Art
Siegel

Increasing The Conversion Of Telephone Sales Leads

Many marketing campaigns are designed to generate telephone inquiries. Then it is up to your telephone sales reps to qualify those leads and convert the best of them into customers. This case study describes a process used in a major call center for Increasing The Conversion Of Telephone Sales Leads. 

This case study describes events that took place in a real company. The name of the company and a few minor facts have been changed to preserve confidentiality.

Company Background

Megafund (not the company's real name) is one of the nation's largest mutual fund providers. The majority of sales to new customers are produced through the company's inbound 800 lines. Megafund prospects read an ad or article about one of the company's funds and call the 800 number. Some new customers are referred by friends or relatives.

Investors must read a fund's prospectus before the company can accept their money, so new callers cannot be closed on their first call. The goals of the telephone representatives are to answer the prospect's questions, provide them with information about one or more Megafund mutual funds, and then send out the prospectuses and application forms so the prospect can invest.

The Problem

Of the many thousands of calls that came in from new prospective investors, about 14% were converting to customers. While most companies would be delighted with a 14% conversion rate, Megafund management believed the number could be improved, and every 1% increase would represent a very substantial enhancement to their bottom line.

The question was what the phone representatives, who were already very well selected and trained, needed to do differently to convert more callers to customers. As if this were not enough, Megafund added three more requirements to the effort:

• The goal of improved conversions would have to be accomplished without resorting to any form of sales pressure.
• There must be no increase in customer complaints of any sort. Rigorous before-and-after customer satisfaction surveys would be used to verify this.
• The average call length, now 270 seconds, should not be increased.

What Was Done To Address The Problem

Megafund, like most companies in their business, tape records all investor calls. They do this to protect both the customer and Megafund in case questions arise later about what took place during a call. Our first step was to have a random selection of some 200 prospect calls copied onto standard audio cassettes for analysis. The tapes included calls handled by many representatives from many different types of customers throughout the country over a period of time that included both up and down markets.

We listened to each of the tapes and captured answers to these questions:

1. What (in our opinion) was the prospect trying to accomplish?
2. Did the representative correctly recognize and respond to the prospect's needs and goals?
3. What did the representative do well to meet this prospect's needs?
4. What could the representative have done better to meet this prospect's needs?

We also transcribed verbatim the prospect's opening statement or question and the rep's first response.

The data and conclusions from this research were quite complex, resulting in a lengthy report, but a few major patterns emerged. Customer openers could be divided into two broad categories:

• About two-thirds were people who began with a brief question, such as, "What is the current rate on your Intermediate Bond Fund?" or "I'd like some information on the Blue Chip Fund."
• About one-third of customers would start by describing a need, "I have about $12,000 coming out of my company's 401k plan that I need to re-invest within 30 days, and I'm interested in a fairly aggressive stock fund."

In general, the reps handled this second group quite well. When the prospect began by immediately telling his or her story, the reps harnessed their extensive training in Megafund products and investing to offer a range of suitable mutual funds and explain how they might apply to the prospect's situation. On our score sheet we could write in:

1. Exactly what the prospect was trying to accomplish.
2. The representative correctly identified the prospect's needs.
3. The representative generally did a good job of offering solutions that fit the prospect's needs. (On points 2 and three, of course, there was some variation in quality from one representative to another. Some did a better job of listening than others, and some were better at suppressing their own biases and preferences.)
4. On almost every call we could find some details which might be improved, but most were minor.

It was in the other two-thirds of calls, where the prospect simply asked about a product or asked for a rate, that the reps performed less well. Let's take one common example: The prospect begins with, "What's the rate on the Megafund Intermediate Bond Fund?" or "I'd like some information on the Blue Chip Fund." Individual reps responded in two different ways to this.

About half of them would respond with a verbal presentation of the features and relative advantages of that fund, using information they had been given in training, as well as approved language from the prospectus. Then, if the prospect had no further questions, the rep would offer to take the prospect's name and address and send out the investment kit for that fund. Sometimes that was the end of the conversation. Sometimes the prospect would go on to ask more questions about that fund or other funds, and the rep would answer the questions and conclude by offering to send the kits.

About half of the reps, given the same prospect opening: "I'd like some information on the Blue Chip Fund," interpreted this as a request for printed information only. They'd respond with some variation of: "Sure, I'd be happy to get that right out to you," and then get the prospect's name and address. The reps would often follow this with: "Can I help you with anything else today?" Most prospects said no thanks.

Our score sheets for these calls were pretty dismal:

1. We didn't have enough information to guess, in most cases, what the prospect was trying to accomplish.
2. We doubted that the rep could guess either.
3. Although the reps were polite, they didn't do much to help the prospects with their decisions.
4. In terms of what they could do better, our answers were numerous.

What Happened To Improve Results

Lest we paint too bleak a picture of selling at Megafund, there were a few representatives who handled their calls very well, and they served as the model for the direction we recommended for all of the reps. The essence of what the bests reps did included two major points:

1. When a prospect asks for information, don't just rely on the printed word to communicate it. Always give a verbal presentation before offering to mail anything. Sales literature, particularly as complex as a mutual fund prospectus, can be too difficult to understand. With a verbal presentation, you can communicate in plain language, and you have an opportunity to make sure the prospect really understands it.
2. Never present product information, even if the prospect asks for it, until you understand what they are trying to accomplish. Your product presentation makes a lot more sense to the prospect if you can clarify how its use fits into their needs. In the case of a mutual fund, many features work quite differently if it is for a retirement account, a child's education fund, or a current source of monthly income.

When we first discussed these recommendations with some of the representatives, they agreed to the first point. Unless the prospect was adamant about only wanting literature sent, any request for information should be treated with a verbal response as well as literature.

On the second point, though, many of them balked: "Our job is to service the customer's needs. If they ask for information, we can't refuse to give it to them until we ask about their needs." Although we didn't agree with the reps, we knew we would have to deal with their discomfort over turning this type of call around.

We went back to the tapes of past calls, and there was the answer. Every time a representative sent out literature, they asked for and typed in the prospect's name and address, in addition to their daytime and evening phone numbers. Then they asked the prospect how they had heard about Megafund or the specific fund in question. This data is used by the marketing department to evaluate the success of various advertising and promotional programs. Since the reps were already asking this question on every call anyway, we asked Megafund management: "Why not ask this source-of-the-lead question at the beginning of the call rather than at the end, and use it as a way to learn more about the customer?"

This is an example of the way the proposed type of call would go:

Rep: Good morning, Megafund. How may I help you today?

 

Customer: I'd like some information on your Blue Chip Fund.

 

Rep: Yes, I'd be happy to provide that for you. By the way, how did you happen to hear about the Blue Chip Fund?

 

Customer: Well, I was reading this article in the latest issue of Money magazine on top performing stock funds, and it was in the top 10. I thought I would call for literature on all 10 of them, so I could make a comparison.

 

Rep: That makes a lot of sense. There really are so many choices. Have you invested in stock funds before?

 

Customer: No, I haven't. I only have CDs, but . . . (prospect goes on to tell their story in some depth, aided by good follow-up questions from the rep).

A quick test of this approach with a few hundred prospect calls showed that none of them minded the rep asking this "source of the lead" question, if it was handled this way. And we quickly found a whole array of potential responses to the source question, such as:

Barrons or Investor's Business Daily article
Told the rep this was probably a relatively experienced investor whom the rep could speak with at a more technical level.

 

A stuffer for the fund was in their latest Megafund statement
This was a current customer who called the new customer department instead of the one that handles current customers.

 

My accountant recommended it
A potential need to speak with the advisor for more information about what the fund would need to accomplish.

After an additional series of tests, we built a list of likely responses to the source question, what they suggested about the prospect, and how the rep could respond. For example, if the prospect said: "There was an advertisement for the fund saying it is good if you're saving for a child's education," the reps would ask how many children the prospect has, their names, and the number of years until college. If the prospect said: "There was an article about in Inc. magazine, " the rep would say: "I missed that article, what did it say?"

The reps were given the freedom to phrase their responses in their own style, as long as they used follow-up questions that were appropriate to what the prospect had said.

The Results

After these tests with a small group of representatives, Megafund management agreed to a large scale test. In one of their regional telemarketing centers, 40 representatives were divided into 2 groups of 20 each. Group 1 was told to keep doing what they had in the past without change. Group 2 was trained in the new methods -- always find out the needs before presenting (using the lead source question if necessary), and always give a verbal presentation before offering to send literature.

The test continued for one week, and data was kept for several weeks thereafter to allow time for prospectuses to be mail and read and for prospects to make their investment decision. The results showed that Group 1 continued to convert about 14% of leads into customers, but Group 2 converted 28% of leads, far more than expected. After that test, all of the company's representatives were trained in the new method, resulting in similar high average productivity per rep.

But what about the company's other goals?
The new approach involved no sales pressure. If fact, the more consultative approach reduced the tendency of some representatives to enthusiastically "puff" their favorite funds.

Call length increased from an average of 270 seconds to 300 seconds. More time was spent asking prospects questions, but much of that time was saved by reducing presentation of products that did not meet the prospect's needs. Management agreed that the results more than justified the additional time and reduced pressure on the reps to minimize call lengths.

Customer surveys indicated that customer satisfaction went up. The reason was that customers appreciated the more proactive approach to meeting their needs, rather than the reps just reactively answering their questions.

How You Can Apply What We Learned To Improve Your Sales

For all companies, the majority of new prospects who call simply ask for information without explaining their situation. Sending out literature or even answering their request verbally is relatively ineffective unless you know more about the prospect.

One good question at the beginning of the conversation, such as: "How did you happen to hear about us?" is a good springboard to finding out the prospect's needs. It is easier to ask and results in less resistance than: "Tell me what you are trying to accomplish," but it leads to the same data.

Once you know where each prospect is trying to get to, you know how to explain your products and services in terms of their needs, you know exactly what literature to send, and you know what to suggest as a next step.

SeaBird Associates Inc
3011 NE 7th Drive
Boca Raton, FL 33431
Phone: 561-750-9233
E-mail: Art Siegel

About Art Siegel