Methodical development of customer referrals increases lead productivity by 3.4X
SITUATION: Everyone in the sales profession knows that word of mouth referrals make the very best leads. This is especially true in large companies with many operating units and subsidiaries.
This is the story of the sales management team at the European unit of a Fortune 500 financial services company that decided to take steps to institutionalize the concept of maximizing customer referrals to boost business development and increase market share.
The company’s operational data was managed separately from the contact data developed by the sales executives; therefore, the process would involve consolidating a number of data sets from different systems that did not directly interface. Even more importantly, the customer data from various participating countries were distinct. It was considered important to build a single consolidated process to accommodate cases where a parent company or subsidiaries were found across national boundaries.
Previously, the company had chartered Massini Group with building a comprehensive marketing reference database, which combined all that the company knew about prospects into a single hierarchical database containing companies, sites, contacts and activities.
ASSIGNMENT: The sales management team tasked Massini Group with finding companies that were not spending up to their potential in specific spend categories, and further, to find the sites and contacts where the company had the leverage to cause that spending to increase.
Operational silos between sales, which owned current customer relationships, and marketing, which was in charge of acquisition of new customers, would have to be bridged to complete the project. To accomplish this, the program owners chartered Massini Group to build a fact-based framework to prioritize accounts along two dimensions:
- Likelihood of a high value increase in business if the referral was successful;
- Likelihood of a successful referral developing.
Companies that scored highly in both of these dimensions would be elevated to drive change in process between marketing and sale
KEY STRATEGY: Massini Group needed to bring together three key measurements of the company’s customer base to fulfill the selection criteria of the program, specifically:
- Detailed knowledge of the composition of the current customer base, including industry, size, geography and corporate hierarchy;
- Consolidated historical spend across customer accounts which were complex and often duplicated;
- Projected levels of spend across a number of categories.
Massini Group employed a statistical extrapolation process to identify the projected level of spend which involved classifying current customers as "fully penetrated" or "not fully penetrated" based upon a number of measures of the engagement available from the client. With this data as a foundation, Massini Group was able to complete a gap analysis on a customer by customer basis to describe which companies spent less than they would be expected to spend if they were "fully penetrated."
Lastly, Massini Group used business reference data to assess how likely it was that the buying decision was widely distributed within the company. This analysis employed the corporate hierarchy of the subject companies to determine:
- How many discrete current customers existed within the full corporate hierarchy?
- Where were the largest parts of the company that, by their sheer weight within the organization, were likely to make independent buying decisions?
By cross referencing the results of the above steps, Massini Group was able to isolate good candidates for the customer referral program.
ENGINEERED PROCESSES: Massini Group utilized a multi-phase program development methodology based upon Massini Group’s Dialogue StrategySM to construct a foundational data set and implement the pilot program, including:
- Positive identification of all customers, including accurate application of firmographic data, including industry, size (employees and/or revenues), geography (country) and corporate hierarchy;
- Isolation of the top 20% performing customers based upon a number of key measures of engagement provided by the client;
- Development of a statistical extrapolation process designed to predict the likely spend across eight categories of a company based upon its firmographic attributes;
- Execution of company-by-company gap analysis to identify companies that were not spending up to expectation based upon the model output;
- Use of business reference data to map out the corporate hierarchies of customer companies and identification of business units where the company was likely to make decisions in a distributed fashion, specifically:
- where the company was comprised of a number of large peer units;
- where the company already had more than one major account embedded in the corporate hierarchy;
- Cross referencing high spend gap companies with distributed decision-making companies to identify targets for the pilot program;
- Delivery of the targeted companies and known contacts to sales executives via a Massini Group web-based lead management portal that included direct Siebel integration;
- Assessment of program effectiveness in two ways:
- real-time measurement of sales force activity with the selected records, including dispositioning as an active opportunity and transmission to Siebel;
- correlation of Siebel WON sales stage to the leads resulting from the program;
RESULTS: Direct comparison of efforts addressed at prospects (companies not related to current customers) and related companies (in the same family tree as current customers) showed that related companies converted to opportunities at a rate of 10.9% whereas unrelated prospects converted to opportunities at a rate of 3.2% (3.4X.)
Massini Group’s client went on to institutionalize the customer referral process in two ways:
- Companies demonstrating both a large gap and distributed decision-making are isolated from normal prospecting effort and addressed directly by sales;
- All companies confirmed to be related to current customers are isolated for special treatment within on-going prospecting efforts.
