Lead Yield: The #1 Sales Metric Your Team Has Been Missing

Your team is constantly receiving new leads, and as you know, no two of them are exactly the same.

Some are probably inbound and come mostly from your marketing team, while others are outbound and sourced by reps themselves. Some may be from B2B companies and others from B2C. Some are extremely tough closes, yet for others it seems like the stars align and they close exactly as planned for more than anticipated.

But when these leads are just a name in a list of hundreds or even thousands of other businesses, it’s hard to know what you’re going to get. Because of this, reps will often just start at the top of a list and work their way down. Or, they might cherry-pick leads that are similar to those that have been easy closes in the past.

Either way, good leads can slip through the cracks, while bad leads can waste your team’s time. In fact, it’s been proven that reps ignore 50% of marketing leads on average. So how do you know what makes one lead better than another? And how do you help your team prioritize and focus on the leads that will drive the most value for your business?

Say Hello to Lead Yield

Lead Yield is just one example of a Yield Measure – measures that are used to understand how much value you get in return for your investments at each stage of the sales pipeline. With lead yield, companies can:

Strategically invest in growth: Understanding lead yield is a method for directly quantifying the ROI for marketing channels, and supports arguments for growing/cutting programs.
Forecast more accurately: By knowing average deal sizes based on dimensions such as industry and marketing channel, forecasts can be supported by historical data rather than a one-size-fits-all model.
Effectively prioritize efforts: Knowing which types of leads drive the most value for your business enables you to strategically score and prioritize both inbound and outbound leads.

The equation for lead yield is as follows: Sales Revenue / # of Leads Generated. You can see an example of this equation worked out below.

Screen Shot 2017-03-21 at 3.46.10 PM

In this scenario, the yield for all leads, or “aggregate lead yield,” is $101.77. This means that, with conversion rates and lead quality held constant, we can forecast $101.77 of revenue for every lead in our pipeline.

Super helpful, right? But we’re just getting started. The real value of lead yield becomes apparent when we begin to segment leads and calculate their yield by dimension.

Lead Yield by Dimension

Think of all the potential factors that can touch and impact each of your deals at any point during their journey through the funnel, from reps, to pricing, to lead source. These are dimensions.

Rather than viewing your sales funnel in aggregate, viewing it by relevant dimensions helps uncover underlying trends, patterns or variables that indicate levers teams can pull to scientifically impact sales.

Blog_Art vs Science of Sales 3

To understand what sets one lead apart from another and identify the types of leads generating the most value for your business, we want to choose dimensions that are relevant to the actual lead profile. Some examples of these kinds of dimensions include:
– Lead source
– Contact title
– Company size
– Company industry
– Number of decision makers
– Solutions already in use

You can see a breakdown of lead yield by the dimension of industry below:

Screen Shot 2017-03-21 at 3.48.21 PM

As you can see, these results tell us that Media is the industry with the highest lead yield, followed closely by eCommerce and Travel/Hospitality.

First of all, this warrants a discussion with the marketing team, whose budget would clearly be better invested in channels that produce leads from these verticals than others.

Secondly, this discovery also offers guidance for which leads reps should be prioritizing in their outreach. When given a list of leads, focusing on the ones that have similar qualities to those with the highest lead yield will ultimately generate the most value for your business. The same goes when sourcing. This information can also be used to create or improve lead scoring.

Finally, you may notice something else interesting about the results of this particular lead yield analysis. While eCommerce leads have the second highest yield out of all industries, they represent a very small percentage of wins.

Of course, there could be a number of reasons for this discovery. Maybe my reps aren’t pursuing these leads with the same tenacity as others. Or perhaps they’re not as knowledgeable about this industry and as adept at closing leads from this vertical.

It will definitely take some additional dimensions and analysis to get an answer. However, one of the best parts about dimensions is that they can be combined to generate increasingly granular insights.

For example, we could take these industry buckets and further segment them by company size to see whether different industries perform better for my SMB, mid-market and enterprise teams. We could then further segment these results by the dimension of sales rep to see if particular reps are more skilled at closing deals from certain industries than others.

Be a Steward of Data

It’s important to remember that before we even begin to think about segmenting leads and deals by this information, it’s critical to ensure that we have clean and complete sales data. Here are a few tips to make sure that we are generating the quality of sales data needed to receive accurate and impactful insights:

Avoid free-text fields: Instead, use drop-down and multi-select fields wherever possible to avoid typos and missing information.
Keep data standardized: Clean data makes reporting easy. Watch out for the same dimension listed multiple ways, like “NY” vs “New York” vs “NYC.”
Monitor data completion: Missing fields often hold the keys to success. Constantly review field completion rates and ensure data is filled in.

Simple Yet Powerful

Despite being easy to calculate, lead yield is one of the most powerful calculations in the Science of Sales. To learn more about lead yield and other key equations shaping the field of sales science, download the free eBook: Understanding the New Metrics of Sales.

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