Contact Decay Erodes the Foundations of Commerce
November 24, 2014
A colleague, Manoj Ramnani, recently said to me that “contacts are the foundation of commerce,” and I was taken aback. Having spent more than a decade and a half heading sales and marketing departments in the U.S. and abroad, I’ve dedicated thousands of hours to prospect- and customer-interaction, and to hear my work validated—no longer “just a salesman or marketer” but, instead, one who facilitates and interacts with the very foundation of any successful business—was quite heartening.
Unfortunately, as the landscapes of technology and economics change, so too does the nature of the workforce, the nature of getting in touch, the nature of contacts. When I started my career over two decades ago, people joined companies on career-paths, committing 10, 20, sometimes even 30 years to one business. If, for some reason, their contact information went out-of-date, it was a simple as calling up the business and determining a contact’s new role. Unbelievable as it sounds today, there were no cell phones on business cards or emails back then…
Those simpler days are over. Given that now the average person changes jobs every 3 years, salespeople and marketers are faced with the reality that the contacts they depend on—that determine their livelihoods—are decaying at a rate of approximately 30% per year and that any given business’ CRM and Marketing Automation Systems are upwards of 32 percent inaccurate.
As you can imagine, this creates tremendous disadvantages for both marketers and those in sales. According to research conducted by CEB, approximately $19,000 marketing dollars are wasted per company per year on Marketing Automation Software. This fact coupled with the inevitability of skewed marketing campaign data resulting from out-of-date contacts, leads to as much as 5.1 percent of an average annual marketing budget being wasted. Marketing targets are missed, often being developed from those skewed campaign analytics, and brands are suffering as a result. Ultimately, customers lose faith in ill-conceived messaging.
And that’s not to mention the effects of out-of-date contact data on those who interact with customers most directly: sales departments. For example, according to Marketing Playbook, it costs $8 every time a salesperson dials the wrong number. When doing the math, $8 x 32% of a company’s contact data yields huge wastes in budget (approximately $10,500 per sales rep). But it doesn’t stop there. In addition to the incredible expense of cold calling, administrative costs are rising as sales executives lose faith in the contact data on hand. Per Jill Konrath, the average sales executive now spends upwards of 6 hours a week prospecting on LinkedIn (News - Alert) and related sites when, really, they should be able to plug, play, and sell from the contact data in the CRM.
The real kicker for sales departments lies in the fact that, despite increases in budgeting, man-hours, and prospecting, conversion- and customer-retention-rates are in decline due to data-leakage and inconsistency. Considering both that 91 percent of new prospect contact data never makes it into the CRM and that businesses typically have incorrect information for at least 2 of the 7 people involved in large purchasing decisions, it’s clear that contact problems extend far beyond data decay and into importing inefficiencies and failures to update records.
Here’s a story I heard just recently that illustrates my point: the marketing department for a publically-traded, multi-billion dollar company came up with an idea for a campaign in which they’d send a copy of their new infographic poster to top prospects and customers, and asked each of their sales reps to put together a list of their top 100 contacts. It took the rep I spoke with 5 hours to get the list right with the correct mailing addresses. 5 hours. And this company has a sales force of just over 1,000 reps. By not having up-to-date, accurate contacts, the marketing department experienced over $400,000 of unaccounted costs for the campaign, and that’s just the cost of the time they spent. It doesn’t account for the number of sales lost during the (approximately) 5,000 wasted selling hours.
Taking both the marketing- and sales-teams contact problems together, it’s obvious that businesses are hemorrhaging money and, more importantly, losing customers. Currently, few solutions exist aside from hunting through emails for updated contact signatures, Googling until salespeople can’t Google (News - Alert) anymore, or purchasing lists of contact data that are often recycled and are, typically, upwards of 50 percent out-of-date.
It’s difficult to comprehend that incorrect phone numbers or job titles can have such an impact on businesses, but they do, every single day. Between marketing departments wasting upwards of 5 percent of their annual budget and sales departments losing an average of $10,500 per rep per year, it’s time to reconsider how we approach contacts in the digital age. Otherwise, the maxim that “contacts are the foundation of commerce” may begin to sound more like a death knell.
Edited by Stefania Viscusi
Article comments powered by