Why the Space Shuttle Columbia, Toyota's Auto Recalls, and Inquiry Dormancy Are Related
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Why the Space Shuttle Columbia, Toyota’s Auto
Recalls, and Inquiry Dormancy Are Related
How Normalized Deviation Destroys 75% of Marketing’s Efficiency
And Why Marketing Automation is the Answer
By James W. Obermayer
Executive Director of the Sales Lead Management Association
i
Copyright 2010, Sales Lead Management Association, All Rights Reserved
Sponsored by: LeadTrack, Marketo and the Sales Lead Management Association 1|PageWhy the Space Shuttle Columbia, Toyota’s Auto Recalls, and
Inquiry Dormancy Are Related
How Normalized Deviation Destroys 75% of Marketing’s Efficiency
And Why Marketing Automation is the Answer
By James W. Obermayer
The term ‘Normalized Deviation (ND) surfaces most prominently during discussions of
product defects. Stated in the simplest form, ND (sometimes referred to as standard
deviation) is a sociological phenomenon where, over time, defects in manufacturing or
processes become not only acceptable, but in some cases are considered ‘normal.’ In these
situations, we become so used to seeing a high number of defects that we adopt a form of
self-deception. The most prominent example in business-to-business marketing is the
practice whereby 75-90% of all sales inquiries are left dormant (not followed up). More
about that in a few paragraphs.
Two prominent instances of ND involve the destruction of the Space Shuttle Columbia and
Toyota’s recall issues. Let’s look first at the Space Shuttle Columbia example. During
Congressional investigative hearings, certain engineers implied that the Columbia was
destroyed when foam insulation broke away, hit, and then destroyed heat tiles. The
insulation degradation issue was known to exist prior to the destruction of the Columbia.
Engineers testified that it became “normal” that a high number of insulation impacts
occurred without catastrophic failure. The “problem” became so common it was
considered typical and an acceptable risk. The risk became normalized.ii Yet it was this
problem that destroyed the shuttle.
In the February 24th issue of the Los Angeles Times, an article covering Toyota’s auto
recall troubles used the term ND. The term surfaced again in Congressional testimony as a
reason why Toyota’s engineering staff accepted a certain number of auto performance
failures as normal.iii
HOW ND EXPLAINS MARKETING’S ACCEPTANCE OF INQUIRY
DORMANCY
It occurred to me that marketers and C-level managers experience their own ND situations
when they accept an “error” rate of 75-90% inquiry dormancy. We know this error rate is
true and exists, meaning 75% of marketing budgets are wasted! This high error rate has
been accepted and ignored, with a disastrous effect on marketing ROI and corporations’
profits. The issue surfaced 50 years ago when business-to-business marketing became a
discipline and salespeople learned that they could ignore with immunity 75-90% of the
leads marketing produces.iv
Copyright 2010, Sales Lead Management Association, All Rights Reserved
Sponsored by: LeadTrack, Marketo and the Sales Lead Management Association 2|PageThe normalized deviation of lead management is 75-90%,
with follow-up by salespeople in the low double digits.
Be aware of some facts:
• Research reports going back 40 years consistently show that salespeople only
follow up 10-25% of all inquiries received.v
• Research has shown that 45% or more of all inquirers eventually buy someone’s
product: yours, or your competitor’s. This is the well-known “Rule of 45.”vi vii
• When salespeople follow up only 10-25% of inquiries, they ignore 75-90% of the
buyers Marketing finds. The waste on marketing spending is billions of dollars
each year. Yes, Billions.
45% of all inquirers buy within one year!viii
We have come to accept this ridiculous deviation as normal. We allow salespeople to
decide with little more than intuition who deserves sales attention and who may be
Copyright 2010, Sales Lead Management Association, All Rights Reserved
Sponsored by: LeadTrack, Marketo and the Sales Lead Management Association 3|Pageignored. When they fail to follow up 75% of inquiries, the impact on corporate profits is
enormous, but still small compared to the unrealized sales to inquirers who are never
contacted. Perhaps as a result of your marketing expenditures, these inquirers buy from
your competitors who followed through and contacted them.
The screaming issue is that too many C-level officers and marketing managers accept this
as normal. I can safely say that the company managers who do NOT accept a 75% lead
dormancy as normal, and insist on 100% follow-up, are beating the stuffing out of their
competitors.
So the question I pose to you is: When will you stop accepting this waste as a normal
deviation and stop giving your competitors 75% of your marketing investment?
THE FIX
In manufacturing circles, the “fix” for defects often takes time and huge monetary
commitment. For those who want to eliminate the ND trap of lead dormancy, the fix is
fast and relatively inexpensive, but you must follow three steps:
1. Find out the extent of your deviation from 100% follow-up. In some cases you may be
lucky to see that you have only a 25-35% problem. Regardless of the problem size, the
solution you must address is essentially the same.
2. Gather your major stakeholders (sales and marketing managers) for a brainstorming
session on increasing follow-up. Tell them that they have no choice; they must solve this
problem. Follow-up can be a mandate to the salespeople or a combination of marketing
and sales actions to ensure that every prospect is contacted.
3. Follow-up should take the form of:
A. A rule that salespeople will follow up every inquiry.
B. A measurement system (CR/Marketing Automation) to measure compliance.
(No…spreadsheets are not sufficient; they’re difficult to use and notoriously
inaccurate.)
C. A marketing automation program which can host a “nurturing program” of mail,
email, and telemarketing to reach and prioritize inquirers.
D. A combination of B and C above is ideal.
The cost of this follow-up, which every prospect deserves, is the salesperson’s time. This
is a valuable but expected part of his or her job, and the cost of the nurturing program.
Nurturing can be managed manually (and clumsily) with emails and telemarketing, but it
can be done. It can also be accomplished in a much more sophisticated manner using
Copyright 2010, Sales Lead Management Association, All Rights Reserved
Sponsored by: LeadTrack, Marketo and the Sales Lead Management Association 4|PageCRM programs or, better yet, a marketing automation program which manages a database
and the many emails and calls based on the prospect’s declared needs.
CMOs CANNOT AFFORD TO IGNORE THE PROBLEM
If you have:
1. a small sales force
2. only 10-20 inquiries per month per salesperson
3. an average sales price of less than $10K
4. a short sales cycle
5. and only 3-5 touches to make a sale,
then you may elect to simply make it a business rule with your salespeople that follow-up
is job mandatory.
If, however, you have a larger sales force (some would say the number of inquiries makes
no difference), a lengthy sales cycle, an expensive product, and 8-20 touches to make a
sales, then you have fertile ground for a nurturing program.
If you have no control over your sales channel follow-up, marketing must assume the task
of creating a nurturing program with multiple touches to each inquirer.
THE PAY OFF
Many marketing automation firms claim a 2-3X increase in sales because of their programs
and processes. For some companies, the decision may be to produce fewer inquiries,
divert former lead generation funds into nurturing, and with 100% follow-up spend less on
marketing but increase sales. While you may spend $50 to $500 for an inquiry, a fully-
loaded nurturing program controlled by a sophisticated marketing automation program
with emails and calls will start at $18,000, and increase depending on database size.
Regardless of your chosen path to measure and eliminate your normalized deviation, this is
not something you can ignore once you understand the seriousness of the issue. Those
who solve the normalized deviation of sales inquiry dormancy reap massive rewards
within 90-120 days.
###
Copyright 2010, Sales Lead Management Association, All Rights Reserved
Sponsored by: LeadTrack, Marketo and the Sales Lead Management Association 5|PageABOUT THE AUTHOR
James W. Obermayer is the executive director of the Sales Lead Management Association.
Obermayer is a four-time book author and a motivational speaker on sales and marketing
topics.
James W. Obermayer
April - 2010
Sales Lead Management Association
17853 Santiago Blvd. Ste. 107-339
Villa Park, CA 92861
P. 714 637 6989
F. 714 998 3876
REFERENCES
i
Author: Nasa: http://dayton.hq.nasa.gov/IMAGES/LARGE/GPN‐2000‐000650.jpg
ii
Transcript (Part 5): Hearing on the Space Shuttle Columbia Investigation Before the Senate Committee on Commerce, Science
& Transportation 14 May 2003.
iii
Los Angeles Times, Feb 24th, 2010, Toyota’s structure may be an issue, pages A1 and A9. “In the last decade, 2,600
complaints about sudden acceleration in Toyota vehicles have been filed with the US government, among them allegations of at
least 34 fatalities. Yet when federal safety regulators repeatedly investigated the matter over the last eight years, Toyota asserted
that many of the complaints were not relevant. Although such behavior may seem irrational, the phenomenon is known as
“normalization of deviation” a theory advanced by Columbia University Professor Diane Vaughn. In a ground-breaking study,
she found that NASA had slowly come to believe that safety anomalies in the shuttle program were “normal” because they had
not caused an accident in the past.”
iv
Obermayer’s opinion is that “Salespeople assume every corporate rule, procedure, request or dictate is optional until it is
repeated at least three times over a two-month period.”
v
Cahners Advertising Research Report No 210.5C (Newton, Ma.: Cahners Publishing, 1993. This study showed only about 15%
of the inquiries received personal follow-up. Reader Action Report: 22 Years of Advertising Effectiveness Research, (Cleveland:
New Equipment Digest, 1990 p. 47. This study showed follow-up of only 22.7%. These references are used to show you how
long this issue has been an issue without resolution.
vi
James Obermayer, Managing Sales Leads: Turning Cold Prospects into Hot Customers, (Mason, Ohio, Textere an imprint of
Thomson/South-Western, 2007), and Racom Books.
vii
Russell M. Kern, S.U.R.E.-Fire Direct Response Marketing, McGraw Hill, 2001, Page 149.
viii
Donath, Dixon, Crocker & Obermayer, Managing Sales Leads, How To Turn Every Prospect Into A Customer, NTC Books-
AMA, Lincolnwood, Il, 1996 Page 18.
Copyright 2010, Sales Lead Management Association, All Rights Reserved
Sponsored by: LeadTrack, Marketo and the Sales Lead Management Association 6|PageABOUT THE SPONSORS The following sponsors have underwritten the creation of this white paper. They have not edited or preapproved direction or copy. LEADTRACK has been providing sales lead management software solutions for more than 30 years. Our clients enjoy a cost-effective and timely means of distributing and managing sales leads, measuring marketing campaign effectiveness and communicating with prospects and customers. Unlike most of our competitors, we offer lead management solutions for both client server and hosted platforms. We do not have a bias to either platform. We want you to have the best solution to meet your needs and support capabilities. Regardless of the solution you choose, you will have access to live U.S.-based technical support when you need it. www.leadtrack.com Marketo is the revenue-focused marketing automation company, revolutionizing how marketing and sales teams of all sizes sell and succeed at every stage of the revenue cycle. Delivered in the Marketing Cloud, Marketo’s powerful and easy solutions provide the fastest time to value and ignite explosive revenue growth from the earliest stages of demand generation and lead management to the pursuit of revenue and customer loyalty. Marketo Lead Management helps Marketers acquire, nurture and qualify more high-quality sales leads with less effort, while Marketo Sales Insight helps Sales understand, prioritize and interact with the hottest leads and opportunities to close business faster. Known for providing breakthrough innovation and the utmost in usability, Marketo was voted 'Best Marketing Automation Application' by Salesforce customers on the Force.com AppExchange. As of January 2009, more than 450 enterprise and mid-market clients in 14 countries have selected Marketo. www.marketo.com Copyright 2010, Sales Lead Management Association, All Rights Reserved Sponsored by: LeadTrack, Marketo and the Sales Lead Management Association 7|Page
The Sales Lead Management Association has the mission of helping companies become more successful in the critical business process of managing sales leads. Membership is free and everyone can become a member by registering and gaining access to the content on the site. We have built an extensive library of articles, reports, and information about inquiry management, sales leads, lead nurturing, lead qualification, ROI reporting, and lead distribution. Additional subjects include trade show sales lead acquisition, telemarketing, and inquiry and lead generation. www.salesleadmgmtassn.com Copyright 2010, Sales Lead Management Association, All Rights Reserved Sponsored by: LeadTrack, Marketo and the Sales Lead Management Association 8|Page
You can also read
