Lead generation vs. Appointment Generation

What are the primary differences between Appointment Setting and Lead Generation efforts?

  • It’s relatively easy to get appointments.  Even with top decision makers in large companies.
  • It’s generally much harder to identify genuine purchase potential in addition to setting an appointment with the key  individuals who would ultimately be involved in making a purchasing decision.

Why?

Appointment Setting:

Assuming the solutions you offer and your brand is well positioned in the marketplace, then many executives may be at least willing to “learn” more about what you might be able to do for them.

If you’re brand is not well known, then it’s certainly much harder.

However, when little or no commitment is involved, it’s an easier row to hoe.

This does not, however, signal that they have real buying interest.  They may have a need.  They may even have some pain.  But that’s not what’s being asked of them.  They’re simply being asked to say yes to “learning more.”  Most of all, it doen’t mean that their organization has the capacity to implement the required change in the near term.

Yes, a good sales person who is worth his or her salt might take this opportunity and, over time, develop it to the point that a sale can take place.  However, rarely do appointment setting programs generate near-term sales.  And rarely are sales persons efficient and patient enough to nurture leads over time to ensure their long-term success.

Of course, you can always get lucky.  But luck is not a strategy. It’s always useful to remember in this context that in any given sales force the 80/20 rule generally applies.  80% of the sales force is comprised of order takers (or farmers) and only 20% are real hunters.  Moreover, generally speaking, 80% of the sales force generates 20% of the sales revenue.

So is an appointment with a decision maker in and of itself a “bad” result?  No.  It’s just not an efficient or productive one, because the productivity of the sales person is not maximized and the cost per sale, ultimately, is more expensive   even if your cost per appointment is lower.

Lead Generation: Consider on the other hand a lead generation effort that is focused on maximizing sales productivity.  It emphasizes identifying real “ready to engage “opportunities, enabling the sales person to spend more time selling to the right prospects at the right time.  In other words, lead generation effort should not just open the door,they should open a door only where real potential to purchase exists.

Why it comes down to sales productivity.

Sales productivity has been addressed many times in this blog.  In fact, for the past 20 years it has consistently been ETI Sales Support’s motto.  (You may find the 3 part blog entitled  Rethinking BANT  of interest.)

Table 1:

Assumption Explanation
Time available to each sales person A sales person can potentially visit with one opportunity per day
Cost per appointment (Appointment Setting effort) $600
Closing ratio – Appointment Setting (year 1) 10%
Closing ratio – Lead Generation (year 1)/td> 20%
Appointment Setting annualized result: Assume 50 weeks per year X 5 appointments per well X 10% closing ratio 55 Sales Cost $150k Cost per sale: $2,727
Lead Generation annualized result: Assume 50 weeks per year X 5 appointment per wellX 20% closing ratio 110 Sales Cost $250k Cost per sale: $2,272
Impact of increased sales productivity on the cost per sale $455 less from a Lead Generation effort vs. an Appointment Setting effort.

So even though the cost per opportunity is higher ($1,000 vs. $600) via a Lead Generation effort, the number of “sales” over the equivalent period is double and the actual cost per sale is $455 less than the result of an Appointment Setting effort.

Lastly, let’s also not forget the Lost Opportunity factor.  If your sales people are not calling on those prospects that have real buying potential and the competition is, then your poor investments in Appointment Setting are just that much more costly because they are spinning their wheels talking to the wrong people and the wrong prospect companies.

So think twice about wasting precious selling time on plain old appointments.  A better choice would be to invest in a highly effective and sustained lead generation effort that will result in real sales sooner.

Real Time Web Analytics