Marketing and Sales

May 22, 2006

Deciding to Outsource Lead/Referral Generation

Filed under: Marketing,Tips and Hints — Philippe Mesritz @ 11:42 am

So the choice is yours now… You're ready to start making money and have a sales force staring at a phone, waiting for it to ring. Then it starts. Ringing off the hook as customers respond to your first TV ad and you're off!

That's, obviously, a pretty idyllic viewpoint on advertising, but it would be nice. More reasonably, your sales force is out there, trying to reach new customers by calling people cold. You've trained a group of four people on your product and they know it inside and out. If they have the opportunity to speak to someone whose interested in your product, they'll close one in four and can handle four calls an hour since it takes them about 15 minutes per person to explain the benefits in detail. Since they're making outbound calls "cold", however, they are only gaining minimal interest levels every fifteenth call and nailing a sale every one in sixty. Suddenly, instead of one sale an hour each, your trained sales team is only making one sale every three hours and becoming more and more frustrated. Your sale projections have plummeted from thirty two sales per day to around ten per day — 31.25% of your expected numbers.

How can you increase your level of success?

Well, there's a couple of ways. The one I'm going to focus on is outsourcing lead/referral generation. Many people call it lead generation, but I, personally, consider it to be referral generation. See my earlier posts for why I do so.

Outsourcing has a lot of advantages, not the least of which is the simple fact that your sales team doesn't need to be focused on spending time finding people that are interested.

  1. Expense: The cost involved in outsourcing is, in the long run, usually a cheaper investment than having your in house sales team do the work.
  2. Training: Training sales people to make cold calls and qualify people without going into their detailed pitches at the wrong times is difficult.
  3. Training x2: Your sales team has expertise on a product that is not necessary for referral generation. Bringing you contacts for sales can be done by people who know the basics of your product — enough to generate an interest, but not necessarily to gain a new customer.
  4. Time: You simply can't make as many sales if you use your in house sales people to make cold contact with prospects.
  5. Better Prospects: As the numbers above showed, without the right prospects, your company will not be able to make as many sales as they have the potential to, even with a perfect sales team. With an outsourced company generating referrals for you, the sales team can complete the sale and help you gain customers with greater success.

Obviously, there are disadvantages as well, but I believe that for many businesses these disadvantages are far outweighed by the above mentioned benefits as well as others that companies find to be true. The primary disadvantage that seems to weigh on management's mind is the loss of control. Although this is a definite concern, this can be addressed by finding the right company to work with.

Outsourcing referral generation can have a very positive impact on your business and its long term success. By chosing the right company to work with, understanding how to best manage the organization, and negotiating an equitable payment structure, all parties can be improved and each person along the chain will feel the increased capabilities.

A good referral generation company does not see you as "just a customer" — but as a partner. I'll address this more in my next detailed tip on how to chose a company.


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