When it comes to lead distribution, we need to stop focusing on who gets the lead. And start asking, what’s our strategy?
The challenge with lead distribution is the same challenge you face when splitting up any finite resource. Let’s imagine for a moment that you have a delicious pie, and you want to share that pie with your friends. Do you give your hungriest friend the biggest slice, or do you give divide the pie into equal slices?
Sales managers face this dilemma every day when new leads come into the system. And many have devised clever ways to quickly assign new leads to the right rep.
Indeed, there are now so many ways to distribute leads that it’s hard to determine which methods are right for which teams. From randomly assigning leads to relying on complicated algorithms, lead distribution strategies have multiplied as sales itself has gotten more sophisticated.
In this post, we dive into four of the most popular lead distribution methods, explain how they work, and outline the pros and cons of each strategy.
Does it really matter how leads are distributed to reps?
Yes, it really matters. Implementing lead distribution systems have been shown to positively impact lead volume, contact rates, and conversion rates.
A recent study found that companies utilizing at least one automated distribution method had an 87% higher conversion rate than those that manually distributed leads. What’s even more impressive, the same study found that using multiple automated distribution methods increased conversions by up to 107%.
To understand how lead distribution works, you need to keep two factors in mind: Speed and compatibility.
Most sellers instinctively understand why speed matters. Leads can be fickle, and capturing their attention often requires moving quickly. Online leads, for example, can go cold within just 90 minutes.
Lead distribution methods, like the ones we describe below, are designed to deliver leads to reps quickly. By taking the guesswork out of the top of the funnel, lead distribution methods ensure that reps know which leads to pursue and when.
Compatibility refers to the match between the rep’s skills and expertise and the lead’s needs and requirements. High compatibility means that the sales rep assigned to any given lead has the right information and skills to qualify and convert that account.
By matching leads to reps, you increase the likelihood that the rep has the information necessary to close the sale. If your leads vary by industry, account size, or location, taking into account compatibility could significantly improve the efficiency of your sales team.
What kind of lead distribution methods are available?
Enterprise sales stacks have evolved enormously in the last few years. New automated distribution methods have gradually pushed manual distribution to the side.
While we mostly focus on automated lead distribution methods below, we also include manual lead distribution as an option for those who are starting on a smaller scale.
The four methods we cover are:
Let’s use our pie analogy from earlier to illustrate how these methods work.
Push-based lead distribution
The name says it all. Push-based lead distribution is where you automatically “push” leads to sales reps based on predefined criteria.
Every person gets a piece of the pie. The slices are distributed in the same order until the pie is finished.
- Pros: The round robin method is very easy to understand and even easier to implement. It’s inherently “fair” since everyone gets the same number of leads. Because you’re sharing the workload evenly, response rates should be uniform.
- Cons: While it’s easy to understand and implement, it might not be the most effective method. Round robin doesn’t take into account each rep’s specific area of expertise or particular skillset. The method optimizes for equitable distribution over compatibility.
People who meet certain performance criteria, say hunger, get the biggest or best slices. All the slices are distributed based on predefined tiers, and individuals in certain tiers get bigger or better slices.
- Pros: By giving your highest-performing sellers more or better qualified leads, you optimize for conversions. It also rewards higher performing reps for closing more deals and can encourage reps to move toward higher volume or higher revenue sales.
- Cons: It can result in “lead hoarding” and reinforce the inequitable distribution of leads. By having a consistent flow of more or better qualified leads, top producers will continue to close more deals, and the divide between top and underperforming reps will grow. It can also reduce response time because your top performers will have significantly more leads than anyone else.
The group is divided into separate tables by geographic area. Each table gets their own section of pie to distribute among their sub-group.
- Pros: Segmenting leads by region allows reps to leverage regional differences to establish relationships and nurture accounts. Additionally, region-specific methods resolve certain geographic issues like differences in time zone and localization requirements.
- Cons: Some regions may not be as lucrative as others, so certain sub-teams may close significantly more deals or revenue than other sub-teams. Region-specific methods also limit your team’s flexibility. For example, if you see a sudden spike in activity in one region, your reps trained to sell in other areas may not be equipped to help out.
Pull-Based Lead Distribution
Pull-based methods enable sales reps to take on new leads at their own pace. Because leads aren’t auto-assigned, it’s up to sales reps to work quickly and efficiently.
Each person at the table picks their own slice of pie and eats at their own pace.
- Pros: Cherry picking ensures that the most qualified leads get responded to first since reps choose their leads among the existing pool. Reps manage their own workload and are incentivized to move quickly to claim the best leads. Competition is high!
- Cons: While highly qualified leads get pulled quickly, those that may be harder to close or have a smaller deal size often end up at the bottom of the barrel. You risk leaving leads untouched for several cycles before a sales rep picks them up.
The pie is divided into slices and then hidden from view. Each person at the table selects a slice at random.
- Pros: Because leads can’t be prospected before being claimed, all leads have an equal chance of being pulled by a sales rep. Like with the Cherry Pick method, reps manage their own workload and only take on as many leads as they can handle.
- Cons: Because reps aren’t incentivized to work quickly to get the best leads, you may find the Blind Pull method lengthens your sales cycle. Additionally, you have no ability to match leads to reps based on their specific areas of expertise.
As soon as a slice of pie is cut, the slice is placed on the table for people to grab. The first person with a hand on the plate gets the slice.
- Pros: The shark tank method can foster healthy competition. It ensures every lead receives immediate attention, as any available rep will attempt to claim the lead.
- Cons: All reps get notified even though only one gets the lead. If there’s too much competition, morale may decrease among those who aren’t as quick to claim leads. The shark tank method can also result in “lead hoarding,” with rep grabbing more leads they can handle.
The group is divided into separate tables based on predefined criteria. Each sub-group receives a section of the pie, and each member of that group has a chance to claim one or some of the available slices. The first person with a hand on the plate gets the slice.
- Pros: Leads are matched with the group of reps best suited to close those types of deals. Competition remains high and reps remain incentivized to move quickly since each rep competes within his or her group to claim the lead.
- Cons: Like with the Shark Tank method, this method can result in low morale if there are too few leads and too many reps. It can also result in “lead hoarding” for sales teams that enforce strict quotas.
Hybrid distribution blends push- and pull-based methods. For example, if you have sales reps that handle both inbound and outbound leads, you might rely on push-based distribution for just inbound leads and use pull-based distribution for outbound leads
Using our pie analogy, people at the table experience the pie in two ways. They get to choose some of their slices, while other slices are given to them.
- Pros: Hybrid distribution allows you to blend the incentives of push- and pull-based methods. While pushing leads increases response time, allowing reps to pull leads ensures that reps only take what they can handle.
- Cons: Hybrid distribution can often be confusing for reps. Reps may not understand when they need to pull leads and when they should wait for leads to enter their queue. If not implemented correctly, hybrid distribution can result in slow response time for pulled leads as reps work through pushed leads.
If you have a new sales team or prefer to match reps to leads, you may decide to use manual lead distribution. Manually assigning leads gives you complete control over the pipeline.
Using our pie analogy, the host decides which slice each person gets, and each slice is given away as the pie is cut.
- Pros: You can match leads and reps based on any criteria you deem relevant. You know your sales reps better than any CRM or lead distribution platform, and your understanding of any specific rep’s skills or expertise can help to increase the conversion rate and time to close.
- Cons: Because manual distribution requires you to work through leads and reps on a case-by-case basis, it’s often slower than the automated distribution methods described above. You may find that your lead volume outpaces your ability to match reps and leads.
How do you choose the best lead distribution method for your team?
With all the options for implementing lead distribution, it may seem impossible to choose one. The “right” method, however, depends entirely on your organization’s goals, culture, and selling process.
We recommend starting the selection process by answering the question, do I want to optimize for speed or compatibility? Pull-based distribution methods like Shark Tank work to increase response time. Push-based distribution methods like Top Producer, on the other hand, help match reps and leads. You may even decide to test several methods or blend pull- and push-based methods.
Ultimately, the best method depends on what works for your team. The method you pick should allow your sales team to respond quickly and close deals effectively. Remember to keep on testing and automating as you scale. What works with two reps won’t necessarily work with 20.
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This post was first published on April 19, 2016. It was last updated on September 5, 2017.
image credits: jefferyw, steve snodgrass (2), NCDOTcommunications, Tilemahos Efthimiadis, Amanda Slater, Clive Darra