B2B Appointment-Setting: Less Risk, Less Reward?
Companies are spending 33 percent of their lead generation budget on outsourced business-to-business teleservices, notes Peter Ostrow, senior vice president and director of the customer management group at Aberdeen, citing a recent study by the group.
May 1, 2008 5:00 AM PT
While demand generation professionals consistently turn to a wide variety of direct marketing software and e-mail marketing tools in search of sales leads, current research by Aberdeen points to a significant spend associated with a more human element: outsourced B2B (business-to-business) teleservices, provided by a large array of vendors offering different models of phone-based support by outside agencies.
In fact, organizations spend 33 percent of their overall lead generation budget on such services, and 44 percent of Best-in-Class end-users do so, according to data collected by Aberdeen in a March 2008 survey of more than 200 companies.
Within the outsourced B2B teleservices sector, a commonly addressed discussion point revolves around the simplest of questions: "What is a sales lead?" More specifically, at what stage in the overall lead generation cycle is a contact record, industry executive or company deemed "qualified" as a sales lead that should be shipped by marketing to, and accepted by, the sales team within a vendor's customer?
Within any discussion about this definition sits the oft-debated concept of appointment setting. Research clearly shows the idea of a prefabricated phone or live meeting between a sales rep and their prospect is highly attractive. At nearly four times the popularity of the next most frequently cited definition of a qualified sales lead, well-prepared appointments appeal to the Best-in-Class marketing and sales leaders.
A Pay-Per-Appointment Structure
Yet, digging deeper into what would appear to be an obvious desire, the data show a significant qualifier when comparing a simply defined "scheduled appointment or conference call," with a scheduled event that is "supported by qualifying data." While 10 percent of all other companies cite the former as the most relevant definition of a qualified sales lead, zero percent of the Best-in-Class agree.
Returning to how top-performing organizations interface with outsourced B2B teleservices providers, Best-in-Class companies support a pay-per-appointment structure that complements their preference for defining qualified leads as intelligence-supported meetings or calls arranged by the outsourced provider.
Another glance at favored compensation approaches raises the question of whether a rigid adherence to a pay-for-performance relationship is optimal. Aberdeen research reveals that 70 percent of the Best-in-Class either currently deploy a flexible financial arrangement with their outsourced services provider, or plan to do so within the next year. Far fewer Industry Average and Laggard companies mirror this open-ended mindset.
Valuing Lead Quality
Among the 20 percent of all survey respondents that rate appointment setting as a top-two valued activity provided by outsourced B2B teleservices providers, the companies most frequently cited as vendors include By Appointment Only, Catapult Target Profiling, PointClear, Senior Level Communications, Target 250 and Televerde. A number of interesting trends exist within the survey responses from this audience of "appointment-setting devotees":
- These companies report an average annual revenue of 19 percent smaller than all companies surveyed.
- Lead quality is twice as important as lead quantity.
- Lead quantity itself is an elusive goal: 19 percent report dissatisfaction with how many leads they receive, compared with only 5 percent of the Best-in-Class.
- They strongly support the best practices of regular adjustment to messaging deployed by outsourced callers; clearly quantifiable deliverables, which equates to successfully held appointments; and regular one-on-one interface between their sales reps and the calling staff representing them to the market.
Of most interest is how companies that prefer appointment setting compare to others regarding overall success. Aberdeen's maturity class framework for this data set focuses on changes in year-over-year performance across a number of metrics, including sales performance against quota, and average deal size, as self-reported measures of core sales and enterprise competency.
The 'Devotee' SubsetA dramatic delta in performance is obvious here: If Best-in-Class organizations, which represent strong-performing sales teams, are highly supportive of accepting sales leads only as data-supported appointments, and seek to primarily compensate vendors the same way, why do devotees of appointment-setting services yield such poor performance on a corporate level, at 7 percentage points worse than Laggards and 21 to 28 points less than Best-in-Class? The answer lies in the additional characteristics associated with the "devotee" subset:
- These companies report only a 2 percent interest in lead nurturing compared with 17 percent of all companies in the survey. This point suggests a "silver platter" mindset that, despite a desire for quality over quantity, reveals a deeper pattern of simply wishing for educated buyers to be introduced to sales with the least resistance accompanying the conversation.
- Appointment-setting devotees are 40 percent more likely than Best-in-Class companies to express dissatisfaction with the amount and accuracy of business intelligence gathered in support of leads delivered as appointments. This stems from a demand for style over substance.
- When asked why leads are rejected by sales, these respondents chose "cannot connect with the decision-maker" and "company is not a good fit for my solution" as the predominant reasons for pushing opportunities back to outsourced vendors. Again, the pay-for-performance model deployed inspires vendors to arrange sub-optimal opportunities for customers, in the interest of volume delivery only.
A Complex EquationThe data regarding appointment setting suggest that organizations pursue the service from outsourced B2B teleservices vendors, but not as a sole or even predominant compensation model amidst an overall engagement. Lead quality, the ability to receive well-nurtured opportunities and, ultimately, the challenge of providing sales "customers" with well-rounded leads, should be addressed as contributing factors in engaging with vendors.
Ultimately, the value of appointment setting to marketing buyers and sales customers remains a complex equation. Best-in-Class companies have exhibited a strong preference for deploying this silo-type of service, but the data shows that an over-reliance on the model leads to negative results in overall corporate performance.
Visit the customer management research page for the complete report.
Peter Ostrow is senior vice president and director of the customer management group at the Aberdeen Group. He can be reached at firstname.lastname@example.org.