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The short life of online sales leads

Authors:
James B. Oldroyd ( jamesoldroyd@gmail.
com) is an assistant professor at the SKK
Graduate School of Business at Sungkyunkwan
University, in Seoul. Kristina McElheran
(kmcelheran@hbs.edu) is the Lumry Family
Assistant Professor of Business Administration at
Harvard Business School. David Elkington
(delkington@insidesales.com) is the chairman
and CEO of InsideSales.com.
panies, measuring how long each took to
respond to a web-generated test lead. Al-
though 37% responded to their lead within
an hour, and 16% responded within one to
24 hours, 24% took more than 24 hours—
and 23% of the companies never responded
at all. The average response time, among
companies that responded within 30 days,
was 42 hours.
These results are especially shocking
given how quickly online leads go cold—a
phenomenon we explored in a separate
study, which involved 1.25 million sales
leads received by 29 B2C and 13 B2B com-
panies in the U.S. Firms that tried to contact
potential customers within an hour of re-
ceiving a query were nearly seven times as
likely to qualify the lead (which we de ned
as having a meaningful conversation with
a key decision maker) as those that tried to
contact the customer even an hour later—
and more than 60 times as likely as compa-
nies that waited 24 hours or longer.
Companies are making big investments
in order to obtain customer queries from
the internet , and they should be respond-
ing at internet speed. Why aren’t they?
Reasons include the practice of retrieving
leads from CRM systems’ databases daily
rather than continuously; sales forces fo-
cused on generating their own leads rather
than reacting quickly to customer-driven
signs of interest; and rules for distribut-
ing sales leads among agents and partners
based on geography and “fairness.” We’re
conducting further research to more fully
understand the causes and identify pos-
sible solutions. But it’s already evident that
most sales organizations need new tools
and processes to meet the demands of the
online age. HBR Reprint F1103B
The Short Life of Online
Sales Leads
TECHNOLOGY by James B. Oldroyd, Kristina McElheran, and David Elkington
Are you confident that your com-
pany is effectively handling po-
tential customers’ online que-
ries? Think hard. Our research shows that
most companies are not responding nearly
fast enough.
Companies in financial services, auto-
mobiles, education, software, health care,
professional services, and many other in-
dustries have increasingly turned to the
internet to generate sales leads. Indeed,
corporate spending on online advertising
aimed at drumming up leads to potential
customers soared from $12.5 billion in 2005
to $22.7 billion in 2009, and it’s still grow-
ing strongly. Online brokerages that o er
customers a simple way to get quotes from
multiple companies and then sell the re-
sulting leads to those companies are thriv-
ing in both the B2B and B2C markets. The
business of providing technology and ser-
vices to help companies turn online leads
into sales is on the rise as well.
Nonetheless, our research indicates
that many rms are too slow to follow up
on these leads. We audited 2,241 U.S. com-
Many Firms Are Slow to Respond
RESPONSE
TIME
NUMBER OF
COMPANIES
0–5 MIN
5–30 MIN
30–60 MIN
1–2 HR
2–4 HR
4–8 HR
8–12 HR
12–24 HR
>24 HR
NO REPLY
Top Lead Generators
SOURCE
LEADSCOUNCIL
600
400
200
INSURANCE
AUTOMOTIVE
INSURANCE
AUTOMOTIVE
INSURANCE
LENDING
LENDING
INSURANCE
LENDING
INSURANCE
INSURANCE
InsureMe.com
NetQuote.com
Insure.com
USInsuranceOnline.com
InsWeb.com
AUTOMOTIVE
Dealix.com
Autobytel.com
AutoUSA.com
CarsDirect.com
iMotors.com
LENDING
LendingTree.com
LowerMyBills.com
Ratemarketplace.com
Guidetolenders.com
Bills.com
586
143
90 81 61 7
90
133
538 512
Stat Watch
MORE CITATIONS are garnered by research
papers whose authors (four or fewer) are
in the same building than by papers whose
authors are in separate buildings, even on the
same campus. According to Harvard Medical
School’s Isaac Kohane, who led the study
that produced this result, “Physical proximity
still matters for research productivity and
impact”—a fi nding that presumably applies
not just to academia but to business as well.
Proximity Is the Key to Collaboration
45%
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