The decision to outsource lead generation is a significant one for most agencies. Whilst almost all business development agencies white label their services, the fact remains that someone outside of your agency will be making calls on your behalf, and affecting the perception of your brand through the content of those communications.
On the other hand, many agencies will have tried to bring lead generation in-house only to find that this has its own inherent problems:
(1) The key competencies associated with this role often sit outside of the area of expertise of those deciding who to recruit. As a result, the commercial awareness and industry knowledge of a candidate is robustly checked, but the candidate’s business development skill – especially cold calling – isn’t analyzed as closely as it should be. Comments like, “they seemed to know our space really well but they never managed to get us any good meetings” are common within the agencies we consult with
(2) If a BDM is not proving to be a resounding success, somebody needs to train and develop their skills. Again, often this skill set is not core to the existing agency employee base
(3) Managing and motivating a sole BDM is very hard indeed. Making cold calls alone is an unenviable task, and only a few will thrive in these conditions.
(4) Largely as a result of the above, attrition in these roles tends to be very high. You will have invested time teaching a BDM your proposition, and how to deliver this. In addition, they will have gained a lot of knowledge into your target clients. If they leave your agency, you are back to square one, and often these insights are lost. Business development agencies will have processes in place to retain that knowledge of your proposition, and your target prospects, and can easily train and transfer these insights into a suitably qualified replacement.
So, how do you select the right new business partner for lead generation?
First check who will be making the calls on your behalf
It’s easy for a Director of a business development agency to impress, but it’s the BDM who will represent the client’s first impression of your agency. Often Directors will tell you that they will be making the calls, but this is often not the case. Responsibility for calling activity is then allocated to lower level staff, some of who you will never meet. Agencies that do this will often use a different name on the phone to their actual name to protect the anonymity of the account manager.
Check how they qualify what makes a good lead
Having had a huge amount of experience with internal and external lead generation partnerships, the largest sense of conflict by far is that the person making the appointment and the person attending this had different interpretations of what the objective of that meeting was. At Upfront, we use a Lead Management model (see diagram 1) that we have developed to ascertain clearly what the minimum level of spend a client of ours would consider for an established need and brief, what size of opportunities they would be happy to attend credentials meetings with (assuming huge potential sits within those brands), and how many briefs and pitches we expect to be involved in generating. This varies for each agency, since large opportunities to some agencies are very small to others. What is critical is that these figures are agreed, expectations are aligned, and the positioning of all meetings is in line with the discussion held on the phone, which is itself shaped by the brief provided by our agency client.
Diagram 1 – Lead Management (click image to view full size)
How is each Business Development Manager incentivized?
This is arguably the most underestimated point of differentiation in the procurement of outsourced lead generation. Typically most marketing agencies will instinctively be opposed to any model that focuses (in part) on a commission paid to the business development agency, on business wins generated by them. Where a fee is in place, it will usually be 3-10% of gross profit, though the way this is calculated varies from agency to agency. Equally, the deal sizes involved will affect this figure enormously since any commission payment should be directly in relation to the work required to close the deal as a whole. In other words, setting a meeting for an established brief at a project value of £20,000 is arguably 10-20% of the overall sales process. On the other hand, setting a meeting up for a global pitch, which is later won with a value of £500,000, is perhaps more like 1% of the overall sales cycle at best. The sum payable should reflect this, and any new business agency who understands sales cycles will happily accommodate this.
In the main though, most suppliers will not charge any fee, and instead work to an “appointments set” model. At first glance this appears to be the better model for the marketing agency. In reality though, for relationships of this type to really thrive, both agencies need to be aligned in their corporate objectives. To put it another way, when you win, they win, and vice versa. In agencies where BDM’s are paid solely on “appointments set” their behaviour is shaped accordingly (i.e. a quantity, rather than quality based model). Travelling long distances for unproductive meetings is not in the interest of your agency, but qualifying meetings out of this type is not in the interest of your chosen lead generation agency if this is the basis upon which they are exclusively paid. Furthermore, if they were confident of their delivery, it is really one of the easiest to collect elements of any fee. The client only pays when they have profited significantly from any deal won.
It is worth noting that no lead generation agency will work to a commission only model, simply because the ability of the marketing agency to pitch has a significant influence on the overall process. Ideally though, there should be some risk and reward share between both business partners, which in turn is represented in the incentivising of individual staff members.
How do they understand your proposition and target market?
Typically all major lead generation partners will conduct an induction session where they map out the following:
(1) Your current areas of strength, and where you have a strong story to tell
(2) Who your target market is: sector, discipline, job title, and spend
(3) Where you currently get your data & insights from, and to what extent you want your lead generation partner to generate these
(4) What current and future PR activities you are engaged in, and to what extent the agency partner can get involved in following up opportunities through these
(5) Dependent on your target market and ideal deal sizes, how many leads will you receive a month, and of what value/need (as above)
(6) Review of existing credentials and collateral
(7) For a couple of suppliers, they may offer training to business development staff, particularly those used to referrals rather than new business meetings
Make sure that this is the normal procedure for each potential agency you consider. Anything short of this leads to vague messages, and they in turn lead to vague meetings
How does the supplier protect against lead sharing between its staff?
This is a vitally important question to ask all prospective new business partnerships. It is common practice within some lead generation agencies to share meeting opportunities with other BDM’s, essentially creating additional competition within pitches you are put forward (and paid) for. This is particularly true for agencies that do not pay their staff any win commission, since the BDM essentially has no disincentive to pass leads over to his or her colleagues. In fact, the complete opposite is true since they all have to work less if each assists the other. At the very least, this requires aggressive management of this, with disciplinary for those caught engaging in this practice.
Conversely, where BDM’s are paid on win commission and retention of clients, their behaviour will be shaped by the potential earnings lost in sharing these opportunities.
How good was their new business process and how much has their business grown recently?
This is self explanatory. If you are employing somebody to generate leads and advise you on how to win more new business, you expect them to be masters of their craft. If the Business Development Director does not impress with their understanding of new business, and your agency, then clearly that doesn’t bode well for their team.
Additionally, and less obviously, if their business is shrinking, there’s clearly a contradiction between the advice they give and their ability to execute on a new business strategy of their own. You may say that you do not employ a lead generation agency to give you advice, but simply to provide you with appointments. In some instances this may well be true. In our experience, these are the least successful relationships since they are often difficult to gain regular communication with, the positioning of meetings is misinterpreted (despite a clear meeting report being generated), and the value based on the new business agency is commoditised in a way that usually leads to a lack of long term success. In the main, we refuse these relationships in favour of a much closer strategic and long term alliance.
Clearly identify what hasn’t worked for you to date and make sure you don’t repeat the mistakes.
There’s an old saying, allegedly spoken by Robert De Bruce: “There’s no such thing as a wise man that did everything right”.
Whilst this is undoubtedly true, another saying speaks to the folly of ignoring the lessons of the past: “The ultimate sign of madness is doing the same thing and expecting different results” (Einstein).
If you have tried to recruit in house or outsource lead generation before and it has not worked, rest assured that every agency can have a successful new business strategy, including lead generation when executed well. Hopefully this article will enable you to spot any mistakes you have made previously, and to make sure you do not repeat those again in the future
Chris Gallagher is an Executive Business Development Coach at Upfront Business Development. Chris was previously a Tack International executive coach, and also developed a Leading Technology company from £2 million to £25 million in just over three years.
Upfront Business Development is a full service business development agency, specialising in the marketing services sector. Upfront offer a proactive and insightful approach to new business that is aimed at significantly increasing client agency revenue, and helping to grow their business.
Upfront provides lead generation, data & insights, recruitment and training.
If you are an agency looking to appoint a lead generation partner, and would like to find out more about Upfront, please get in touch with Matt Dyment, Business Development Director on 0207 940 4662
For additional information visit www.upfrontbusinessdevelopment.co.uk