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Pay Per Lead vs. Hourly Rate

How should you pay a Telemarketing agency?


Since we started operating in 1990, a small but persistent percentage of the prospects that we speak to have insisted on a "pay per lead" or "pay per appointment" model. It's far less common than it used to be, but we’re still contacted by marketers who have learned the hard way that pay per result models in telemarketing often don’t work.

Despite this, the superficial appeal of a pay per result model still lures the unwary into commercial arrangements that produce poor quality, build no pipeline, damage the brand and “burn” through precious prospect data. Marketers sometimes forget that an appointment is not a commodity – quality is the key driver of ultimate ROI and twenty low cost, poor quality appointments will deliver fewer sales, at much greater overall expense, than ten good ones.

More to the point, an agency’s skill set and ability is only one of the determinants of the number of opportunities that will be produced in any given campaign. The others are the profile of the data and the strength of the value proposition and finally, the qualification criteria used. We generally use BANT (Budget, Authority, Need and Timescale) criteria to qualify leads.

To give a very quick example, if an appointment can only be set with someone who has a time to purchase of one month, far fewer opportunities will be generated than if the time to purchase criteria is six months. This will hold true until a steady run rate has been achieved and all of the records in a given dataset have call back dates set against them, at which stage the rate of results will plateau at a maximum.

It’s easy to see how these kinds of variables can have a huge impact on the true cost per lead and why this makes nonsense of many "pay per result" models. At the agency selection stage, buyers using a pay per lead model have just one number to consider – the price per result offered. It’s easy to forget that poor quality appointments can generate enormous expense and lead to complete disengagement of a sales force, however “cheap” they appear to be.

Our agents are fully salaried, our account managers are driven by bonuses exclusively based on client satisfaction, instead of just a target for leads and we charge our clients by the hour. This means that our entire organisation is geared around delivering the maximum ROI for our clients by delivering quality and quantity.

An appointment is not a commodity – quality (measured in terms of BANT or similar criteria) is the critical element that underpins ROI. Not only do poor quality appointments convert to business at a much lower rate, but they also generate massive extra costs further down the process as sales teams chase non-existent interest or business contacts who don’t have decision making authority or access to budgets. Because we only deliver an appointment when it is fully BANT qualified (meaning than budget, authority, need and timescale have all been confirmed) five of our appointments should be worth significantly more than seven of a pay per appointment agencies.

Lead Nurturing

Paying per appointment encourages a myopic approach by an agency. Agents and managers chasing a target will tend to “burn through” data to get as many quick wins as possible, at the expense of the (often more valuable) prospects that might require careful nurturing until they are “sales ready”. Being paid by the hour means that we make every interaction count, not just those that might get a result today. We not only build a pipeline, but we also capture new decision maker names, profiling information and continually updating the calling database. This is the key reason that we deliver significantly more value to our clients in the form of an ever improving level of performance.

Whatever the payment model, no client will use an agency unless they see a strong ROI. We deliver, day in, day out, for an unparalleled client list. We’ve grown to be one of the biggest B2B specialist agencies in the country by delivering outstanding results. Through the course of review after review our clients choose to stay with us because we provide the combination of quality and quantity of results that drive class-leading ROI. 

Risk

When forecasting results, no agency can be certain how they will perform on any campaign before they engage. As a result, most pay per appointment agencies will build in a hefty margin to their charges to cover the risk they assume.

An hourly rate model might seem to offer less "certainty" and to put the balance of risk unfairly in our clients’ hands. However, because we offer flexible terms that don't tie you into long term contracts and charge an all inclusive hourly rate (other than data and a small one-time set up fee), the risks are in fact very low (and borne chiefly by us, which is why we won't take on work that we feel we can't deliver significant ROI around).

We work hard to keep our clients happy and provide regular updates on the campaign, call recordings for review and insight and pro-active recommendations to improve results spanning data, messaging, objection handling and many other areas. All of this means that clients are "in the driving seat" and choose to work with us month after month because they see great return on investment - there's no better evidence that a pay per hour model with the right agency delivers over the long term. 

Find out more about 'How We Work'

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