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Businesses are always on the look-out for the most cost-effective pricing strategies, however, many end up getting tunnel vision and lose focus of the bigger picture, which is obtaining high-quality leads & nurturing them into sales-ready prospects, building a sustainable pipeline along the way and ultimately getting a much higher ROI.
You need to ask yourself “What’s it going to cost me to successfully achieve my targets this year, and what is the most effective methodology?” and build your strategy around these targets.
The total cost will depend on a number of factors, including but not limited to the overall size of pipeline you are looking to achieve, average deal size, the volume of net new logo client wins you require, average sales conversion ratios, length of the sales cycle and the pricing model chosen.
There are a variety of pricing models available to choose from, the most common ones being cost-per-lead, shared risk-reward arrangements, and the most popular of them all, fixed man-day rate, also known as flat-rate.
What’s The Difference?
Fixed Man-Day Rate
A fixed man-day rate model is based on a pre-agreed, allocated time and materials arrangement, and is most recommended for generating high-quality leads with far greater supporting intelligence, especially with high-value solutions where the sales cycle can be anywhere from 6 – 24 months.
By adopting a fixed rate model with the right agency, you are likely to get more intelligence captured as well as a wider pipeline of longer-term interests established. The agents are less likely to force the issue with a prospect, taking a soft consultative approach instead.
With the fixed rate strategy, you are at least assured the quality of the calls being made will be to a high standard with no pressure-selling tactics involved, and if the leads are there in the first place, a good agency will find them or at least capture good intelligence to justify and support the final outcome.
With this approach, telemarketers focus on expending 100% resources and efforts into finding & nurturing voluminous high-quality leads that meet BANT+A standards, into sales-ready prospects, building a genuine relationship & trust along the way.
This happens via hitting multiple touch points which in return fills your pipeline for months, or even years to come, allowing for more organic growth over a longer period of time, proving to be a great ROI. Furthermore, you're able to gain knowledge of how the market perceives your brand, the competitive incumbency, and even contract renewal periods, allowing you to always be several steps ahead.
You get the best of both worlds with this approach.
Cost-Per-Lead
Cost-per-lead is based on payment per lead acquired & is most commonly implemented into strategies that involve low-value, high-volume products/services, that are generally more transactional in nature.
It can be a tempting offer, considering what appears to be a low-risk strategy, ‘no results, no fee’. The reality is, you may end up spending an awful lot of time and effort in training up an agency, only to get zero results. There is also the added pressure that comes with such a model to perhaps push through sub-standard leads or to force the issue with a prospect that is not quite mature enough in the sales cycle. The outcome often results in quality suffering at the hands of quantity when it comes to generating genuine leads.
On the other hand, for high-value solutions, due to the nature of ‘more leads, more money’, while it may be a motivating factor for telemarketing agents to perform better, it can also get easy for agents to lose focus of the bigger picture and instead narrow down on solely obtaining a higher quantity of leads, compromising on quality, prospect-nurturing & pipeline development in the process.
You may end up with more leads than you can handle, often poorly qualified, overwhelming your operational bandwidth and causing you to burn through your resources & budget, ultimately resulting in a disengaged sales team.
No agency, however good they are, can dictate the market, and therefore working on a guaranteed cost-per-lead model can turn out to be a far riskier strategy compared to other pricing models.
Shared Risk-Reward Arrangements
Similar to an incentive-based model, the shared risk-reward arrangements pricing model is designed to distribute the risk and rewards gained from the campaign between the business and telemarketing partner, who earns a percentage of closed business profits for a defined time period. This usually applies after an estimated project cost has been set based on known requirements, with additional rewards being distributed depending on the achievement of specific objectives.
Both parties share equal responsibility for acquiring resources, strategizing, and contributing to the campaign. There’s a higher chance for success when both the business and telemarketing partner have discussed and determined the campaign’s objectives, targets, and estimated project duration, and have an overall aligned vision to get the business to where it needs to be.
With this model, businesses have more assurance that the budget and resources expended on the campaign will bear fruitful results due to the mutual impact it will have on both parties. With the right telemarketing partner, you can be sure to have a good balance of quality vs quantity.
The shared risk-reward arrangement involves a good blend of both aforementioned pricing models, where your telemarketing partner will be equally motivated to bring in BANT+A qualified leads with higher chances of converting and organically developing the sales pipeline further, as well as eliminates the ‘more leads, more money’ mindset and allows for deeper, collaborative efforts, ultimately resulting in a bigger ROI.
This pricing model is quite flexible and can possibly be paired with a fixed man-day rate strategy.
Which Is The Right Model For Me?
If you are looking to distribute a high volume of products into the market and generate a high quantity of leads that don’t require deeper-level nurturing, cost-per-lead would work best for you.
However, if you have higher-value products/services that prioritize lead nurturing, in-depth qualification and pipeline generation over solely quantity of leads, the fixed man-day rate strategy would be most applicable.
A shared risk arrangement would work best when you have most of your requirements set out, but require a degree of flexibility when it comes to the final requirements and cost.
Whatever pricing strategy you decide to go with, a best practice to follow is to start off with a pilot campaign – initially three months on average. We follow this practice with new clients at GCL as it helps us gather real-world data insights and discern how receptive the market is to the client’s product/service, in order to set realistic delivery expectations, to ensure higher chances of set business targets being met within the expected timeframe and budget.
If you would like to find out more about which pricing model would suit you best, reach out today for a free consultation.
