How Data Decay is Killing Your Pipeline

Building a sales pipeline in the B2B space is a long-term investment. Even for businesses with relatively short sales cycles, keeping a few months-long pipeline is the norm. For others, it might be years. This is evident from the typical sales process of most businesses that looks something like this:

  1. You spend tens of thousands of dollars on an event or any marketing campaign to generate a large number of leads
  2. You score and qualify those leads to get a handful of opportunities
  3. You then spend the next few months engaging and nurturing those opportunities hoping to win a few deals.

In most cases, buyers are already contractually committed to other solutions and thus have a long waiting time before they can meaningfully engage for a new purchase. “I loved your product demo. Our contract with XYZ is expiring in August, so I’d love to get in touch with you then” is a kind of response most SDRs have heard on multiple occasions.

Sounds pretty standard, right? But here’s the problem – the months or even a year that a lead takes to convert into a deal is fraught with risks.

What if in that period your POC leaves the company? What if you negotiate with a prospect to sign the deal next month, but by that time, they no longer work there? This is just one common example.

From generating leads to qualifying and follow-ups, data decay plays a detrimental role in sustaining your pipeline. In many cases, a lead is only as good as their contact information. You miss their phone number then you miss that opportunity. You might build a pipeline with massive investments in marketing, but it would yield little results if data decay continues to corrode it.

On average, B2B contact data decays at the rate of around 30% every year. In turbulent times like during the pandemic, it goes even higher. So if we take a conservative figure of 30%, that means you will lose track of 30% of your pipeline designated for next year due to outdated data. Depending on the size of your business, it could be millions of dollars in lost revenue. This is the reason most businesses invest in some kind of data enrichment solution to minimize those losses.

For example…

Let’s take a simple example to get a better understanding of how data decay affects various stages of the sales process and how data enrichment counters those risks:

Suppose you attended an event and got 100 business cards/forms filled. You get back to the office and enter those 100 leads into your CRM. Typically, the information on a business card includes name, company name, job title, phone number, and email address.

  • At this point, if you have an enrichment service, you can get additional information like the details of their company, the technologies they use, any recent news, other decision-makers, and more.

Once you have that data into your system, typically you’ll start outreach to score and qualify those leads.

  • With the right firmographic and technographic data, you can do half that process without even picking up the phone or shooting a single email. For instance, if your product works only with Salesforce and that company doesn’t use it, there is no point in calling or emailing them.

Let’s say 20 of those leads turn into qualified opportunities, and 10 of them ask you to follow up after a couple of months as they can’t purchase immediately.

If you have data enrichment, you’ll be able to contact the right decision-makers during the entire sales cycle, but in its absence, you will lose track of several opportunities and significant revenue.

Going by the famous 1-10-100 rule that shows the escalating cost of action against time, it would take a dollar to verify a record as it gets into the system, $10 to clean and update it later, and $100 if nothing is done.

To put it inversely, if you spend $10,000 on data cleansing and enrichment, you are saving at least $100,000 to a million dollars in the long run. And that’s just one aspect of it.

As data decay deteriorates your sales pipeline, it also negatively affects your overall sales performance. With salespeople calling wrong numbers and having their emails bounce, the connection and close rates take a major hit which further impacts the bottom line.

Overall, while building a pipeline remains the core of a solid business, defending that pipeline from constant decay is the secret of sustaining your business. It’s simply not feasible to make massive investments in lead generation and then lose those leads due to bad data.

If you wish to learn more about the problem, we highly recommend this free eBook on the perils of bad CRM data to understand the full scope of the issue.

You can also schedule a free demo with our sales team to get a free quality assessment of your CRM data and how SalesIntel can improve it.