Construction sales leads are the life blood of a business. Research shows that building product companies spend half of their marketing budget generating these leads. But are they getting value for money?
It is important to understand the cost of sales leads from the different sources, their conversion rate and hence the cost of securing each sale. Some sales leads will have a relatively low unit cost but will also have a low conversion rate or provide low quality sales, hence the cost per £ of margin earned may be quite high. Other enquiries may cost far more to generate, but if they have a good conversion rate and generate high value and/or margin sales their cost per £ of margin generated may be relatively low. A manager must understand these relationships and hence the return received from the investment in sales leads.
Some companies will have a relatively small target market which is easily defined. In these instances mass marketing, such as advertising in trade publications, may not be cost effective. Far better to adopt a targeted approach with carefully designed promotions intended to appeal to a relatively small and easily defined target group. Even companies with a broad market coverage will benefit from using different methods of lead generation for their individual market segments.
But how to define such a small group? Data available from ABI or Glenigan provides the ideal opportunity. In addition to their standard sales lead service, both companies will undertake specific analysis of past projects to identify key decision makers in a variety of categories. Identify these and you have started to define your market segment.
Listed below are some of the principal sources of sales leads, with some suggestions on their use and suitability.
Repeat Business
The main source of business for most companies, it is important to ensure that customers are satisfied with the service they receive. Business can be generated not just from satisfied customers but the referrals they make. The cost of measuring customers satisfaction, and taking actions to correct any shortcomings is relatively low compared to the level of business this will generate.
Web Sites
Today a web site is mandatory for a company. However it tends not to be a primary source of enquiries. This is because potential customers often refer to a company's website or an online product directory for background information, or to download material, without any interaction with the provider. However this plays an important supporting role which can lead to a subsequent enquiry via telephone.
Sales Lead Services
There are a number of providers of sales leads but only ABI and Glenigan provide a comprehensive national service. Some companies use these service only when sales leads decline in other areas. There is a tendency to assume that when a sales lead is published everyone in the industry knows about it, but less than 3% of companies in the construction industry subscribe to these services.
They can provide an effective source of sales leads but profiles need to be carefully set and regularly reviewed to ensure sales teams do not suffer from information overload.
Advertising
Possibly one of the first areas to be cut when marketing budgets come under pressure, 56% of companies2 use sales leads generated from advertising. To be effective the right message needs to be placed in the right journal at the right time. The enquiry card system operated by most journals makes it relatively easy to measure the number of enquiries generated and hence the return on your investment.
This option is most suitable for companies who have a large, disparate, customer base.
Public Relations
PR tends to be grouped with advertising, but it is quite different. Inclusion of material in a journal is at the discretion of an editor and may not appear at the time or in the form required. However it does have far more credibility than advertising. To be effective it is important to prepare releases that include information of real interest to the readers of the journal.
As with advertising, most journals operate an enquiry system which allows the level of enquiries generated to be measured.
Direct Mail
Although email is more cost effective, the unpopularity of spam and the ease of deletion ensures that traditional direct mail remains popular as a means of generating sales leads. Used by 48% of companies2 a well composed item combined with an accurate mailing list will generate enquiries, although a response rate of more than 2.5% is considered good.
Events & Exhibitions
To be effective the purpose of participating in an event or exhibition needs to be clearly defined along with the method of maximising the return. Although used by 38% of companies2, these are ranked as very low in terms of their importance in generating sales leads.
Reference 1: Wedgwood Markham: Targeting the Specifier, May 2000
Reference 2: RSM Robson Rhodes report for the Competition Commission, October 2004
Chris Ashworth 2005©
Competitive Advantage Consultancy Limited
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