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Challenges in Lead Management and Conversion

8 min read

From: alexhormozi

This article details a case study of a portfolio company that doubled its performance in 60 days by addressing key problems in its lead generation and conversion process. The focus is on identifying and rectifying common challenges in lead management and optimizing conversion rates. [00:00:00]

Key Metrics in Lead Management

To effectively manage and convert leads, several key metrics must be understood and tracked:

  • Show Rate: The percentage of people who show up for their scheduled appointment [00:00:22]. For example, if 70 out of 100 people with appointments show up, the show rate is 70% [00:00:37].
  • Offer Rate: The percentage of people to whom an offer is actually made [00:00:47]. Not everyone is qualified, so a 100% offer rate for those who show indicates high-quality lead flow [00:01:04].
  • Close Rate: The percentage of people who buy, tracked either against those who show or those who are offered [00:01:13]. Tracking both helps prevent salespeople from artificially inflating their close rates by only offering to highly qualified leads [00:01:25]. High-quality data in this area helps identify if issues stem from low-quality leads or sales team performance [00:01:50].
  • Percentage of Cash Collected Upfront: The average percentage of the total sale amount collected at the time of purchase, indicating buyer conviction and sales team effectiveness in securing payments [00:02:02]. A low close rate with a high cash collected percentage tells a different story than a high close rate with low cash collected [00:02:14].
  • Units Sold: The final output, representing the total number of conversions achieved by multiplying the above metrics [00:02:33].

Initial Performance (Before Fixes)

Before intervention, the company’s performance metrics were:

This data provided a baseline to identify discrepancies and opportunities for improvement [00:03:26].

Challenges Identified

1. Low Show Rate

The company’s show rate was 49%, significantly below the benchmark of 70% for appointment-based businesses [00:03:40]. This represented a 40% difference in potential growth [00:04:20].

  • Poor Targeting and Offer: The number one factor affecting show rate is often the quality of the leads themselves [00:04:37]. The advertising was targeting 18-24 year olds instead of the desired 25-35 year olds who were gainfully employed [00:05:07]. The media buyer was optimizing for the lowest cost leads and appointments, rather than optimizing for cost per sale [00:05:30]. This led to a high volume of unqualified appointments, with 75% requiring cancellation before the 49% show rate was even achieved [00:05:44].
  • Sales Team Multitasking: The setting team was responsible for both calling leads to get appointments and nurturing/following up to remind prospects of their appointments [00:06:06]. These are distinct activities requiring different flows [00:06:13].
    • Lack of Double Dialing: The team wasn’t utilizing the common tactic of double dialing to get through initial call screens [00:06:27].
    • Slow Time to Contact: Leads would sit for 30 minutes to several hours before being contacted [00:06:38].
    • Ineffective Nurturing: Appointments weren’t set for the same day or next day, and there was no “morning of” nurture process to remind people of appointments booked days in advance [00:06:53].

2. Low Close Rate

The company’s close rate was 27%, while the benchmark for their type of mid-priced consumer service (two-call close) was around 40% [00:07:40]. This represented a 50% improvement opportunity [00:07:58].

  • Surface-Level Discovery: Sales conversations lacked depth in the discovery phase, merely asking surface-level questions like “how much money do you want to make?” [00:08:00]. Effective discovery requires understanding the prospect’s intentions, motivations, past attempts, and the impact the solution would have on their life [00:08:37]. Without understanding deeper “why” questions, it’s hard to tailor the sale [00:08:50].

    “This is where all the meat is and that’s where all the money is is the questions that are below the surface is understanding why someone’s even doing this to begin with” [00:09:32]

  • High Objections/Obstacles: Sales calls were frequently encountering objections and obstacles (which arise before price is discussed) [00:09:42]. Common objections like “too much,” “need to think about it,” or “talk to spouse” often serve as “smoke screens” when the underlying intentions haven’t been uncovered [00:10:19]. This led to a lot of argumentation and “hard closing” because the salesperson was talking at people rather than listening [00:10:54].
  • Poor Delivery and Tonality: Salespeople were delivering scripts without proper tone and emphasis, leading to miscommunication and distrust [00:11:37]. The first 5 minutes of a sales call, including setting the frame and conducting discovery, were often mishandled due to incorrect tonality [00:12:26].

3. People and Organizational Structure Issues

  • CEO as Sales Manager: The CEO, despite being the best closer, was an ineffective sales manager, leading to high churn within the sales team [00:12:44]. This is a common mistake: promoting top individual performers to management roles without considering their management skills [00:12:55].
  • Over-education on Product, Under-education on Prospect: Sales training focused too much on the product itself and not enough on understanding the prospect’s deep motivations and intentions [00:13:25].

    “If I know someone deep in their core what their intentions are I can tell them anything I know someone inside and out and then someone says sell this thing and I know nothing about it I could probably get them to buy on the flip side I know everything about this thing and I don’t know who I’m talking to” [00:13:35]

  • Low Setting Team Expectations: The setting team had low minimum standards, setting only two appointments a day when the benchmark was three [00:14:19]. This 50% difference in individual output translates to significant lost productivity across the team [00:14:33].

Solutions Implemented

The interventions were implemented strategically, with personnel changes preceding process changes.

1. Personnel Changes and Leadership

  • Hired a Sales Director: The first priority was to hire an experienced sales director and trainer for similar consumer sales [00:15:11]. This freed the CEO from micromanagement, allowing them to focus on CEO responsibilities [00:15:16]. Hiring the right “who” before fixing the “what” or “how” is crucial, especially for recurring problems [00:15:40].
    • Interviewing for Quality: New hires were vetted for culture fit and tactical knowledge, with experts conducting interviews to assess their understanding of data collection and nuanced problem-solving [00:16:18].
  • Replaced Media Buyer: It was discovered that the media buyer was negligent, optimizing incorrectly, and splitting their attention with a side hustle [00:17:18]. This person was replaced, immediately fixing the ad targeting issue [00:17:35].
  • Reduced Sales Team and Reset Expectations: The sales team was downsized based on low utilization rates (taking 4 sales calls/day when they could handle 10) [00:17:48]. This rewarded high performers and eliminated low performers, leading to a higher overall team closing rate [00:17:55]. Fewer, better people improved the sales culture and increased productivity [00:18:37]. The setting team’s daily expectation was increased from two to four sets per day [00:18:51].

2. Targeting and Lead Quality Improvements

  • Fixed Ad Targeting: With the new media buyer, ad targeting was reset to focus on the ideal customer profile: 25-35 year olds who love their jobs [00:17:39]. This improved the quality of incoming leads and appointments.

3. Sales Team Optimization

  • Promoted Setter to Lead Nurture Specialist: One of the best setters was promoted to a dedicated lead nurture specialist role [00:19:01]. This eliminated multitasking for the setters and created a bridge between the setting and closing teams [00:19:08].
    • Nurturing Checklists: The specialist was equipped with checklists for maximizing show rates [00:19:22]. Examples include:
      • Three-way Intro: A three-way introduction call via iPhone between the setter, closer, and prospect to build rapport and trust [00:19:29].
      • Morning-of Reminders: Closers sent personalized voice memos or video texts to prospects on the morning of their appointment [00:19:50].

4. Sales Script and Objection Handling

  • Optimized Sales Scripts: The sales scripts were revised to include deeper, more meaningful discovery questions, moving beyond surface-level inquiries [00:20:07].
  • Proactive Objection Handling (“Killing Zombies”): The new scripts incorporated methods to bring up potential objections and obstacles earlier in the conversation, defusing them before the close [00:20:18]. For example, asking “Is there anyone else who’d be required to make a decision about this?” before the appointment and rescheduling if necessary to ensure all decision-makers are present [00:20:41].
  • Drilled Team on Looping: Salespeople were trained on “looping,” which involves handling an objection, resolving the concern, and then asking for the sale again [00:20:59]. This technique focuses on consistently resolving concerns and asking for commitment, as the number of sales is directly proportional to how many times one asks [00:21:16].

Results and Improvements

Within 60 days of implementing these changes, the company saw significant improvements:

  • Show Rate: Increased from 49% to 70% [00:22:25], a 40% improvement [00:22:47].
  • Offer Rate: Remained stable at 80% (from 83%) [00:22:56], indicating improved lead quality as fewer unqualified leads were reaching the offer stage [00:23:02].
  • Close Rate: Increased from 27% to 41% [00:23:12], a 50% improvement and 1% above their benchmark [00:23:19].
  • Percentage of Cash Collected Upfront: Increased from 47% to 82% [00:23:44], nearly doubling the cash collected upfront [00:23:50]. This reflects the improved quality of discovery and closing techniques, leading to higher buyer conviction [00:23:33].
  • Units Sold (monthly): Increased from 56 units to 93 units [00:24:16], almost doubling monthly sales and significantly improving business cash flow [00:24:06].

These results were achieved over just two months [00:22:49], demonstrating that focused interventions on lead management and conversion can yield rapid and substantial growth. This case study highlights the importance of data-driven decision-making, strategic personnel placement, and continuous optimization of sales processes to overcome scaling challenges and enhance customer acquisition and cash conversion cycles.

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