Why lead-to-sales conversion rates in Life Science are so low and what to do about it
By Marina Hop, Managing Director at Viveo Ltd
The average marketing campaign for Life Science products achieves a lead to customer conversion rate of around 10-20% with similarly low conversion rates at each stage along the customer purchase journey. There is an enormous amount of attrition along the sales funnel. Sales are receiving insufficiently well qualified leads while marketing is working overtime to stuff the funnel in an attempt to meet targets.
Example: Marketing campaign for an established Life Science consumable product:
In this example, more than 80% of leads were not sufficiently well qualified to convert to sales. The marketing team contacted over 30,000 potential customers, created tomes of content incurring cost and time but the result was an overall conversion rate of only 0.03%! Sales reps spent time following up on leads that didn’t produce sales and lost confidence in the marketing process. So what went wrong? In this particular case (as for many Life Science marketing campaigns), it was a combination of factors including a poor understanding of the market and inadequate planning.
What can be done to improve the conversion rates? Using the theory of marginal gains – breaking down the marketing process and then improved each element by a small percentage, allows you to achieve a significant aggregated increase in performance.
Let’s look at 15 elements that underpin key stages in the marketing process to understand how lead quality can be improved.
- Are your sales targets realistic given the size of the audience?
Knowing how big the potential audience is and what proportion are likely to buy will help you understand what’s required in terms of effort to meet the proposed sales target. It’s a good reality check to ensure that the campaign can deliver on its promises. If the audience is small and sales targets are huge, you might be embarking on a futile mission.
Sales targets are usually set in terms of revenue. This is a difficult measure to work with. Thinking in terms of unit sales or number of customers (if you understand the number of units per customer) makes it more concrete and it’s easier to see how many people you will need to contact and move along the purchase journey to achieve the sales target.
- Know who your target customer is:
Deciding who the customer is and where to find them goes beyond broad definitions like “cell biologists” and requires you to get specific about how to identify them e.g. what labs they are likely to work in, what projects they might be involved in and what challenges they are facing. For example, a manufacturer of a cell analyser that produces images as well as phenotypic data that looked a lot like flow cytometer data would need to decide whether to market to Microscopists or Flowcytomitrists depending on the problem the instrument is solving for the customer.
An understanding of how risky the purchase is for the customer will give clues as to how much persuasion will be needed, the means of persuasion and how long it will take. Customer profiling is an important step before any campaign design can begin.
- Establish what category your product falls into:
Do customers know where to find your product? What category do they expect to find it in? To use a supermarket analogy – is it in the chiller or on the shelf? In other words, is it positioned correctly where customers are most likely to look? Is your new cell imager a cytometer or a microscope or something completely different which might take time for customers to find?
- Determine what problem/need the customer has:
Do you have and can you articulate a value proposition which communicates how your product or service solves the customer problem? The messaging that you will use with customers should unambiguously convey the value proposition.
Equally important is understanding who the stakeholders are in the purchase decision making process and crafting appropriate versions of your key message for them as well as appropriate, supporting content.
- Understand the buying journey:
What does the customer do at each stage of the purchase journey? Where do they look for information and what information do they use? How long does it take them to find, digest and act on the information that they get? Going through the steps that the customer will go through at each stage of the buying journey and understanding what information they will need to help them move to the next stage, will inform your content plan and channel mix. Equally important is knowing what signals to look out for to determine if they are ready to move to the next stage.
- Aligning the sales process with the marketing process:
Once you have a compelling value proposition it’s time to craft the story that you’re going to tell. The story needs to evolve along with the customer’s purchase journey. An excellent framework to design the message and accompanying content is Hamid Ghanadan’s content centric model for Life Science and Healthcare marketing. In his recent book, Catalytic Experiences1, Hamid outlines 3 classes of content; Leadership, Education and Persuasion content, each one intended to resonate with the audience at the appropriate point in the audiences’ decision journey. The diagram above shows how the sales funnel and content-centric model are aligned. This enables both marketing and sales to understand what content will be delivered at each stage using language familiar to both parties.
In addition to marketing to customers, marketers also need to market to sales. This is a frequently overlooked part of the campaign process. Ideally there should be a separate campaign plan to educate and train sales on the value proposition, aims of the campaign, messaging, materials being used and tools available to them.
- Know the sales cycle length:
The length and complexity of the sales cycle depends on the type of product being purchased, the perceived risk associated with the purchase, the number of stakeholders involved in the decision making process and the budgetary cycles of the customer organisation. It’s important to know how long the process will take and match your activities to the customer’s timing – don’t try to drag them along the customer journey or you risk losing them along the way. Designing a 12 month marketing campaign for a product with an 18 month sales cycle is guaranteed to fall short.
- Generate persuasive and actionable content:
The type of content that you produce to tell the value proposition story should explain what the customer problem is that you intend to solve, it should educate the audience about the issue and explain why it should be important to the customer. Each piece of content should have a strong call to action for the customer to engage with the content and your company and later with your product. Finally, the content should persuade them that your product, through its value proposition, is the one that will best address the issue in a way that the alternatives can’t. Using a tool such as the Content Matrix can guide you in the choice of content for each stage (available to download from www.viveo.io).
- Find out where your customers look for information:
Where do your customers hang out and what channels do they use to find different types of content? Find the most frequented and credible channels to use to get your content out to the market. Your own channel conversion rates for previous campaigns are a good indicator of what works and can help you to decide which channels offer the best value for money. Be cautious about using industry or B2B data about channel effectiveness as they will not be appropriate for your specific audience. Start by listening to conversations on various social media channels to understand the type of audience that uses each type of channel, what the content of the conversations is and whether it will be appropriate for your campaign.
- Test everything:
Using market research to test the message, content, imagery and channel preferences of the audience is critical to executing an effective campaign but piloting the campaign can be even more effective. Select a small sample of potential customers to test the campaign with before launching it on the whole market. This is also an opportunity to test a range of channels and slight differences in message. Message testing should have been thoroughly checked using market research before the campaign starts so now is the time to tweak rather than A/B test. Follow up with customers who progressed along the customer journey as well as those who dropped out to understand what worked and what didn’t. While this works for products with a short sales cycle, it won’t work for long sales cycle items so here customer research like focus groups or interviews will help. Remember to test combinations of content, messaging, channel and timing.
- Read the runes:
Know what the signs are that indicate when a customer is ready to move to the next stage of the purchase journey and synchronise your content delivery with this. Customers will quickly become frustrated if there is no clear way for them to move forward especially when they are ready to buy. Avoid bombarding them with more content and make sure there is always a clear route for them to take to make a purchase. The ideal campaign builds trust with the audience and gives the customer the tools that they need to commit to the next step in the purchase journey where you will provide different information appropriate to that stage.
For those customers that are not ready to purchase and do need more nurturing, avoid asking them to buy too early. Your earlier research should provide a good sense of what information the customer needs to be able to make a purchase decision. Let the customer be your guide.
- Have a plan to nurture customers:
Many potential customers might not be ready to buy immediately for a variety of reasons such as a lack of budget or delays in funding or lack of internal stakeholder agreement. It’s important to understand what content will keep them interested and also how frequently they need to be contacted to maintain interest without feeling that they are being blitzed with communication. Content which enables customers to visualise how they might use the product is particularly helpful for nurturing customers. For example, case studies, application notes, short demo videos etc. where they can see examples of specific use cases.
Marketing automation really comes into its own for lead nurturing. Review progress regularly and make sure that you clean out any “dead wood” that might be cluttering your database.
- Don’t forget the post sales plan:
Marketing campaigns often focus only on generating leads for new sales. Post sales marketing and installed base marketing are important to keep customers satisfied and ensure repeat purchases. This is particularly critical if you are selling an instrument and associated consumables. Design relationship management into the campaign from the start so that customers are delighted with their purchase and become advocates for the product. Post purchase marketing can drive higher product usage. For example, providing easy training tutorials to get more users trained and using the product or creating a forum where users can share protocols and applications or designing apps for experimental design or data analysis so that a user can work offline while others use the instrument, will drive up utilisation rates and consumable use.
- Learning from what works and what doesn’t:
Even with the best planning, some campaigns hit snags along the way. It’s imperative to track progress against objectives at each stage of the customer journey – doing a post-mortem at the end is important for lessons learned but it will be too late to rescue the campaign. Rather measure progress at least weekly and have a backup plan of alternatives if, for example, a particular communication channel is no working or a piece of content is not resonating. Be able to course correct before you embark on the next stage of the campaign to avoid knock on effects.
- Do the maths:
Regularly compare the cost and conversion rates for different channels to see where you are getting the best return on your investment. Analyse cost per engagement (i.e. those who responded to the call to action) rather than just cost per click and ultimately measure revenue generated per marketing dollar. Compare campaigns against each other to see which subject lines, calls to action, communication length, layout, channels, content types, sources of contact details etc. work best.
Analysing the campaign conversion rates at each stage of the funnel helps you to see where the attrition points are and stay focussed on the end game which is to generate new sales not get clicks or likes or any other vanity metric.
Marketing campaigns for Life Science products can achieve lead-to-sales conversion rates of around 30% with conversion rates of 15% for the preceding steps in the journey. Higher rates are achievable through marginal gains that come from true customer insight, careful planning, continuous monitoring and the flexibility to course correct if needed. How effective is your marketing process in producing high quality sales leads?
Interested in putting this advice into action?
- Catalytic Experiences: Persuading Scientists and Clinicians with Effective Digital Marketing Hardcover – May 1, 2016 by Hamid Ghanadan
Cover Photo from GotCredit.
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