The Simple, Ugly Truth About Vendors' Efforts In Lead Generation

Why is that? We all know vendors spend an incredible amount of money in hundreds if not thousands of different ways attempting to generate leads for partners. It's a valid quest, so surely some of it must pay off?

It does, to a small degree. Closer examination of this issue, however, indicates clearly that solution providers are better off generating their own leads.

A research study completed by CMP Media's Technology Solutions Group speaks volumes on this issue. (CMP Media is the publisher of CRN.) Solution providers tell us that 69 percent of all sales are to current customers, signalling that 31 percent go to new accounts. Those figures indicate a healthy business, so if your own sales breakdown is close to those numbers, you are in good shape.

It gets even more interesting when you delve into that 31 percent figure. Our research shows that a whopping 79 percent of sales to new customers are the result of solution providers' own efforts, while just 21 percent are derived from manufacturers' efforts. To complete the algebraic equation, this means only 6.5 percent of solution providers' sales are the result of manufacturers' lead-generation efforts.

There are, of course, all sorts of variables involved. One could argue, for instance, that the reason manufacturer-produced leads perform so poorly is because solution providers don't follow them up as diligently as they might their own leads. There may be some truth to that, but I haven't seen an enormously successful lead-generation program for the channel in 15 years.

Despite the numbers, most solution providers still want more leads from manufacturers. They make that known, and manufacturers comply, so we have a bit of a vicious cycle here.

From my perspective, the research indicates that the opportunity cost to a solution provider of chasing a vendor's lead vs. those generated internally is significant.

It's a natural tendency for many solution providers to push manufacturers to supply more leads because there is always a hope that they might reduce sales cycles and generate quick business. The reality, of course, is something else, but we all want to hope for a better future on this. I also believe manufacturers sincerely want to generate quality leads for their channel partners, and many have put in place elaborate mechanisms to not only drive but to monitor lead-generation efforts.

The trouble is there are many things that can happen to sour a potential deal that cannot be easily measured. For example, a solution provider may approach a prospect only to hear that budgets were cut or the project was put on hold. It's extremely difficult to gauge under this scenario whether those statements are legitimate or if the lead just was never very good to begin with. It's also impossible to know if the "new customer" was merely using the manufacturer and the solution provider to keep its current supplier honest or drive prices down.

We all have to make choices about where to prioritize our resources in business. Sales resources are always best-placed where the effort has the greatest potential to pay off.

So far, for solution providers, that effort sure seems to be best-placed on leads generated internally. I'm not convinced this is ever going to change. That's something to keep in mind the next time you ask a manufacturer to pass you more leads.

Make something happen. I can be reached at (516) 562-7812 or via e-mail at rfaletra@cmp.com.