What is the difference between pay per sale telemarketing and pay per lead telesales?
Pay per sale telemarketing is a service where you, the client, pay for the lead only if it converts into a sale. This is obviously a massive benefit for whoever is purchasing the leads as it guarantees a positive return on investment. However, the lead provider will often ask for a profit or revenue share. With a pay per lead telemarketing campaign the client will purchase leads regardless of whether they close or not.
Who pays for the opportunities that do not convert into a sale?
Unfortunately all the risk is transferred from the client to the telemarketing companies. This is why the pay per sale method has a higher fee than paying by the lead. This is why in a pay per sale structure the marketing agency will ask for a profit or revenue share to pay for the time spent on all the leads that did not convert.
What is a typical ROI for pay per lead telemarketing?
In most marketing campaigns lost leads are accounted for in the lead price. If a sale value is £1000 and you are buying your leads for £100 you need to close one out of the ten opportunities. For highly qualified leads a 10% closing rate is very achievable.
If you closed two sales from the ten leads you would be on a 100% ROI with a 20% closing rate. You can see now how if you have a good lead price, high quality leads and a good closing rate pay per lead telemarketing is fair for all parties involved.
What are the reasons for a low closing rate
One of the reasons for seeking a pay per sale telemarketing campaign is because of your historically low closing rate, coupled with a tight budget you may feel that marketing agencies are taking advantage of you and selling poor quality leads just to increase their monthly bill.
This is of course a factor to consider when outsourcing your appointment setting or telemarketing. However, I can assure you that it is in everyone’s interest for you to have a positive ROI when using lead generation.
You may have an unrealistic expectation of how many leads should actually be closing. Generally you should not be paying more than 10% of the lead’s sale value for the opportunity. Even though you may be receiving high quality leads there will still be a large proportion of the leads that won’t close regardless of how good your sales reps are. Think about the last time you purchased a car, pair of shoes or a watch. How many did you try on, test drive and receive quotes for before you found the right purchase for you.
Many leads are generated with prospects who do have a genuine interest in your product, they do have a budget and they do have a project. There is just simply too much competition. If they are talking to you, they are most likely speaking to at least 4 or 5 other vendors and using your quote for a price comparison.
Even if you don’t close a sale, what benefit did you gain?
We all know that the majority of leads do not end in a sale. But they must still be acquired, contacted and pitched. This is a time consuming process and even though they may not close they still provide long term benefits.
Even though they didn’t buy your product or service they have now been made aware of its existence and provided their details with permission to contact in future. Decision makers were identified and data was collected on their budget and potential projects were discovered.
As a business you should always be expanding, nurturing and maintaining your database. Populating your business CRM is one of the key benefits of using a telemarketing team such as Midas Consultant.
Do not purchase marketing services and then judge them based on how well your sales team closes them. Judge your marketing team on how much data they bring to the table, how many opportunities are introduced to your database and how accurate the data is. Data enrichment is a valuable resource.
What is the difference in cost and billing structure?
Pay per lead marketing campaigns are usually run under an agreement in which the lead is billed regardless of its closing state. You can typically expect to pay around £50-£500 per appointment with a prospect interested in your service or product. It is very hard to give an accurate figure as each industry and product has its own sale price, profit margin and rate of closure.
At Midas Consultant our appointment setting starts at £50 per lead. An entry level appointment setting campaign would typically consist of around 20 leads at £1000. That is 20 opportunities for you to pitch your product and make a sale to an informed and warmed up prospect. If your service sells for £1000 and that is what it costs for you to sit 20 meetings you can see why affordable lead generation is so heavily demanded.
At Midas Consultant we will allow you to set aside a week or two in which you can back to back pitch and quote interested parties. By closing just one of the 20 appointments you would cover your marketing costs and have the luxury of the service provided.
If you close two of those appointments you would have a 100% return on your investment. At Midas Consultant we expect our appointments to have at least a 20% chance of closing. All of our leads have a budget and project coming up in the next few months.