unique set of attributes and skills for both managers and the telesales employees. The difficulty of communicating complex value propositions in the hostile climate of a cold call demands ongoing training. A managerial laser focus on recruiting, screening, hiring, training, and performance monitoring is essential. Early identification and termination of employees mismatched for telesales is crucial. Verify that your managers are prepared to execute on this key responsibility. To achieve optimal results, your managers should maintain ongoing training and education programs that prepare your telesales employees to maintain a peak performance level and continually produce quality leads
2. Evaluate corporate risk appetite. Significant investments in both human and financial capital are required to establish, build and maintain a high-performing inside sales force. Capital commitments include skilled managers devoted to inside sales, a technology infrastructure of telecommunications and complex lead management systems, among others, as well as healthcare and real estate expenses.
To ensure success you must not only make the initial investment required to establish and build inside sales, but also make the ongoing operational budget commitment needed to maintain a high level of results. Before getting started or expanding your internal program, evaluate your company’s risk appetite to ensure that sufficient funds will be allocated to build and sustain an internal sales team that can consistently deliver a pipeline of sales-ready prospects.
3. Assess costs. Consider the skills and attributes of a successful inside sales representative—an employee that encounters even more rejection than the average field sales person. The combined compensation can be up to $100,000 annually including commissions. Add to these costs the supervisory and management expenses, the cost of high turnover, and the discipline required to manage the function. Re-evaluate whether it makes financial sense to build or continue maintaining an internal inside sales force by calculating the true value of a sales-ready lead and determining whether the inside sales force is generating enough leads to justify their cost.
4. Optimize results. Impose the urgency to create value on your team that is typically required of an outsourced partner. Outsourced partners are usually given six months to prove the viability of their entire program. Maintain the same razor-sharp focus on metrics, results and the alignment between the company’s marketing, and sales functions that an outsourcer would. Revisit the performance of your current in-house lead generation process to validate its results.
5. Establish your Return on Investment (ROI) Requirement: If your field sales employees have a base salary of approximately $100,000-$150,000, and are spending 10-20% or more of their time on the phone generating leads, this has a serious impact on your sales ROI. Seriously consider building an inside sales force if you do not already have one. Evaluate the financial viability of your inside sales team if you already have one in place. In many cases, the cost of recruiting, hiring, training and retaining an inside sales team is higher than the cost of outsourcing the function so weigh your options carefully.
6. Enhance internal accountability. Inside sales managers are frequently torn by other operational responsibilities that diminish their accountability for their managerial role in demand generation. If the managers have been promoted internally to lead inside sales, they have typically accumulated goodwill in their organizations which makes it more difficult to hold them as accountable as an outsourcer that is new to the organization. Outsourcers are more accountable and strict adherence to metrics is a way of life for them. Internal inside sales teams are frequently given longer lead times to produce results—it can take six months to identify and terminate a low-performing telemarketing employee. If you will not outsource, then develop the mentality of an outsourcer and put the right metrics in place to increase your chances of success.
7. Sharpen your marketing message. Start from the inside out. Examine every aspect of your target market(s), value proposition, and marketing message. Enlist the ‘best of the best’ inside your entire organization for a marketing message review. Along with your marketing team, include customer support, product management, and even trusted loyal customers in this exercise. A fresh look and new sets of eyes on your prospect profiles, your message and your targeting will be invaluable in boosting the quality of your sales pipeline.
Whether you outsource your lead generation function or strengthen your internal demand generation process—the strategies, metrics and performance requirements should be the same. In order to produce an ongoing, successful sales pipeline of quality, actionable leads that meets and exceeds your forecast, you must establish bullet proof processes and accountabilities.
Andrew W. Sallay is the founder and CEO of GrowthInfusion. GrowthInfusion builds pipelines of sales-ready prospects for clients selling products and services to C-suite executives in small and midsize businesses. GrowthInfusion develops the intellectual capital to become as good as or better than its clients’ own marketing and inside sales forces. Sallay’s new approach to the age-old challenge of building actionable sales pipelines is built on his previous experience as a private equity investor and an operating executive at Ofer Group, the world’s largest private shipping conglomerate. He can be reached via email at firstname.lastname@example.org or via phone at (858) 535-4882.