Every year, during the Executive Forum and Fly-In, a delegation of member executives from Plumbing Manufacturers Intl. (PMI) travels to Washington...
Almost everyone in the industry asks themselves, at some time, whether they should provide leads or have their sales people find the prospects. This article looks at some of the pros and cons as well as the cost of finding those elusive customers.
Benefits to the Company
The first thing to realize is that the days of sales people generating all the leads they need is over. This is the '90s. Most sales people have a hard time finding enough leads to make a good living. In looking through our lists of clients, almost every customer of ours who average 12 or more closes per month per sales representative generates at least some of the leads. To follow are some of the benefits to the company.
More Successful Recruiting
Companies who can advertise that they "provide all leads" do far better when it comes to recruiting a sales team. If you were interviewed today by two companies and one provided all leads but the other didn't, which job would you consider? Most sales people choose the leads. You will be able to attract more and better quality sales people if you provide and set the appointments. So, if you don't have the right number of sales people, providing appointments may ease your problem.
Companies that set the appointments seem to average two completed appointments per day per sales person. Our clients who do not provide set appointments average about one completed demonstration per day. I am sure you will agree that in our industry, getting into enough homes is what separates success from failure. Also, generating the leads for your staff eliminates the "Cycle Of Doom". This is a frustrating cycle where in week #1 the salesperson generates leads and appointments, then gets busy with demonstrations, financing, call backs and has no time to prospect in week #2. The result? A high-income week, followed by a low-income week, followed by a high-income week, and so on. This causes an up and down cycle of income and success that leads to frustration and low income. The company generating a constant stream of appointments for the sales team can cure this. Also, companies that generate appointments have less seasonal downs. For example, many sales people feel no one will give them an appointment in December because of the holidays. Lead generation programs usually do better at smoothing out the seasonal lumps in business.
What About Call-Ins?
Many long-established dealers rely on call-ins to provide sales for their staff. However, this makes the company far less profitable than it deserves to be. Call-ins are easy closes and tend to make your sales staff fat and apathetic at the expense of your profit. You see, call-ins are like dessert. A nice addition to a meal but not healthy if used for the main course. Many companies that have a lot of call-in business are understaffed. This is caused by pressure from the current sales staff to keep the number of sales representatives low so they can make a comfortable living just off the call-ins.
The national average from our surveys indicates that call-ins should represent a maximum of 33 percent of your sales. If it is 100 percent, your company should be selling three times what you currently sell. Don't leave money on the table. Recruit the number of sales people you need and generate enough appointments that they are demonstrating two families per night.
Yeah, But It Sounds Expensive
Like all forms of advertising, it either works or it doesn't. One way to keep the cost down is to charge your sales staff for the appointments. This spreads out the cost between both parties who benefit. This is often done by paying a higher commission on closes where the sales person generated the lead rather than if the company provided the lead. (Call-ins are normally included in the leads considered generated by the company.) This makes a huge difference in cost. For example, if you paid five percent less commission on company-generated leads, this would result in a commission savings of $75 on an average $1,500 sale. This not only spreads the costs, but it encourages sales people to generate some of their own leads and increases sales.
I have had success with a straight charge to sales people of an amount per appointment. I used to charge my sales team $25 for appointment they got when the company provided the lead. I made the plan optional. Sales people who had enough leads didn't need to buy them, but they all wanted more appointments at times and were happy to pay. So, don't shoulder the entire burden; it will make your company more efficient in several ways.
But the Community Hates Telemarketing
Telemarketing has received such bad press that some dealers are afraid to do any lead generation because they have nightmares about being tarred and feathered or branded as pushy by the community. Consider this before you take the telemarketing approach: bad telemarketing, like bad cooking, bad food and bad hygiene, is offensive. Good lead generation is good service to your customers. For example, if you are sitting at home and the phone rings and it is a phone company offering you something you don't need with a bad script, you view it as an interruption. However, if a lawyer called to tell you that you inherited $15 million from a long lost relative, you would be glad he called. If your calls are targeted, exciting, well scripted and aimed at helping the customer, you will be perceived as offering a good service. Besides, you can generate piles of leads without telemarketing. You can use shows, community meetings, other store displays, picking up bottle samples, direct mail and many other techniques if you wish.
The number of closes per month per sales representative is a number that is critical to your profitability. If your company had five reps closing 12 families per month, that's 60 closes per month! If you want the highest efficiency you can have, consider generating some of the leads for your sales team.