B2B Sales, Lead Generation and Marketing Blog

Fixed Cost VS Pay-for-Performance – The True Cost of Lead Generation/Appointment Setting

Posted by Vendere Team on Fri, Jul 29, 2011 @ 07:07 AM

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In the world of Lead Generation there are two methodologies that have come to the forefront of BPO services – Fixed Rate (FR) (similar to Fixed Rate costs for a project) and Pay-for-Performance (PFP) (similar to Time and Materials(T&M) costs for a project).

Marketing organizations that focus on Lead Generation usually gravitate towards one methodology or the other.

Let’s say you want to engage a marketing organization to help you with Lead Generation, Appointment Setting, Event Audience Acquisition or Event Marketing. You might be thinking - How do I know which company is a better value for my organization? Which one will provide a better ROI? Which one will be the most thorough and provide the best quality of leads and information? Well here are a couple of things to consider when choosing . . . and then you decide.

Key Points in Determining the True Cost of Lead Generation

Cost per Lead

The average cost of a lead generated by Fixed Rate and Pay-for-Performance:

Fixed Rate

Pay-for-Performance

$350 - $700

$500-$1000

Based on:

1) Expectations - The level of targeted prospects

2) Firm Deliverables – agreed upon, quantifiable, qualifiable contracted deliverables.

3) Paid on monthly basis – good for cash flow

4) Strategic partnership Model

Based On:

1) Perception of lead value

2) Minimal commitment by the customer

3) Full commitment paid up front – bad for cash flow

4) Sub-contracting model

*Data is based upon information gathered from an average of 100+ events and appointment setting campaigns per quarter over the last 4 years

*Some smaller less experienced  PFP organizations might only charge $500 per lead.

Measurable Results

The main object here is to generate well qualified leads that convert into revenue for your organization. There are numerous variables at play, so here are a few.

Fixed Rate

Pay-for-Performance

Dedicated Rep – 100% Focus - Work directly with and for the assigned organization.

Undedicated Rep – Distracted - calling for multiple organizations and decides who fits best once they get a lead on the phone

Qualified Rep – Telemarketing and Sales professionals resulting in low turnover rate due to good base salary, great incentives and organizational culture that focuses on human capital

Mixed Qualification of Reps – Mostly lower qualified professionals due to incentives, base salary and costs associated with doing business

Well Qualified Leads – Effort is made to understand the client’s needs, focus and corporate vision. Not focus on passing leads but providing leads that produce revenue for the client resulting in high conversion to revenue rates

Poor Qualified Leads – Relying on leads to get paid. More like to pass unqualified leads to meet expectations and quota resulting in lower conversion to revenue rates

Support Marketing – Marketing Intelligence, email campaigns and reporting methodologies are all part of the engagement contract

Support Marketing – Separate costs and does not take into consideration reporting methods

Impact – Positive impact on Sales , Marketing and overall operations of the organization.

Impact – Mixed due to the time wasted on poor leads “Dead Wood”. Man hours wasted and undesired ROI results.

Finals Thoughts -
When choosing a BPO services organization, like VenderePartners, to assist you with your Marketing and Sales support efforts, select one that understands how you sell and go to market. It is very important to choose a solid business development company that can provide well qualified leads and supportive information and services that help all participating levels of your organization.

Vendere Partners has over 40 years of inside sales, direct sales and sale management experience that equate into verifiable value for your company’s overall growth. Please take a moment to compare your current Lead Generation, Event Audience Acquisition and appointment setting efforts to ours. Clink on the link below and test drive our lead generation ROI and event marketing ROI calculators. You’ll be truly surprised!

 

Topics: outsourcing, cold calling, tips and techniques

RFI tips for b2b lead generation appointment setting