The Economics of Outsourcing Your Prospecting

There are two ways to look at the economics of outsourcing your lead generation: from the perspective of results (i.e. ROI, payback, etc.,) or from the perspective of costs. No two businesses are exactly alike, but the economics of sales are the same throughout the world.

The "Results" View

Whether you judge investments and expenditures based on ROI or payback, positive cash flow or cost reduction, a successful campaign can pay-off every time. How do you compare to these JV/M clients?




A commercial services company paid their telemarketer $8.50 per hour. Add 12% for taxes, $200 per month for benefits, $100 per month for space and overhead, and $8/hr for telephone. On a good week, she found them three good leads, so it cost them $262/lead.

Using JV/M, they consistently generate 10-12 appointments per week, at an average cost of $224/lead.

Savings: 15%

A professional services company used one of their analysts to prospect for appointments. At $60K/year, producing one good lead a week, they were paying about $1,200 per appointment (ignoring the additional cost of the telephone, and the opportunity cost of the professional work that she wasn't doing.)

JV/M produced three good leads a week, for less than $250 per appointment.

Savings: 75%

An industrial distributor had inside salespeople who didn't like to prospect, so they only did it about five hours a week. Their loaded cost was $23/hour, and they got about one new lead a week, which nets out to $114 per lead.

JV/M got them four times as many leads, at less than $80 each.

Savings: 30%

An e-commerce software company had a full-time sales rep prospecting for new business. At a $40K base, he was finding about two prospects per month, and spending most of his time putting proposals together. Their cost per proposal exceeded two thousand dollars!

JV/M got them a 60% appointment rate, increased their close rate by a factor of two, and reduced their cost per sale by 75%.

Return on Investment: 1200%

A marketing services company had hired a full-time sales rep to do their prospecting for $4,000 per month, but he found virtually nothing in three months time.

JV/M's first campaign cost the client $2,500, and landed them an account worth over $100,000.

Return on Investment: 4000%

A software company hadn't been able to find a new piece of business in six months by the time they called JV/M. Their two outside reps had worked every contact they could find without success.

A $7K investment in prospecting with JV/M netted them two accounts worth over one million dollars.

Net Profit: $200,000

A manufacturer of sales aids needed help penetrating the pharmaceutical market. And if you know anything about the pharmaceutical companies, you understand why they called JV/M: They're big and complex, you can't find the decision-makers, and it seems like most of their employees are paid just to block salespeople from getting in.

With JV/M, it was another case of "been there, done that." We quickly got them into 6 out of 14 target companies, where they landed a sale for $75K before the campaign was even finished.

Gross Profit: $73,000

The "Cost" View

Many companies try to compare the cost of hiring someone to do their telemarketing in-house (or making their outside salespeople do it in their "free" time,) to outsourcing. This shows what one client expected, and what really happens.

Part-Time Field Sales Reps
641The company had six sales reps,
but only four actually did any calling.
Hours/Day1.00.5 6They thought they could do an hour a
day, but they only had time for about
half an hour.
Dials/Hour15415 The goal was to make 15 dials per
hour, but the average turned out to be
much lower due to distractions.
Dials/Day45890 They thought they could do 45 dials
per day to new prospects, but the actual
number of dials was 8.
Dials/Contact585 Persistence is the key to getting
through. Without it, the connect rate
Contacts/Day9118 And actual contacts with new prospects
was horrible. In fact, most reps just
called their regular customers.
Appointment Rate20%10%20% Without focussing on getting new
appointments, they didn't get much
of a hit rate...
Leads/Day1.80.13.6 ...or very many new appointments per day...
Leads/Month39.61.579.2 ...or per month.
Cost/Hour$25.00$35.00$40.00 The cost per hour was higher than
expected because they forgot about
the opportunity cost.
Total Cost$275.00$262.50$3200.00 The total cost was pretty low, though.
(But what's the point if they didn't get
any leads?)
Cost/Lead$6.94$175.00$80.00 And the few that they got cost more than
twice as much than if they were
outsourced. Was it worth it?

Whether you want to reduce your cost per lead, maximize your return on investment, increase your market share, shorten your payback or just generate net profit, at JV/M we make you money, no matter how you look at it. For a more personalize view, check out Compare Your Cost-per-Appointment to Ours.

JV/M, Inc. 1221 N. Church St. Suite 202 Moorestown, NJ 08057 Tel: 856-638-0399 Fax: 856-316-7465
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