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What If You Had Fewer Leads?

I was reviewing some numbers with a client not long ago and they expressed concern that the overall number of leads they were producing had been going down steadily over the past year.

I knew a few of the other numbers and what we had been attempting to do with their marketing so I quickly quipped, “that’s great.” The reason I was able to say this is that over a three year period their sales revenue had more than tripled, their average project size was up about 425%, and their lead conversion numbers were through the roof.

We had spent the better part of three years repositioning this 25 year old firm and two of the primary goals of this process was to narrow their target market and clearly define a core message of difference. The result of this work was that they are now telling unqualified leads, “we may not be for you.” The net effect is they are getting more of the type of work they want with a lot less work. Their sales folks are far more productive and making more money, and they have far fewer questions about the price of their work.

Now, the owner of the business still is a little nervous about that downtrend in leads, but he’s coming around.

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  • http://www.beamax.com otto

    Hi,
    With all the numbers available, it’s easy to be worried about a negative change in numbers which is not really that important.

    At the end of the day, what really counts is whether the change in numbers is affecting the goals you’ve set. Mostly, that would be improving the bottom line.

    In this case, the increase in sales revenue tells the real story and with the increased productivity, they are probably getting better profits on the increased sales too…

    Otto

  • http://www.stickyfigure.com Steve Woodruff

    As I was advised years ago…”not all business is good business.” And not all leads are good leads, if they aren’t leading toward good business!

  • Max

    Hi John,

    can you give any recommendations how get targeted leads in residential real estate industry? We have traffic and leads, and all of them seams to looking for related information, but conversions are very-very low.

    Thank you!

  • Mark

    Hi,

    Less leads a good thing? Huh?

    Better qualified leads is a wonderful thing- but that is not the same thing as saying that less leads is good is it?

    To follow that logic would say that no leads would be ideal?

    Better quality leads, higher conversions, stronger $ per customer are great but I have never reached a point where I wanted less customers or less demand for my services.

    Even at a 100% close ratio I think I want one more lead- (and then another and then another.) If there is a shift in the market and my close ratio changes I want to know that I have more prospects to sell our services to.

    More prospects (leads) means that we have a margin of error, an opportunity to grow, a chance to adjust or expand or develop- leads keep the pipeline full and allow us to predict the future.

    One of the biggest mistakes I see us (and many others) making is believing that we-they have enough clients, that because we-they closed X percentage last week we-they will close that same percentage next. When the market changes or the customers change or the local dynamic that drives our business changes — or something happens not expected there is shock as the realization hits that there is nothing left in the pipeline.

    Am I wrong there?

    Mark

  • John Jantsch

    Mark,

    Of course you are not wrong – we are saying the same thing but it quality over quantity that we meet.

    Too many businesses are willing to jump at anything that looks like a lead and then they use up their capacity to actually get any more clients.

    Where I disagree is that there are many businesses that do not need any more clients until they do a better job at serving the ones they have, raise their prices to reflect the value they deliver, and start getting home at night a little earlier.

  • http://www.corecubed.com Merrily

    This is one of Henry Pellerin’s methods to generate more sales. It is scary, but the key to limiting the client is who is your best client? And those criteria vary. Henry helped us at corecubed narrow down the client criteria to 5, and we have it posted at each work station, so we can continue to grow with customers who fit our profile for a great client.
    http://www.vantaedge.com in case you are interested in learning more about how to take that first step in understanding the criteria for your best client. Great info and good solid meaurement results, John. I continue to send people your book.

  • http://www.jackhumphrey.com/fridaytrafficreport Jack Humphrey

    I can attest to the less is more tactic.

    Our business was attracting a lot more attention from the wrong people than it is now.

    Since we’ve honed our offer and pushed what we don’t do up there with what we DO do, we’ve lost a % of original customers but our retention rate has gone up because people know what they are getting, know what it entails, and are ready for it when they get it.

    For a recurring membership this is vital because the money and time you spend getting the wrong kind of customer creates a massive waste not just in hard dollars, but staff and support time it takes to bring them in and let them go.

  • http://www.leadoptimize.com/blog Chris Denny

    I love this article. I have to explain the same idea to business owners sometimes – that less is not necessarily bad and to look at the sales generated from the leads. You must look at both factors (# leads and %conversion) to get a clear picture of your lead optimization.

    Also, I like what Mark (above) said about using those extra leads to expand or develop new business. They can be a great source of information about what opportunities lie just on the edge of your current offerings.