How Time to Lead Influences the Conversion of a Sales Closing Ratio?
Time to Lead Influences the Conversion of a Sales Closing Ratio - Every Minute Counts. Let us Explain You Why Your Lead Response Time is so Important. You’ve probably seen hundreds of captions like: „Shorten the reaction time to query from a potential customer and increase sales by x7”. Or „If you react to a query from a potential customer after more than 60 minutes, the chance of closed deal will decrease x10”, etc.
Do the first and second sound like a clickbait for you? Yeah, you are right. These are real clickbait.
A Director of Marketing or a Director of Sales doesn’t think about lead response time. Their primary focus is on the number of leads generated, the average value of all deals, sales growth, recruitment, or dealing with underperforming reps.
Taking all this into account, the ultimate focus is on the sales growth and the financial performance of a company.
You simply have more important things to focus on than lead response time.
You have more important issues and projects than whether potential customers are waiting for an email response for two or five hours (i.e.: what’s your company’s LRT).
Marketers understand that LRT is not the most crucial metric for decision-makers, but they try to bring their attention to this topic in all possible ways.
And they’ve got a point.
I’m not commenting on if they are doing it in the right way, but it is worth paying attention to this metric. Why? Because improving lead response time, e.g., answering the email as fast as possible or working with the lead on the phone can significantly improve sales success.
Why does lead response time indirectly influence the results of the sales process?
There are several reasons for that. In order to understand this, it is good to simplify the sales process and divide its initial stages into two steps – from the first touchpoint with a company to the moment when a potential client becomes a customer.
1. Lead classification
The lead classification means calling a potential customer back or answering their email (depending on the preferred communication channel) to check if they are still interested in the offer and to evaluate if there is a chance to close the deal with the prospect.
If you manage to make contact, find out that they are still interested (meaning: they have not chosen the competition already) and that they fit your target, you move to the next stage.
Here begins the real sales process: discussing the needs of a potential customer, presenting your offer, negotiating terms, handling objections and finally, if everything goes well, closing a deal.
A simplified classification and sales process:
In some businesses, the classification and sales process are closely connected and can take place during one conversation.
But this does not mean that there is no classification process as such. It is an integral part of sales and can not be omitted at any cost.
And lead response time is extremely important, especially in the classification process.
The time of processing the lead does not directly affect the sales conversion rate, i.e., CV2, because it neither improves your product nor sharpens the selling skills of your reps.
Do not expect it.
However, time to lead has a chance to significantly (and here is where the mentioned click baits are right) improve CV1, i.e., conversion in the lead classification.
When you respond to incoming leads immediately, you do not give a potential client the opportunity to:
- change their mind or look for a substitute for your offer,
- find a better offer or turn to your competition,
- feel ignored, forgotten, or irrelevant to you.
That’s why LRT influences the classification-to-sales conversion ratio, not having a direct effect on the sales conversion rate.
If you still think that lead response time should not be a part of the metrics you measure, control, and improve, do just one simple thing.
Check how many leads are generated in your company in a month. Then, check how many sales processes are actually started by your reps within the same period of time. I bet the results will surprise you.