Tag Archives: recycling buyers

Think Your Market is Too Small? Try Recycling.

I was speaking with an executive the other day who repeated the concerns of her management team that their existing market was too small to sustain their growth.

Expanding into new markets may look enticing, but there are large risks and costs associated with this strategy.  As it turned out in this case I was able to show the company that their market was large enough to provide growth opportunities for the next 3 years.

A little back of the envelope math indicated a bleak picture at first. Considering the size of their available market and their current conversion metrics for demand generation they simply couldn’t reach their revenue target. They were burning through too many prospective buyers and before long every prospective customer in the market will have been contacted and perhaps even placed into their sales funnel.

Their conversion rates were respectable, too. Only incremental improvement could be expected. It was when I asked about buyer recycling (lead recycling)  that the answer started to emerge.

Many marketers and salespeople put all their energies into generating leads and working to progress these buyers through the funnel. But, a percentage of buyers always leak from the funnel at every stage. If your conversion rate at one stage in the funnel is 40%, this means 60% have leaked–they haven’t progressed. For whatever reason they weren’t willing or able to move to the next stage in the funnel at that time. Later a portion of these leaked buyers will be ready to re-engage with you (if you let them).

Sadly these buyers who leak for whatever reason are frequently forgotten by marketing and sales.

The company I was speaking to wasn’t actually ignoring their leaked buyers, but had a procedure in place to follow up with leaked buyers every 6 months. Ah-ha!

Using a sales funnel calculator from MathMarketing (click for  lite version of this calculator) I was able to show the company that by recycling their leaked buyers at every stage after 4 weeks rather and after 24 weeks they’d need 7,000 fewer fresh names over a three year period.

This meant the market was large enough if they could execute effective marketing and sales strategies for recycling the leaked buyers back into the funnel–certainly a much easier and less risky proposition than expanding into new markets.