Quality vs. Quantity
The quickest way to a sales person’s heart is through their wallet. A lot of companies use lead volume as a bonus piece in an inside reps comp plan. While I agree 100% that lead incentives and monetary pay outs are the way to go with your inside reps, I do not think that lead volume is the way to do it.
In my experience, compensating based on lead number incents the wrong kind of behavior. If you tell me that I will get (X) dollars per lead, I will pass a hell of a lot of leads. I will strive to hit the minimum qualifications and hand it to sales before I have the chance of losing it. I have a friend that is doing pretty well for himself working inside sales for a major tech company. He just bought a new house. After taking a quick tour of his new place I made a cheesy sales comment to the effect of, “Sales must be pretty good at (XYZ) company!” He turned to me and said, “Who the hell knows, I just pass leads.” While I am happy that his company is paying him enough money to provide me with a great spot to watch Sunday football, I wouldn’t want my inside reps to have the same mindset.
High lead volume isn’t a good thing if it masks issues of lead quality. Keep an eye on both the number of leads that actually take place and the number that move forward. Sales reps will lose confidence in a lead source quickly if the lead is a no show or if the lead is not a fit for the solution. Studies have shown that a sales rep will begin to lose interest in taking leads from a source if there are 2 bad leads in a row. We are a fickle bunch. The result is marketing spending a lot of money to find leads that Sales doesn’t want to follow-up on. If you would like an outlet to waste money, I would be happy to take it off your hands.
Using lead volume as a gauge for success can also lead to the oh so familiar “black hole” that marketing execs tell me about. “I pass a gazillion leads to sales and I have no idea where they go until something pops up on forecast 6 months later!” What is missed is that these leads have not been fully flushed out or have been passed too early leading to meetings with non decision makers or prospects that do not have active buying cycles. A sales executive will not forecast a lead without an active budget or without talking to the right person. As a result they get your leads and then they have to work on them for long periods of time. In that time a lot happens as they try to up sell through a company or nurture non active buyers. Prospects lose interest, nurture accounts fall off the face of the earth, marketing loses track of leads.
So what to do? What I would suggest is compensating based on opportunities that move into a 2nd stage as verified by the sales team. You have to do some work to get sales on board, but here is how it goes.
- Inside rep passes lead.
- Meeting takes place with sales rep and prospect
- Sales Rep is required to give feedback to marketing within 48 hours
- Inside Rep receives kickers for every opportunity that meets the mutually (sales/marketing) defined criteria of an opportunity.
You are now compensating based both on quantity of leads and quality of leads. The inside rep should receive more money than they did before for leads passed. If they used to get ($) for every lead passed, they should get ($) x 2 for each lead that is moving forward. The more qualification you require, the higher the payout for the leads. You can adjust this until you find the perfect mix of quality vs quantity. We also incorporate a kicker based on the % of leads that are successful to prevent inside reps from taking a shotgun approach and passing 50 leads in hopes that only 5 stick. We require a 70% success rate at plan. So for every 10 leads a rep passes, 7 should move forward. If you are below 70% your bonus comp drops and above 70% it goes up. Don’t worry if your lead number drops. Your forecast number will go up and your time to sale will decrease as leads passed are of a much higher quality. Sales will be fully engaged working only leads that matter and they will give feedback is they know they may get shut off from the lead source if they don’t report back within 48 hours.
There are a lot of additional ways to compensate your inside reps, but this is a good starting point. Whether inside or outside, a sales person mindset is always going to be on making money. While outside reps are compensated based on closed business, an inside rep should be compensated on how much real opportunity they provide to sales to close that business.