In these times of restricted budgets and a real focus on the costs associated with sales and marketing, it is inevitable that for companies outsourcing their lead generation activities, some kind of pay performance model could seem attractive.
It is important to stress the difference between performance related payment models and pure pay per appointment models. The former indicates a professional arrangement between a client who knows exactly what they want and wants to incentivise a provider to over perform on their agreed contract, whereas a PPA model tends to indicate a nervous client who doesn’t really understand the value of professionally conducted lead generation, so attaches very little value to it.
This usually indicates that the client is unsure about what they are trying to achieve and so cannot make an informed choice about the provider that is the perfect fit for them.
It is up to the client company to have done their research and to set appropriate targets before approaching any lead generation provider. This is covered in more detail in a previous blog preparing to engage with a telemarketing agency? Where do I start?
Targets are still important
Once you have done this research and due diligence, you should set about defining exactly what constitutes success and how this should be measured. Then work with your lead gen provider to formalise these into a contract.
Reputable lead generation companies are professional and want to do the best possible job. Just like any business, they would like satisfied customers to come back because this is cheaper than finding new ones. They will have well developed approaches and processes that have worked in the past, so you should trust them to do the job you want them to.
Of course, this does not mean that you let them get away with anything they like. You must set and agree targets at the outset - with clear definitions of who you are targeting and what is acceptable to you in terms of a good appointment. Like any contract, you work with the lead generator to make sure they deliver on every aspect of what has been agreed between you. Any reputable company will expect to be held accountable in this way and relish the challenge.
What’s so wrong with PPA?
The PPA model is effectively downgrading what should be a profitable relationship built on trust and commitment to that of a series of independent transactions with an emphasis on providing quantity not quality
With no, or greatly reduced, fixed fees coming in, the lead generation provider will be focused on delivering as many leads/appointments as they can.
This means that agents will take short cuts. A good lead generation agent is like a good salesman. They build up rapport to delve into the customer’s needs so they can present their solution in the most appealing way. If they are under pressure to deliver, the agent will not take this time and this will cause problems:
The Wrong Lead – in the PPA model, the agent will take short cuts and this will inevitably lead to wrongly qualified leads. You will be charged for every appointment booked regardless of whether it is correct or not.
Wasted Opportunities – In the rush to deliver numbers, they will almost certainly overlook great leads that aren’t immediate. Often the leads that take the longest to nurture to maturity, end up being the most lucrative.
Wasted Time – with poorly qualified appointments, your salespeople will waste a lot of time. They will then assume that everything is a waste of time and not bother to respond appropriately. This will reflect badly on you as the owner of the lead generation activity and inevitably lead to wasted money.
Reputational Damage – As a business you have tried hard to build up a good reputation. If you have people representing you who do not really care, then they will not take the time to professionally represent you in the way you would like. Also, do you really know who is calling on your behalf? Some companies offering PPA deals will subcontract to off shore call centres.
The Wrong Bill – PPA companies need to maximise their income. As they are not really interested in forming long-term relationships with clients, they have no incentive to bill accurately or appropriately. Beware of hidden charges!
Strategy, What Strategy - Lead generation activities do not exist alone – but should be part of a wider business development strategy. This seemingly attractive quick fix transactional model will quickly leave strategy behind. Particularly if the PPA agents do not deliver and you end up having to patch up the holes in your pipeline.
The bottom line
Many disreputable telemarketing companies will offer PPA as an attractive, seemingly low cost service. You may strike lucky and get some good meetings, but without the discipline of a formal contract, there is a good chance that you will experience more bad than good. Whereas a reputable agency will have a dedicated team who will get to know you, your product and how best to pitch to the prospect, the PPA agencies have a tendency to body shop, where the focus is on quantity not quality.
PPA is an imperfect approach at the best of times, but is particularly unsuited for a complex B2B technology sales cycle. Sales like this are based on trust between customer and salesman across multiple interactions. If the initial contact is flawed, then you will lose the opportunity at the first hurdle.
Don’t be tempted by PPA. This is a short-sighted approach. By properly defining the project with a reputable agency, you will spend your money more wisely for a higher quality return. You need to work with a provider who will help you with your long term goals and not just focus on throwing as many ‘leads’ as they can at you. Getting a lot of appointments will look impressive initially but quantity will invariably be hiding the poor quality – and by the time you realise this – it could be too late!