Monday, June 15, 2009

CLV – CCA = profit

By Mark Helfen

Its not a pipeline, it's a refinery…

When David Tabor spoke to the SDForum Marketing SIG on Monday (June 8) his objective was to show how to optimize the following equation:

CLV – CCA = profit

CLV = Customer Lifetime Value
CCA = Customer Cost of Acquisition
Profit = the part you get to keep.

Tabor is CEO SalesLogistix and the author of the recently published Secrets of Success: Best Practices for Growth and Profitability

His focus was on CCA, and his prescription for reducing the cost of getting a customer is to re-architect the way you handle leads in your company.

His methodology is targeted at large enterprise sales, where a direct sales model is required - real people who visit real, if still potential, customers.

Despite the advances of E-commerce models, Tabor lists three reasons why direct sales is still a winning, or at least a required, model:

  • For some types of products, you just have to.
  • Some types of customers won't buy any other way
  • There is no other way to do $100K deals.

But the cost of acquiring a customer this way can be more than $40,000.

Tabor's strategy is to move away from looking at the pure number of leads sent to sales. Lead number aren't what causes business to close. It's the number of sales cycles started. Leads need to be highly qualified. By the time the information is given to the sales force, prospects need to be ready to enter a sales cycle – ready for an appointment with a sales rep.

The strategy he proposes has three layers:

1. An initial response. In particular, this response need to be quick - within 48 hours maximum.

"By the time 48 hours have passed, most people will have forgotten their initial inquiry," said Tabor. " Business aren't losing to competitors, they're losing to inaction."

Tabor describes these leads as "low grade ore."

2. The "lead refinery." Instead of a pipeline that all leads follow, the refinery engages prospects over time, turning the low grade ore into qualified sales prospects. These are people who are expert at qualifying leads.

New leads are "new members of your community of interest." This new lead qualification layer communicates and keeps prospects informed about your business and products, and when a customer seems ready to consider a purchase, delivers a lead, in the form of an appointment, to the sales rep.

When it comes to qualifying leads, "marketing doesn't know how, and sales hates doing it," says Tabor, so the lead qualification team does it. Tabor suggests "burned out" customer support reps, or systems engineers, who have strong product knowledge, know how to talk to customers, but want to apply these skills in a different way.

3. Layer three is the sales force, handed fully qualified leads. Sales reps get only qualified leads, and don't spend time with the low grade ore of unqualified leads. Giving a rep a large pile of random leads "gunks up" the sales team. Instead, they are given prospects ready to start a sales cycle.

To understand how your system is working, you need to "go backwards," starting with closed business to see where those leads came from. Don't rely on peoples impressions – instead use some real statistical data.

You can see Tabor's web site here.

You can view a copy of his presentation materials here.


Mark Helfen is a journalist, writer, and marketing consultant.
He can be reached at:


Thursday, June 4, 2009

Who Needs Leads?

Who Needs Leads?

By Mark Helfen

On Monday June 8, David Tabor will speak to the SDForum Marketing SIG on the topic "Who Needs Leads?"

Despite the provocative title, Tabor is not suggesting that you throw out all of your sales leads. But he will explain how they need to be looked at in a different way. According to Tabor, 95 percent of your leads are worthless, and the job of sales and marketing is to find those that have value and use them start a sales cycle.

Tabor is the CEO of SalesLogistix, and the author of a new book, Secrets of Success. His consulting firm specializes in "re-implementing broken implementations."

"We don't do initial implementations," said Tabor. "People don't want to listen until they've tried it and goofed it up." Their thinking needs to change to reflect new ideas of how a sales force needs to in today's environment.

Sales management is too focused on getting more leads. They are very low value, a "low grade ore," in Tabor's words. Marketing management gets incented to just generate more numbers, and "leads will never make a sales guy's numbers." Its how you manage them to get sales cycles started.

Since most of the people attending the marketing SIG are primarily focused on marketing, I asked what benefit they would get from the presentation. Tabor has been doing technology marketing for more then 20 years, and has been marketing VP at a number of technology companies. He has experience in both the sales and marketing roles.

Marketing objectives change under Tabor's methodology.

"The right way to generate more business is for sales and marketing to both work on exactly the same measurement - revenue, not leads." Sales and marketing must act as one cycle. Just generating more leads doesn't get results.

Tabor will bring copies of his new book to the meeting.

You can find the meeting location and details on the SDForum web site, here.


Mark Helfen is a journalist, writer, and marketing consultant. He can be reached at
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Wednesday, June 3, 2009

Thanks to Nearsoft for hosting the food at our May meeting.

Here is a brief introduction, and a short video about them.

Nearsoft is a software product development, with operations in Mexico. We work with ISVs, SaaS companies and consumer-facing sites.

Clients come to us because they are,

  • Disappointed with offshore development
  • Frustrated that they can’t find developers with the right skills
  • Upset because they can’t scale their software development team
  • Tired of late product releases and poor quality

As a startup you can not afford to do it more than once, it has to be done right the first time. We help launch your product.

Thanks to our software engineering approach and experience, we help our clients get their products (and their companies) out to market faster. And we have the track record to prove it, with clients like INgrooves, TierraNatal, Axolotl, TIBCO, and others.

Here is a brief video introduction: