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Don’t Use Leads (Only Use Contacts) in Your CRM.

In B2B marketing and sales you aren’t engaging one person, you’re engaging a buying center. That’s B2B Marketing and Sales 101 and the concept of what comprises a buying center is thoroughly explained in hundreds of college text books and thousands of articles and blogs. The dynamics of buying centers and why they’re critical in B2B is not the focus of this blog post. Rather this post is all about the “sexy” world of B2B contact management in CRM systems and how the majority of B2B organizations still use a leads object in CRM. This is NOT conducive to effectively engaging a buying center.

I think of the leads object as a junk drawer in your house that holds a little of everything but in which you can never find what you’re looking for. In a single record you’ll find a person’s name, phone, and email contained with account level data such as company name, industry, and revenue size. Each lead is unconnected to other leads and they’re not associated to accounts. The concept of a buying center is pretty much out the window at that point

Unfortunately, the reality in many B2B organizations is that this junk drawer (the leads object) represents a SIGNIFICANT part of the marketing and sales database. For the vast majority of B2B companies, using leads in B2B is a bad idea. Anyone that promotes it… well, I personally would not hire them to run a marketing department or a marketing ops team (or as a marketing intern). Where does the use of leads make sense in B2B? I’m not convinced that it has a place, but if push comes to shove, the use of leads does less damage in companies that have more transitional sales and don’t sell into a buying center.

Iron Horse advocates using contacts and accounts rather than the leads object. The primary benefits of diminishing the use of leads and promoting the use of accounts and contacts in your CRM system are:

Segmentation and personalization gets better – way better

When a person exists as a lead (and not as a contact associated to an account) typically you only have the data that A) the person entered into an online registration form, B) the data you received from a purchased list. or C) what you got from a business card. It’s devoid of deeper and richer information that you have on the account- basic things like if the lead is from an existing customer, is related to an active pipeline opportunity, or works at one of your partner accounts. If you have ever received a call or email from a sales rep trying to sell you a product that you already own (which happens to me 2-3 times a year), this is one of the major reasons why that happens-in their CRM you’re likely a lead rather than a contact, and the rep didn’t check elsewhere in the CRM before contacting you.

Beyond knowing if the person is an active client or not (which in my book is a pretty big deal), think of all the fields that exist on an account versus what you typically have on a lead record. For current clients there are fields on (or related to) the account that speak to products purchased, renewal dates, service and support status, etc. For prospects there are fields like incumbent, industry and segment if it’s a target account; revenue; employee count; etc. And yes, a number of these fields likely can be found on the lead record, but certainly not all of them and, if they exist, how well populated or accurate is that single point of data versus the information available at the account level? 

Simplified (and better) reporting is possible

How would you pull the following report from your CRM: All managers or directors at a CA-based software company that are not one of your current customers? If you’re working with contacts and accounts, pulling that report is pretty straightforward; if I was doing it in SFDC perhaps it would take me five minutes. More importantly, this is also a report that most field marketers (or field sales reps) could make.

If you’re using the leads object, that’s where it gets frustrating and cockamamie. You would need to:

  1. Pull the report for contacts.
  2. Download a spreadsheet of accounts from your CRM that are active customers.
  3. Download a spreadsheet of all the leads in your CRM.
  4. Using the company name field and keying off the root email address, then do a Vlookup or Index to identify the leads that are active customers.
  5. Combine the list of contacts and the list of leads.
  6. Dedupe the leads and contacts as necessary.
  7. Send the report to the requestor using a spreadsheet (not a link to the report in the CRM)

So, which way is simpler? Beyond that, given the number of steps in getting this report, how likely is it that this report would even be made? Also, what are the chances that a well-meaning rep or field marketer that made this report himself would only pull a report from the contact or leads section? And no, you don’t have to do what I just laid out in Excel; there are BI platforms you can use, and there is the linking of leads to accounts too. But the underlying issue still remains and these are addressing a symptom and not the issue itself.

Also, if you’re using leads in your CRM, that means any view, dashboard, or report you have on people essentially needs to be double – one for leads and one for contacts and the viewer needs to do some quick mental math to get the full picture.

Data management improves

There’s an assumption in those last two points that there is reliable and accurate usable data. I laugh at that, as would anyone who has ever administrated a CRM system. The assumption is that leads have the same populated fields populated as an account and that they contain the same responses, i.e. a lead from ACME Corp will list the same industry, revenue, employee count, location, spelling of the company name, etc. as what’s listed on the account. That typically isn’t the case. Twenty leads from the same company will show variations in industry, spelling of the company name, etc. as they are individual submissions. Don’t believe me? Take a look at your CRM and you’ll see what I mean. Now, here is the thing: that’s driving your personalization, segmentation, and reporting. Also, as a side thought, when thinking about data acquisition and cleansing projects, maintaining a contact to account relationship offers you the ability to get a bigger bang for your dollar investment by focusing on cleansing/appending/enriching account level data and not leads which are more difficult to connect via domain, DUNS, etc.

Account Scoring no longer requires a workaround

Account Scoring no longer requires a workaroundAccount scoring is a great concept, but for a concept to drive business value you need the ability to execute. In order to implement account scoring you need the ability to aggregate all of the people that your organization is engaging with in the same account together; the leads object does not help with that at all. Yes, there are ways to hack it so you can do account scoring while still using the leads object, but there are drawbacks to doing so like in any workaround. Beyond that though, account scoring is directly impacted by the account hierarchy that the sales team uses and by the rules it uses to define how accounts are structured in the CRM. Are they breaking business lines into subsidiaries? In larger companies, are they managed as two separate accounts in the CRM based on region or product line? This is where the workarounds typically break.

Sales management and insight increases

Put yourself in the shoes of a business development rep (BDR) or a quota bearing sales team. Is it easier to see everyone related to an account in one location? Alternatively, would you prefer to split the people from your account between two locations: 1) an account with associated contacts and 2) a listing of disconnected people stored in a leads object, which means you could never pull a report or a view that shows the complete picture of your account. Simply put, using accounts and contacts makes it easier for a rep to understand the status of his accounts and who is active within them. It also significantly helps with account planning, such as being able to understand the level to which each account is penetrated. In short, maintaining contacts associated to accounts (and not leads) gives reps a MUCH more complete view of an account and their relationship with it.

Account Funnel reporting – can actually be done

In B2B, demand funnel reporting is critical as it provides insight into how your organization’s qualification and engagement process is working versus where it can be enhanced and improved. Typically, this is done at the person level. However, given advances in technology and an increased focus on ABM, firms like TOPO have encouraged the market to do funnel reporting at the account level. We’re HUGE advocates of this and encourage every B2B organization to look at funnel reporting at the account level.

The question is how to do account funnel reporting if your company uses leads extensively in its CRM. The answer is not well, not well at all. If you want funnel reporting at the account level without creating a brittle process that uses workarounds, then you need to standardize on contacts and accounts (and not leads).

Now, don’t get me wrong, there are challenges with taking a contact only approach (and some of these challenges aren’t insignificant), but that’s the subject of my next post. After that we’ll talk about how to actually mechanize a contact-only CRM strategy and the steps to take if you’re (sadly) heavily reliant on leads.