The New Age of Telemarketing, Part 3
The New Age of Telemarketing, Part 3
The New Age of Telemarketing, Part 3
Welcome back to another edition of our ongoing series on changing your telemarketing strategy for today's age. In our last article, we touched upon the advantages of using targeted data for your sales force, and how it is important for businesses to evolve their marketing instead of disregarding what they consider to be antiquated. Today we are going to focus upon practical examples of how this can be applied at your company, and the difference that it can make upon your business model.
For this example, let's say that you have a debt settlement company. Your employees are in the business of negotiating with creditors in order to settle consumer debt, and your profit comes from a commission that is calculated from the total amount owed. The first step for your company is obviously finding people who are not only in debt, but also meet certain criteria for qualification. In our case, let's assume that a consumer must have at least $10,000 of unsecured debt, be in a difficult financial situation, but is still able to make a minimum payment of $250 a month.
Now, let's assume that your company is just starting up, and you have no established presence yet. How do you begin generating sales? The quick and dirty method is, of course, to go down the phone book page, and as any seasoned telemarketer knows, the general response from this approach ranges from quick dismissal to outright hostility. For every tennames your agent calls, they are likely to receive one person who is actually willing to listen, with no guarantee that they even qualify under your terms! A little bit of math reveals that your contact rate would be around 10%, which is a very ideal estimate, and your actual rate of reaching people who are not only interested but actually qualify would be a fraction of that in most practical cases. This doesn't even take individual skill into consideration; just having seats filled does not necessarily translate into guaranteed sales, and having a weak team further degrades your conversion rate.
A 1% or lower conversion rate is obviously far from ideal -- in plain terms, it's horrible, and is bad for your business. Many managers who build their company from the ground up typically look to get away from this approach as quickly as possible, seeing it as a waste of time and money. But this is where targeted data comes into play. Breaking it down, the traditional telemarketing process consists of three steps: finding the prospect, qualifying the prospect, and closing the sale. The example above shows us that steps one and two alone already account for the vast majority of effort spent. By using targeted data, you skip those steps entirely and can leave your sales force focused upon closing.
What does this mean for your numbers? Let's break it down practically: one of your agents works a full day and calls a nice round number of 480 phone numbers, translating to an average of 60 calls an hour. Going by the statistics mentioned above, your agent would have actually spoken to 48 people who did not hang up or express hostility immediately, and out of those 48 people, it would be safe to assume that perhaps only 10% of them actually qualified under your company's terms (again, a very generous estimate). And out of those 5 people (rounded up for sake of this example), let's say that your agent is decent at what he does and managed to close two of those leads for the day. This means that your payroll consists of having an employee in a seat for an entire day -- only to close two sales!
Now, depending on your business model, this may be perfectly acceptable, if the profit margin off each sale is sufficiently high enough to sustain the company. Realistically speaking, this type of sales cycle is untenable for any type of growth, due to the factor of diminishing returns. At some point in time, the additional overhead of having more bodies in chairs is going to outstrip the revenue they are managing to bring in, and that is when you will find your business caught in the dreaded limbo between stagnation and growth. The lower the profit margin on your product, the quicker this point comes.
Here is where targeted data comes in. Since your agent no longer has to blindly look for contacts, they are now able to go straight to the later steps of the sales cycle. Since targeted data means your leads already qualify, the 10% suddenly becomes 100%, effectively removing that limit from the equation. Now, your agent only has to focus on establishing contact (at the aforementioned 10% rate) and closing the sale. With 60 targeted phone numbers an hour, your agent should easily be able to reach 6 qualified and legitimately interested customers an hour, and be able to close at a substantially higher rate.
Now targeted data obviously is not free, and does come at a price to your company. This is where your marketing manager must make the decision: is it worth the time to keep bodies in chairs cold calling and fishing for leads, or would it be more cost-effective to give them material to work with and instead focus upon closing? For businesses with presence, the choice should be obvious.
In our next article, we are going to take things a step further and discuss the live transfer as the ultimate means of telemarketing. For now, please visit our site at www.500marketing.com for more articles and ideas on how to grow your business with us.
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