Dialogue Strategy reduces lead rejection from 89% to 0% and decreases cost per lead by 38.7X
SITUATION: A multi-billion dollar enterprise data storage company had developed a focus for one of its products on the medical imaging market. At the time of the product introduction, the company had a new vertical sales force and a total of 32 customers and 200 or so prospects in this segment, mostly developed by their mainstream technical sales force.
Massini Group had previously consolidated all customer, marketing and sales data that the company possessed into a single consolidated marketing reference database. The database linked activity, including open sales cycles, responses and touches from all media, known contacts and targeted companies and sites together in a hierarchical data model. Further, Massini Group had applied firmographic attributes to the companies. This allowed the client to apply detailed segmentation to the companies. Massini Group also had applied highly detailed and accurate codification of the contacts in the database for selection purposes.
The marketing organization within this company had deployed a standard marketing approach, developed over years, in which all new product introductions were made via broad-based marketing campaigns employing direct mail and email. They had made note that the effectiveness of these campaigns had steadily dropped over time.
ASSIGNMENT: The client had experienced a number of quick wins with the new product, and looked forward to a rapid increase in sales within a short time. Massini Group was tasked with driving business in a new vertical with an existing product. Further, Massini Group had to work with an internal bias toward direct mail to drive the most effective process. Massini Group broke down the challenge into the following parts:
- Focus the business development effort on the 4,000 primary providers of large scale medical imaging previously identified by Massini Group as being appropriate targets but not currently in the company marketing database;
- Assure that the status quo process was as optimized as possible;
- Construct a metrics framework designed to lead the client organization to the best possible campaign structure for their present and future needs.
KEY STRATEGY: Massini Group examined data from a few of the most recent product launch campaigns completed by the client. Using the response data as a foundation, Massini Group applied firmographic attributes to the respondents to demonstrate that a large proportion of those responses were not actually in the markets for which the product was intended, and therefore were wasting the time of the sales executives that were following up on the leads.
Massini Group’s key strategy input was to assure that the campaign focused on only those companies that had the wherewithal to buy, and was addressed only to contacts that had a key role in making the decision. This would require leveraging a priori knowledge of targets in the marketing reference database, over the entrenched approach of using third party rented lists. Further, Massini Group proposed a champion challenger test to assist the client in evaluating the relative performance of the incumbent approach against other methods.
ENGINEERED PROCESSES: Group recommended outbound telemarketing for the challenger approach because of the size of the available market – about 4,000. Massini Group used models developed based upon 1,000’s of documented campaigns to project that at that scope, the relatively high cost per touch of telemarketing would be more than compensated for by the very high current yields of the approach.
The incumbent approach involved using targeted direct mail and rented lists. The rented lists had exactly the selection criteria the company wanted, and were generally known to be the best sources available. A quality direct mail piece was produced that generated seemingly good results, a 4.3% response rate in a market generally known to produce a response of 0.5%. However, the responses were then vetted against the market universe before sending to the sales force. This effort, which involved matching the respondent to the marketing universe, demonstrated that only 99 of the 451 responses were actually from one of the intended targets – all of the others were from contacts involved in the field but NOT directly associated with providers of medical imaging. The majority of the responses were from a) hospitals that were too small, or b) allied industries (companies selling products to hospitals). Further, of the 99 remaining responses, 50 were currently engaged with the sales force. This left a net usable yield of only 49. At a total cost of approximately $87,800, the resulting cost per sales opportunity was $1,792.
The challenger approach, based upon contacts connected to the marketing universe in advance, assured that no campaign funding, beyond the cost of the initial contacts derived from an association list available to the client, was spent on contacts or companies that were unable to buy. The outbound telemarketing utilized with this approach yielded 886 respondents (34.7% response rate) at 604 sites. Note that the instance of multiple respondents at a single site aided the sales process because it provided access to multiple decision makers across the Cardiology, Radiology and IT departments. Further, because the targets had been pre-qualified and vetted against the marketing universe, there was no waste due to out of market responses or responses involved in current sales cycles. At a total cost of $27,900, each opportunity cost only $46.
RESULTS: Massini Group’s Dialogue StrategySM methodology created a new product launch marketing approach that achieved a cost per opportunity of 38.7X lower than the entrenched direct mail and rented list-based approach.
The primary drivers of the superior result were:
- A priori knowledge of the targets which assured that the challenger approach achieved a 0% lead rejection factor compared to 89% for the incumbent approach;
- Implementation of outbound telemarketing in the challenger approach based upon highly accurate Massini Group projections of results derived from 1,000’s of samples of like results in situations where the target universe is less than 5,000 entities.
Massini Group was able to develop a fact based argument for a new method based upon detailed knowledge of the various effects of modifications in the process coupled with robust sampling of the performance of similar campaigns deployed under similar circumstances.
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