What does it cost a business to hire a Business Development Executive?

Hiring salespeople is always a risky business, especially when you’re hiring at a junior level when it’s difficult to really get a handle on an individual’s abilities as there is often no track record of experience by which to measure.

As such it’s vital that an organisation understands the full cost and therefore the total risk involved in such a hire. All too often I have seen companies (generally smaller ones) take the salary plus the expected commission and add on the NIC payments to come up with the “Cost of Employment. This is often way off the mark in terms of calculating the true cost to a business of making such a hire.

Here we have attempted to quantify what that cost might be and therefore what the overall risk of hiring said individual would be should they fail (and various opinions and studies state the 50% - 70% of salespeople are unsuccessful…)

Click here for the Cost of Employment Calculations.

Please note these calculations are generalised and not specific to any business – the notes on the figures will give you an indication of how we arrived at them. We use these sums to demonstrate how outsourcing the Inside Sales or Telesales Role can help to mitigate or offset the cost to the business of this type of employment.

For more information on the numbers feel free to give us a call on +44 (0)20 7471 8600.

What's the real Cost per Lead?

For anyone who sits within the marketing function or sells to that function the phrase “cost-per-lead” is instantly recognisable as a standard measure for marketers to compare their spend across a range of marketing initiatives: essentially “how much did I spend on this lead as a unit cost?”

As a sales professional working in the technology and professional services space for the past 11 years the phrase has both baffled and infuriated me in equal measure by often being too simplistic a measure in an environment with high value complex sales. I would also argue that it is typically an inaccurate measure. By that I mean that ‘X’ may have been spent, but what was the real cost to the business?

Marketing and sales professionals really need to look deeper at the measurements for success rather than cost-per-lead, not just in order to understand the true ROI of a project but also to identify the failings and the potentially negative impacts of these initiatives. Recently I have found ‘cost-per-lead’ has cropped up more and more when measuring the performance of telemarketing or telesales activity, especially where organisations are outsourcing the function to By Appointment Only telesales companies or day-rate telemarketing agencies.

So let’s take a typical example of what is happening and expose the failings of this measure. Acme Telemarketing agency is tasked with arranging 20 new business sales appointments for ACE Software Company. The details of the campaign aren’t important other than Acme will be paid £500 for each scheduled appointment – i.e. each ‘lead’. The cost per lead is therefore £500 - right?

Well, firstly, what is a lead? Too many organisations define this so loosely that the output from projects like this is often ultimately useless. All too often a lead is defined as “this guy had the right job title and he was happy to meet for a chat”. In my mind a lead should be contact with an organisation which has momentum, where a desire for change or improvement has been understood or there are specific business drivers or issues which need to be met or addressed. How often have you received a lead which was really just an opportunity for an introductory showcase to demonstrate the company’s credentials – i.e. to get on the radar. While these can be valuable exercises in themselves but should not be classed as a lead or an opportunity.

Secondly what if one of these leads turns out to be a waste of time – a total dead-end? Perhaps the prospect was a time-waster or there was a misunderstanding which meant the meeting was inappropriate after all. The argument here is that the cost per lead is unchanged as the telemarketing agency would issue a credit for that meeting so the net cost is £0. What about the wasted resource? The sales representative has had to spend much of his day travelling – what value do you place on the cost of his time and travel expenses? An experienced IT sales professional can cost a company £500 per day – so that £0 value lead suddenly has a cost impact. Let’s say the telemarketing agency in question actually provides 25 leads/meetings – 5 of which were poor and credited. Yes the bill may still only come to 20 x £500 (£10,000) but what of the additional cost implications of those 5 wastes of everyone’s time. That’s an additional £2,500 that’s a 25% increase in the real cost.

Thirdly: Keeping the cost per lead down inevitably reduces the amount of investment in time and training by your chosen telemarketing agency at the front end of your project. Our experience shows that this effort up front has the greatest impact on the success of the campaign. How is this incorporated into the cost per lead? Any scrimping on the training element will surely lead to more of those dead-end leads and drive up the real cost.

Finally – how do you measure the cost to the brand of doing this kind of project badly? Too often companies or marketers try to drive down this perceived cost per lead by opting for the cheapest service provider. The individuals making these calls are the first point of contact many organisations will have with ACE Software’s brand. If the experience is poor or even unpleasant they will more than likely never buy and will often speak badly to others of the experience. What is the cost to the business of this reputational damage? And yet organisations continually and deliberately get themselves into this position. I’ve heard this conversation so many times:

Marketer: “what’s your cost per lead?”

Telesales Company: “We charge £500 for an appointment”

Marketer: “Well we’re looking at spending £350 per lead – can you match that?”

This is a false economy. As soon as this type of negotiation occurs the telesales company is driven to run the project the cheapest possible way in order to maintain margins. As a result, they will use less experienced and therefore “cheaper” agents on the phone. They will limit the time spent on the project to ensure it is profitable and move resources on to more lucrative projects as soon as possible. All of these lead to the job being done badly, increasing the number of poor quality leads and typically driving up the cost per lead from the planned £350 to a much higher financial cost and an even greater reputational cost.

So our advice is to look beyond the cost-per-lead measure to get a real sense of the success of your campaign. When the future success of your business is at stake and you operate in a finite addressable market, cutting corners on cost can be more damaging to your business than you think.