Over-Paying for Performance in B2B Lead Generation

In recent years we've begun hearing about business to business teleprospecting agencies who present themselves as pay for performance specialists. Their primary claim to fame is a "guarantee" that you will only pay if they are successful at getting you in the door. Their story is that they call and find the low hanging fruit and you only have to pay for the actual appointments they arrange. The logical questions to ask are, "What's the real cost of an appointment?" and "Is this the best investment I can make for my business?" Let's explore these issues.

Paying by the appointment is, on the surface, an attractive offer, especially to someone who is sales oriented. After all, the compensation model is the same used with the sales force. "Put some skin in the game," "share in the pain" and "pay by commission" are the underlying principles. No overhead, no uncertainty, simple equation.Let's look at this proposition carefully by asking a few questions.

  • Does the sales force compensation model really hold here?
  • Is it desirable to extend the sales compensation model to the lead generation process?
  • Are the true, fully-loaded costs of the pay for performance approach readily apparent?
The B2B Sales Opportunity Funnel

The B2B Sales Opportunity Funnel

A sales force is charged with a very narrow set of objectives, oriented around singular outcomes - close sales, drive revenue. These are near-term objectives, as they should be. We all agree that sales people need to focus their energies on ripe, ready-to-close, highly qualified opportunities in which their closing skills are paramount to success. Sales people have neither the time nor the patience to think strategically about long-term objectives such as positioning, pipeline building, building brand awareness, cultivating interest, educating prospects and customers and patiently developing relationships to keep your brand top of mind when need and interest, not yet apparent, intersect down the line.

But isn't it vital to your business that someone be entrusted with the obligation of considering your long-term business development challenges strategically? Shouldn't someone be tasked with the role of managing the big picture and with initiating the momentum that ultimately will drive highly qualified opportunities on an ongoing basis over the long term? Typically, that role has been handed to the marketing team.

In the traditional view of an opportunity funnel (above), the marketing team is tasked with driving as many inquiries into the top of the funnel as possible. The primary metric by which they judge success is cost per inquiry. But these are just inquiries - not the qualified selling opportunities that sales people want and need to be able to sell.The sales force is only interested in those that fall out of the bottom of the funnel. These are the true prospects who are experiencing real pain with their current solution (or the absence of one), may be ready to buy in the near future, and are interested in speaking with a sales person. Sales people only care about these kinds of opportunities - the ones with near-term closing potential. To tell the truth, they don't much care about the rest. Data suggests that 55% of them go right into their pockets and never see the light of day.

To make the marketing investment count, someone must be responsible for each prospect who has raised a hand but is not yet ready to buy. This is what we call the prospect pipeline. The painful (and traditional) gap between marketing and sales has its origin in the no man's land of the prospect pipeline. We have repeatedly shown that cultivating the prospect pipeline is the key to success in proactive business development. If anything, this notion is even more valid in complex B2B sales situations, in which the pain being experienced by most prospect companies is not entirely evident, even to them.

An investment in high quality sales support services - building awareness and interest, identifying need, qualifying and quantifying opportunities - enables both marketing and sales to better perform their primary roles. The result is truly qualified sales opportunities with near-term potential. And, done the ETI way, you'll also get data captured from thousands of conversations with the very decision makers you are trying to reach and influence to devise more sharply honed go-to-market strategies - a virtual focus group.In the ETI model, we concentrate on pipeline development and prospect cultivation. Beyond the qualified opportunities that are identified, we develop the basis for an ongoing marketing strategy that is anchored by our real-time surveys into your marketplace, speaking with the very decision makers you have targeted. We often provide your prospects with their first impression of your company; something you'll never have a second chance at (as the old adage goes). And when we're not establishing positive first impressions, we're enhancing your brand impression. You need to be represented with the highest degree of professionalism - in a manner consistent with the qualities your company values.You engage ETI Sales Support to do far more than only set appointments with the "low hanging fruit." In addition to uncovering qualified opportunities, we're know we need to

  • Deliver a professional presentation consistent with your values and brand message.
  • Cultivate a warm relationship on your behalf with each and every valid prospect.
  • Build interest, awareness and understanding of your products, services and solutions.
  • Collect information about perceptions, needs and response in your marketplace.

Is this a waste of time? It certainly is not. It is the foundation of your future selling potential. It will build long-term value as well as near-term revenue.It is quite fair to ask, by working in that way does ETI actually have skin in the game? You bet. We invest hundreds of hours in our relationship with you, outside of the calling we are doing, all devoted to learning who you are and making your sales and marketing program more successful. Our smart, talented people are deeply committed to your success. They are driven toward building the value of the relationship with your prospective customers. They want to help cultivate a lasting mutually beneficial liaison between ETI Sales Support and your company. The cost of failure is huge from both a psychological standpoint and a personal one - smart people simply don't like to fail.

Is pay for performance for you?

Let's look at the pay for performance model with respect to sales lead generation. What's the primary incentive? It is exactly the same as that of the sales force: set up near-term appointments. Do it as quickly and efficiently as possible or they won't get paid. For a sales person, that makes good sense; it's all we should be asking from them. But, for a partner responsible for lead generation, it is short-sighted and narrow-focused. It means dialing for dollars and selling appointments - not building long-term value and growthThose vendors won't take the time to understand or deliver the value of a positive first impression.  They just dial and look for low hanging fruit. Slash and burn; smile and dial. No time for anything else.  Is the lead properly qualified? Maybe; but send it to the client anyway.  In their model no one is interested in growing a pipeline. No one develops and cultivates relationships with decision makers. No one identifies the needs of the prospect or the market. No one seeks the pain. No one nurtures longer term prospects until the opportunity is fully qualified and quantified and ready for a sales presentation.If you receive 20 appointments and only 12 are qualified, how do you think your sales force will react?  "Yes, I got 20 leads, but I wasted my time with 8 of them. I can't afford to waste my time like that!"  Back into their pockets it goes. At ETI Sales Support, we have mature, highly educated Business Developers, with years of business experience, who are rewarded for uncovering opportunities that most others forsake. The pay for performance guys have aggressive telemarketers who are only focused on selling appointments.

The bottom line ...

This new breed of pay for performance vendors play on your emotions as their primary means of attracting new business. They have patter that sounds good and they may even speak a good game. But they lack the understanding and depth of experience to follow through successfully. In fact, they don't deliver the full value of your investment.In the past year alone we had two clients who tested us against a pay for performance vendor. One chose to abandon us after 6 weeks and went with such a vendor because they were in dire straits. They needed immediate revenue and couldn't spare the time to do it right. Unfortunately, they are no longer in business. It was too little, too late.The other client tested us side by side for three months and then transferred their entire budget to us. Truthfully, the other vendor set up more appointments for the sales force than we did. But many of them were not properly qualified and the sales force lost confidence in their integrity. Whatever potential opportunity there might have been was lost forever because the sales people simply refused to continue calling on the leads they generated and the appointments they set.

How much does the lost opportunity in these situations add to the basic cost of each? What's the added value of building a growing prospect pipeline - the one that is ignored and lost in a pay for performance model? How about the value of the market intelligence from speaking with prospect decision makers that remains uncollected and unavailable to you without someone taking the time to collect it? Ask those questions and you'll have a better understanding of the true cost of ephemeral pay for performance leads.

What we offer at ETI Sales Support is the expertise, discipline and professional approach to deliver lasting value, superior ROI and much broader strategic outcomes.

Learn more about our approach to sales lead generation and our other best of breed sales support solutions. Give us a call at 1-800-466-4384 or visit us on the Web at www.etisales.com.

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