Lead GenerationPosted: June 10, 2008
I recently pinged the market for quotes on lead generation services. Some fo these compnaies have been around for over ten years. I thought that I’d write a blog about my findings.
a) Established agencies will not work purely on comission. They do not have to as they have ten years of proven track record. Any inside sales agent that is willing to work based on success fee alone is desperate and that is a really bad foundation.
b) There is always a initial training phase, which has a cost associated with it. I have seen proposals from $1500 to $5000. This also covers list generation. Depending on your product you are not actually paying for the creation of the list, but rather the right to recieve a copy that has been sold to numerous companies. If the agency says that they generate a list for you from scratch do not believe them.
c) Typical retainers range between $4000 – $8000 per month. I would recommend starting at the lower end. $4000 equates to about 20 man hours per week of work at $50 per hour. $8000 equates to a full time employee. Now imagine both resources sitting next to each other. They both call for an exchausting four hours. How effective is the full timer going to be the next four hours… every day of the week. OK… lets consider the full timer again: $8000 equates to $96000 per year. Minus 15% for employment costs and 20% of company margin. The caller is actually a $62k per year resource at best. So when they sell you experienced resources you can ask how experienced can a $60k per year be? The cold caller is not going to sell you anything. Their only role is to get the meeting. For that you need voice, a pleasent personality and enough tech savy to understand at high level what you are pitcing. One service provider said that home makers actually make the best cold callers. The reality is that any organization worth working with will dedicate and train a person on your dime. That person will not be able to take the discussion past their attack sheet.
d) When asked how big of a list you need to generate X ammount of leads the answer equates to 2% hit ratio. That is the same as with a well articulated email blast.
e) Commission. Some ask for it and others do not even want it. The highest I have heard of was 30% for hardware… referral fee!!!! The lowest offered was 10%. Under 10% there was no interest at all.
f) Minimum commitment is 3-4 months. 6 months is a preference.
Outsourced lead generation can make sense, but you also need to be an informed buyer. You also have to know what a realistic cost per lead is and accept the fact that there is no such thing as a free lunch.