The Changing Nature of Sales: Tools for Success
By Glenn Renner
HomeSphere President & COO
Last month we started to discuss the changing nature of lead generation in the home building industry and redefined the sales funnel. Revising sales language, establishing roles and learning new techniques all sound difficult… and expensive. However, changing a company’s approach to lead generation can have a direct, measurable benefit and can be achieved for a cost that yields a high return.
Outsourcing: An Effective Option
If digital lead generation is not the main function of a company (and most often in our industry, it is not), one should consider hiring an outside firm to handle this effort. The education industry was the first to benefit greatly from outsourced digital lead generation. Potential students gleaned from these techniques were seen as valuable to universities because they were able to provide sales teams with true sales-ready leads, not suspects or prospects. The successful experiment spawned an entire industry of independent digital marketers who were willing to invest their time and resources to find leads for these customers. Since then, the online marketing industry has exploded. According to predictions by eMarketer, online ad spending in the US reached $37.31 billion in 2012; dollars spent on lead generation continued to grow, increasing an estimated 16.6% from 2011.
Not only is digital marketing more effective, it is also highly measurable. While it’s tricky to measure the ROI of a television, newspaper, radio or magazine ad campaign, digital advertising provides nearly instant feedback. An advertiser can tell, for example, specifically who clicked on an Internet ad and ultimately bought a product or service—even if that conversion did not occur during the same session. This allows companies to track the life of a sale from suspect to customer and determine ROI based on actual acquisition costs rather than guessing at the cost of a sale as a percentage of the total advertising budget.
Online properties that sell advertising have leveraged the extensive tracking capabilities of the Internet to charge advertisers for clicks rather than impressions and, more recently, for acquisitions rather than clicks. Companies see the value, which is reflected in recent statistics on digital ad spending. Performance-based revenues accounted for 67% of online ad spending in the first half of 2012 according to a report from PricewaterhouseCoopers, LLP.
Companies offering outsourced digital lead generation vary greatly from small search engine marketing shops to large ad agencies to direct-relationship marketers. Choosing which one to work with depends on the type of partnership a company is looking to establish and how it wants to pay for performance. If personal attention and management with a small geographic reach is desired, local interactive agencies can handle targeted pay-per-click (PPC) campaigns on search engines. If a greater geographic reach with more opportunity for placement on websites is desired, a large advertising agency integrated with traditional marketing methods might be a better choice. Some of these agencies will charge on a cost-per-thousand views (CPM) basis. In order to touch a specific audience through an established digital and personal relationship, services offered by direct-relationship marketers and partner companies within a specific vertical are ideal. In this instance, paying for new customer acquisition (CPA) rather than per click or view is the preferred approach.
The End Game
The National Association of Home Builders (NAHB) currently estimates that growth in the residential construction industry will remain steady in 2013. However, it also notes that several challenges remain. Taking this economic prediction into account, it is clear companies that want to grow at a faster pace than the market can do so by embracing technology and making changes to how their sales and marketing departments work in today’s digital marketplace.
Some good news does exist, however, namely that other verticals have made the transition away from traditional marketing and cold calling to high ROI sales and marketing models successfully. We believe building product manufacturers, distributors, contractors and builders are on the cusp of being able to make the exact same transition in the construction industry. They simply need to take the initial steps to improve the efficiency and tracking of their sales and marketing resources.
By implementing a unified digital media strategy and measurable automated lead generation tools and re-evaluating each department’s role in the nurturing process, the construction industry will see a substantial improvement in the ROI of their marketing and sales spend.