Why companies should stop wasting time on Lead Acquisition
Emmanuel Jaquet
Lead Digital Design, Singapore PR, ex Deloitte, ex EY, founder of MMPowerFoundation
In this day and age, everyone is obsessed with customer acquisition.?
In fact, websites, emails, and social media sites are three of the most common channels* (89%, 81%, and 72% respectively) companies use to find new leads.
But more leads don’t always mean more revenue.?
In highly saturated markets such as the insurance industry, customer acquisition alone is not a viable strategy at all.
A better solution? Companies should instead focus on nurturing their existing customers through validating, qualifying, scoring, and nurturing leads.
Companies should focus on nurturing their existing customers through validating, qualifying, scoring, and nurturing leads.
After all, data says** your existing customers are fifty percent more likely to try new products and services than your new customers.??
Building an effective lead nurturing program can be of great help to re-engage lapsed or dormant customers through offers of tailored content, products, and services.?
By doing this you’re maximizing value from your allocated marketing budget, instead of wasting time on pursuing leads that might be of no use at all.
Let me put this in perspective.?
1. Case Study One
Recently, we had an insurance company in Singapore tell us that they wanted to invest more money into getting new leads. That being said, the company already had around 450K of active customers with policies, plus a dormant base of more than 700K lapsed customers that have not purchased a policy in the last 3 years.
In a small city-state like Singapore, the active insurance market is somewhere around 1.7 million people, not including minors and seniors.
This client was obsessed with acquiring more leads, but they failed to understand that both their active and dormant customers pretty much already covered a majority of the Singapore population that was susceptible to buying insurance.
In addition, the company had no current lead scoring mechanism in place, with existing generated leads being handed off to the agents irrespective of their relevance or potential propensity to convert.?
In this scenario, we felt like customer acquisition was a total waste of time. Instead, we proposed a lead scoring and nurturing program - in other words meaning each lead was to be scored and nurtured. The goal behind this was to help the company and its agents to focus on the right leads.?
We also wanted to re-engage our client’s existing base (700k+) of dormant leads and similarly automate lead engagement and re-engagement.?
Once the leads were deemed ready to convert, we would pass them on to the agents for the close.
With this strategy in mind, my team and I were looking to:
And so, we identified at least two key opportunity areas:
→?Lead Qualification?
Objective:?
Strategy:
→?Lead Nurturing?
Objective:?
Strategy:
Despite the opportunities presented, the client was still adamant that they wanted client acquisition to be a part of the implemented strategy.?
Naturally, I expected there to be some level of hesitation on their part to accept the newly proposed plan.
So we showed them two distinctive scenarios of lead acquisition:?
Option 1:
In this first option, we were to mainly focus on maximizing lead acquisition.?
As seen in the image above, the cost of acquisition would have amounted to $2 million estimated, 2,520 converted users, and zero re-engaged dormant users. With these figures in mind, the total incremental revenue works out to $2.1 million (based on an APE of ~$2,000).?
Option 2:
In the second scenario, we focus on re-engaging dormant leads instead.?
With this in mind, the marketing leads are only increased by less than a quarter, which results in the cost of acquisition of an estimated $1.2 million (a $200,000 increase from the initial spend of $1,000,000).
The illustration above shows this funnel in greater detail. We significantly save on costs of acquisition by re-engaging and nurturing dormant leads, instead of getting new ones.?
By applying lead qualification into the process, we generated 4,446 converted leads, compared to the 2,520 in the previous scenario.
Finally, incremental revenue works out to $6.8 million - a significant increase from Option 1.
The key takeaway from this comparison is how focusing on full-funnel activities, instead of only top-of-funnel, results in additional incremental revenue of $6.8 million (vs. 2.1 million).
1.1 Lead Qualification
Moving on, our first course of action was to improve the existing lead qualification framework. We wanted to focus on leveraging both the enriched data and engagement data to score leads.?
Lead scores would then be used to determine the right type of communication, and further allocate leads to the right sales agents.
Our revised lead qualification framework looked like this:
Stage 1: Every lead that comes in has little information about it, so we programmatically assume it’s cold.
Stage 2: Communication is sent out through an email, message, or text. We then discard leads that unsubscribe/express no interest.
Stage 3: As per the Sample Lead Scorecard below (see image), each lead scores a certain amount of points based on its demographics and socioeconomic status data.?
Stage 4: If a lead engages with the content, we programmatically check them as an interested client and start collecting relevant information. The illustration below shows sample scores that are awarded to leads based on their engagement data like opening an email, clicking on a product link, or completing a questionnaire, among other actions.
Stage 5: The lead’s profile is built in the background to ensure an agent has sufficient information at their hands when the lead is passed on to them.
Stage 6: We also track the type of content that the lead expresses their interest in so that we can pass this intelligence to the agent for them to have a more relevant conversation with the said customer upon a call.
1.2 Lead Nurturing
The next thing to do was to establish an effective lead nurturing cycle that would help to re-engage at least 5 percent of the client's dormant customer base.
I can’t emphasize enough the importance of a great, thought-out lead nurturing program when it comes to reinforcing relationships with your customers at every stage of your funnel.?
As CSO Insights puts it in their recent study***lack of an effective lead nurturing program means up to 80 percent (!) of your fresh customers will never reach the final stage of your sales cycle.?
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We implemented the lead nurturing cycle illustrated above as part of our strategy. I wanted to ensure that every lead programmatically went through ongoing personalized engagement, segmentation, and profiling refinement processes.?
Those leads that made it to the last decision point would be categorized as hot, and then passed on to the agents.?
Agents would work with the leads to reinforce relationships through cross-sells, up-sells, and other means.
The implemented lead nurturing cycle followed six stages:
Stage 1: A set of qualifications is established, upon which a decision will be made whether to categorize the lead as hot or cold.
Stage 2: When a cold lead comes in, it is placed in the cold lead nurturing program.
Stage 3: Each of the dots in the graphic below represents a decision point or type of communication such as a questionnaire or an article that is sent to a given lead.
Stage 4: Points are awarded when a lead expresses their interest in the communication sent.
Stage 5: A lead is moved to the hot, cold, or warm category based on the number of points it acquires.
Stage 6: All hot leads are then passed to the agent for the close.
2. Case Study Two
A different insurance company reached out to our team with a somewhat similar issue. They were generating tens of thousands of leads every month, but most of those leads were left unhandled by the agents due to their large volume.?
In this particular scenario, the insurance company in question had a partnership with the country's biggest bank, which means every newly opened personal bank account came with free personal accident insurance.?
Further on, the partnering bank would send our client monthly lists that contained very basic information about its new registered customers. These leads were then assigned to the company’s sales agents for an opportunity to cross-sell and upsell life insurance or any other financial product.
However, due to an extremely high volume of leads and very limited data provided, agents were only physically able to contact about roughly 30 percent of them. But even with that number, most leads were either invalid or uninterested in purchasing additional insurance products.
And the remaining untouched leads would just be discarded.
2.1 The Proposed Solution:
My team members and I proposed scoring, re-engaging, and refining untouched cold leads through automation to allow the agents to focus only on those that were most likely to convert. We also made a plan to establish an efficient lead nurturing program to get all leads to interact with an automated/always-on marketing program.
Similar to the previous case study, we would score leads in the background based on how customers opened emails, completed questionnaires, and consumed content that was sent to them.?
For instance, we’d send some type of communication and then follow with an SMS to confirm that leads were still interested. Those that replied with a ‘No” would be discarded, and the remaining ones would carry on to the next stages of the nurturing cycle.
Each lead would be moved to either the hot, warm, or cold category based on their total score earned. Those that were deemed hot were then passed on to the agents.
As a result of this strategy, we managed to enable agents to focus on their immediate work with only those customers that were ready to convert, instead of wasting time by shoveling through enormous numbers of cold leads that contained little data.
Essentially, our idea behind this strategy was similar to what was said earlier: to work on your current leads, instead of trying to acquire new ones.
2.2 Outcomes:
Before:
After:
Total Incremental Revenue: +57.5%
As a result of the implemented plan, total conversions were increased by 0.5 percent, while qualified leads increased by 5 percent. With this in mind, the incremental revenue was uplifted by a whole 57.5 percent.
3. Case Study Three
Another client of ours in the insurance sector similarly experienced problems with their leads - this time, however, it was a drop-off of online applications.?
Customers saw the application page on the company’s website, but seldom started or completed the forms. And a part of those leads that did complete application forms never converted.?
3.1 The Proposed Solution:
Our plan was to recapture drop-offs that expressed their interest in the product through browsing activities or through initiating the application processes on the client’s website. As with previous case studies, the idea was to nurture online applications to move them through the conversion funnel.?
For instance, if our ‘always-on’ automation tools detected that a website visitor was interested in motor insurance by starting the application process but then dropped it for any reason, a chase-up email would be sent out as a reminder.?
Further on, various types of content would be sent out to leads to slowly warm them up. These included articles about the number of deaths on the road, or importance of auto insurance, or testimonials by the company’s existing customers.
Leads that were deemed ready to buy would then be encouraged to convert.
3.2 Outcomes:
Before:
After:?
Total incremental revenue: +50%
As a result of the work done, we witnessed a substantial increase in quote completion rates by 2.5 percent, while the total conversion rate was boosted by 3 percent. These tweaks to the online quote process increased the incremental revenue by 50 percent.
It was obvious that a good portion of customers that expressed their interest in the products failed to complete the online application form simply because they deemed it to be too complex.?
The ultimate solution was to re-work the e-commerce check-out flow, as well as to steadily warm them up through lead scoring until they were ready to be converted.
Final Thoughts
Throughout all case studies, close to no leads were ever added to the top of the funnel, as we were never obsessed with increasing customer acquisition.?
Instead, we focused on nurturing existing leads through lead validation, scoring, and engagement.
It’s incredible how making small increments along the funnel results in significant revenue uplifts, as seen in all case scenarios.
At the end of the day, there will always be a threshold at which you’d run out of good, new leads - especially in a market like Singapore. At that point, acquiring even more leads would be a total waste of resources and efforts.
For those companies that find themselves in similar situations, my advice would be to stop spending money on constant efforts to acquire new customers.
Instead, hold on to whatever leads you already have, and focus on nurturing those relationships.
And if your company ever needs help in generating more leads without drastically increasing your marketing spend, feel free to reach out.
References & credits:
A big thank you to Justin Tan for your guidance along the way!
C-levels advisor on corporate strategy and intentional sustainability transformations. Founder of the Living Labs Federation. Angel Investing. 20yr+ P&L experience in MNCs.
2 年Marwan Sayed Margot Vannelet
David Beaty Somlo
marketing | customer experience | ecommerce | digital transformation | strategy | technology | NED
3 年Excellent piece of work. Very thought provoking.
Thanks for sharing!
Marketing Leadership I Transformation I Strategy
3 年I would just say it is AND vs and or. Still need to look at ways to replace those that are lost to you (and not coming back) and build visibility with new customers into insurance marketplace. But agree business obsesses over new vs existing and there is a lot there can be done with a base that already knows you!