Outsourced Lead Generation

Telephone

I wrote this a number of years ago – the advice still holds up.

As you launch and grow your company, you will face a challenge common to almost all early stage companies: how do you grow sales rapidly and in an efficient manner?  There are three variables that you can affect to make this happen:

  1. Broaden coverage
  2. Shorten the sales cycle
  3. Increase sales yield

In this post, I will look at one of the ways to address the first variable – broadening your sales coverage –  by hiring an outsourced telemarketing service.   Larger companies often run lead generation teams that are separate from their sales organization (often under the aegis of their marketing group) or outsource   the effort entirely so this approach, on its face, makes sense.

There are a number of advantages to hiring a telemarketing company to generated leads for you.   Most important, you can immediately broaden your market coverage by taking on as many bodies as you need to make calls and send emails.  Secondly, outsourcing gives your flexibility: you can ramp up or down as budget or needs demand.  You don’t have to worry about the time and money it takes to bring a fulltime employee on board, train them, get them calling, and then worry about what to do with them if things slow down.  Thirdly, and related to this latter point, you can manage your sales costs more closely by only retaining (and paying for) the calling horsepower you need, when you need it.

You can manage sales costs through the way in which lead generation services are paid for.  When you outsource your lead generation effort, you may pay to have a certain number of leads called on each week, resulting in your hiring a telemarketing FTE for a specified number of hours weekly.  Alternatively, you may pay for warm leads delivered or, in some cases, for appointments set.

What are the challenges with outsourcing your lead generation efforts?  There are several.  First, the quality outsourced lead generation services is all over the map and you often don’t know what you are buying until you are well into the effort.  If you pay at lower end of the pricing range, the folks used to make the calls tend more to the “warm body” designation than “focused, engaged, telephone representative.”

Second, with an outsourced lead generation effort, your sales team loses a layer of market insight that would have otherwise been gleaned by grinding their way through a lead list.  Because your will be tweaking your go to market strategy based on what you learn about the market, early on, you want your sales team as close to the market as possible and calling helps them here.

Third – and related to the second issue , when you outsource your lead generation effort, it becomes more difficult to nurture leads at the beginning of the buying cycle.  If your team is doing the calling they can pick up on inflections of interest that are worth tracking, ones that an outsourced caller might miss or neglect to pass on to your team.

Finally, it is difficult to align incentives with a lead generation firm to get the actual results you need.  If you focus on call volume (e.g. by paying per dial or for an FTE who will make a set number calls), you’ll get the calls but they may not be very high quality.  If you focus on appointment setting (e.g. by paying for appointments) you’ll get the appointments by may find that prospect knows and cares little about what you do when you get them on the phone.

I am not sold on an early stage company outsourcing its lead generation effort.  However, if you do choose this route: 1. Vet the individuals who will be calling for you – make sure you get what you pay for; 2. You get what you pay – if you are getting a screaming deal from your provider you may be getting less focused or lower quality callers; 3. Manage the process closely by providing calling scripts, and ensure that are you receive simple, relevant activity reports; and 4. Do you best to align incentives so that the service providers focuses on what it is that you actually want to achieve.

BTW, I interviewed Dan McDade in late 2012 who runs PointClear, which offers outsourced lead nurturing services and does so in a way that I think genuinely adds value to the sales process.

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