Why Individuals Fail
Lead Generation Requires High Level Skills
As we've described elsewhere, prospecting to high-level business decision makers requires high-level skills. You have to know how to get past gatekeepers and voice mail. You have to know how to get attention and stimulate initial interest. You have to know how to ask good questions. And you have to know how to uncover the needs that drive demand for your product, create urgency, and get the prospect to want to continue the conversation.
If you were hiring someone to do this job, would you know what skills and experience to look for?
If you're like most companies who come to JV/M, you've probably had one of two experiences. Some companies have been able to find a good telemarketer, but that person left for some reason, and now you can't find another good one. So you know what "good" looks like, but you can't replicate it. Other companies who come to us have tried to hire a good telemarketer, but haven't been able to find one who works out. We call the first type lucky, and the second type typical.
The fact is that less than 5% of telemarketers actually know how to make effective B2B calls. That means that if you run an ad for a telemarketer, only 1 out of 20 resumes - at best - are going to be worth reading. Would you even know what to look for? Most people don't; which is why some companies are lucky once, but no one is lucky twice. The basic concept of hiring a telemarketer is fatally flawed if you don't know what to look for.
Lead Generation Is a Team Sport
The other reason that individuals usually fail is that "it takes a village." That is, lead generation requires a good plan, list research, coaching, and a system. Do you have the management experience to make it work? Do you have access to good lists? Do you even know how to coach someone, or even have the time to do it?
One of the secrets to an effective sales program is the interaction between the salesperson and the sales manager. The same holds for lead generation. If you don't have someone managing the telemarketer who knows what he's doing, the program is going to fail. So right off the bat, you need at least two people, not one.
And if the manager doesn't have specific experience in high-level B2B lead generation, you're lost again. Call center experience in a manager is actually negatively correlated with success in B2B, by the way.
What Matters is Cost-per-Sale, Not Cost-per-Hour
Many people believe that paying an individual $10/hour is a lot cheaper than paying a professional firm $40/hour. And that would certainly be true if we took the same amount of time to generate a lead, the quality was the same, and the close rate was the same. The problem is, that never happens. A $10/hour person who takes 10 hours to generate a lead that has a 10% probability of closing costs more than three times as much as a $40/hour person who takes 2 hours to generate a lead that has a 25% chance of closing.
Here's the calculation:
| |
Individual |
Team |
| Targets |
100 |
100 |
| Dials/contact |
x 10.0 |
x 2.5 |
| Dials Needed |
1000 |
250 |
| Dials/hour |
÷ 20 |
÷ 8 |
| Hours Needed |
50.00 |
31.25 |
| Appointment Rate |
5% |
15% |
| Leads |
5 |
15 |
| Hours/lead |
10.0 |
2.1 |
| Hourly Cost |
x $10 |
x $40 |
| Total Cost |
$500 |
$1,250 |
| Close Rate |
10% |
25% |
| Closes |
0.5 |
3.75 |
| Cost/close |
$1000 |
$333 |
The fact is that:
- It will take an individual longer to get a decision maker on the phone than someone who has the proper training, experience, strategy and management
- They will get fewer decision makers on the phone
- Their dial rate may be higher, but they will persuade fewer decision makers to be interested, and
- The interest level will be lower, and therefore the close rate will be lower
As a result, your net cost will be much higher. It will take longer to achieve your sales goal - if you ever do. And you will have lost many months in the process. You may also trash your market, and lose some of your salespeople along the way.
Still think that $10/hour is less than $40/hour?
