Fixed Cost vs Performance-Based Lead Generation Pricing Models
February 8, 2018
The True Cost of B2B Lead Gen Services
One of the questions we hear the most is, “How much does appointment setting and lead generation cost?” It depends on the providers business model.
In the world of lead generation and appointment setting, there are two types of services: fixed cost and pay-for-performance. What’s the difference between these lead generation pricing models? And which one can help you net the best results?
First, let’s define fixed cost and performance-driven lead generation pricing models:
Which B2B Lead Generation Pricing Model Works Best?
When evaluating B2B demand generation services providers, it’s important to consider three factors: lead quality, business intelligence, and ROI. Continue reading to learn more about these areas and to understand why fixed cost campaigns may make sense for your business.
The main objective of any lead generation or appointment setting campaign is to generate qualified leads that have a reasonable probability of converting into revenue. Unfortunately, campaigns that operate under the pay-for-performance pricing model are often more concerned with the quantity of leads rather than the quality of leads.
Telemarketers and salespeople who operate under the performance model are motivated to generate as many leads as possible for their clients, but not for the reasons you might expect or be led to believe. Businesses pay the same amount for each lead delivered through such campaigns, regardless of their quality or likelihood to ever convert into real dollars.
One of the largest performance-based B2B appointment setting/lead generation services providers went out of business in October 2017, but not before they sold one of their clients 30 appointments for $30,000—only a handful of which resulted in actual appointments. Performance-based appointment setting service providers simply don’t have the motivation to deliver high quality appointments. In fact, they stand to lose money the longer they take to deliver appointments to their clients, so it’s in their best interest to get whatever appointments they can, as quickly as possible.
Why the fixed cost model wins
Intelemark’s agents are instructed that their primary objectives are to:
- Protect and promote the client’s brand
- Professionally articulate the client’s value proposition, and
- Close for the appointment only after a prospect meets the qualification criteria provided by the client.
Fixed-cost agents don’t push anyone into a meeting before they’re ready or if they aren’t interested. Instead, they focus on getting the highest quality leads for their clients. That’s because they’re motivated by results, not the commission.
Telemarketers and sales agents spend a lot of time talking to prospects—your prospects, in fact. These communications can provide tremendous insights about a target audience, including questions that need to be answered, problems that need to be solved, and barriers that need to be overcome. Unfortunately, performance-driven B2B lead generation services providers aren’t paid to collect this valuable information, nor do they care to.
Under the performance-based model, agents don’t have the time to collect marketing and sales intelligence; they have to move on to the next call, so they can hopefully capture a lead and put money in their pockets. Even small commissions make a huge difference in terms of how long an agent is willing to spend with a prospect that doesn’t immediately appear to be marketing or sales qualified. In other words, what motivation do they have to collect information on behalf of their clients when they aren’t being paid for information?
Why the fixed cost model wins
Fixed cost B2B lead generation and appointment setting agents are paid to represent their clients on the phone. They are an extension of the sales team. Professional B2B lead generation and appointment setting agents want to make sure that the leads they deliver will have a high likelihood of converting into revenue, and to that end they spend extra time asking questions that can help qualify legitimate leads. This information is then shared with the client who can use the insights to reach new audiences, close more deals, and drive more revenue.
Intelemark recently represented a managed IT services provider. Part of the qualification criteria was prospects who were dissatisfied with their current provider. Instead of passing on prospects who were not immediately ready to switch providers, our agents asked questions about equipment, technology, and budget—insights that helped our client see a 400% increase in leads with a single campaign.
Cost per appointment/lead is a major factor for most (if not all) business owners and decision makers when it comes to outsourced lead generation and appointment setting campaigns. The problem is that most business owners and decision makers assume performance-based campaigns are cheaper, and thus more profitable, than fixed cost models. At first glance, it’s easy to see why.
Given the choice, which would you choose?
- Pay X dollars per hour for an appointment/lead, with no guarantee how many hours it will take
- Pay Y amount per appointment/lead, with no guarantee of quality
Sure, the first option assumes more risk, but can end up costing you less for higher quality leads. In performance-based campaigns, all the risk and profit is built into the pricing model and therefore the price is higher. Performance-driven lead generation services providers know they have to get a certain number of leads or appointments in a timeframe so they can have some level of profitability based on what they are charging. The problem is that they don’t know how long it’s going to take, which helps to explain the low-quality leads and explains in part, why fixed-cost leads are often times cheaper.
Consider again for a moment the example above. If agent A can set one meeting in 10 hours and agent B charges $800 per appointment, the fixed-rate option will be less than the performance-based model—not to mention a possibly higher quality lead with a greater likelihood of converting to revenue.
Learn More About Fixed Cost B2B Lead Generation Services
Intelemark can be as much as 30 to 50 percent lower than a performance-based company. Contact us today to understand how a customized fixed-cost B2B demand generation telemarketing campaign can drive outstanding results for your company, and learn why we have earned the reputation as the business connection company. Request more information, or schedule a test campaign to find out about the results you can expect.
See our case studies to learn about some of the results recent Intelemark clients have enjoyed.