Pay-per-lead versus fixed rates for Accountants

An enquiry I had today for telemarketing for an accountancy firm has prompted me to write a little something about pay-per-lead or pay-per-appointment campaigns versus paid hourly or day rates to help weigh up the advantages and disadvantages with the way some of these campaigns are structured.

My prospective client is in a situation where they feel they have “wasted” £2500 on a pay-per-appointment campaign. This perception is based on 15 appointments at £150 each where only about 2 were converted to clients.

Now I don’t know about the annual revenue they expect to gain over say an average life of the client of approximately 3 years but let’s say it’s around £5,000.  Take out time and money spent on following up all of appointments, chasing the no-shows, travelling etc and the profit starts to diminish. 

Then the real big hitter.  The lost opportunity cost!  This client has absolutely no idea who has been contacted and approached for business in their organisations name.  No report or list or notes or feedback of any kind is usually provided with pay-per-appointment and pay-per-lead campaigns as the Accountant only pays for the successful leads.

So why is this important?

 There are potentially loads of prospective businesses in their local area and within their target market who could have been prospective clients but because they have already been approached as part of a telemarketing campaign the client doesn’t feel it is appropriate or professional to contact them all again so soon as there will naturally have been prospects included in the list who have asked not to be contacted again. 

Having no list or report of prospects contacted and no notes on what was said as part of the call beyond the opening script, means there is a real lost opportunity cost as the Accountant is unable to go back for a 2nd bite of the cherry and make a good impression in terms of selling their areas of specialism, USP’s or general principles, preferred methodology and above all the benefits to the prospect.  Objections and feedback is also not available which can be extremely valuable in terms of continuously strengthening the Accountancy firms position in the marketplace.

The other double-whammy for them is that the appointments were purchased on a “non-exclusive” basis.  This means the telemarketing company have sold the leads onto more than one accountant.  I was told it was around 6, that equates to revenue to the telemarketing company of £900 for one appointment or £13,500 for all 15 appointments. These are not matched to the Accountant on an individual basis and therefore puts a lot of pressure at the appointment to compete on every angle especially price.  £900 may sound like a lot of money but bear in mind that there is no indication of the cost it took to obtain the leads so it isn’t a good measure of telemarketers profit.

I am not saying that pay-per-appointment or pay-per-lead is a completely poor choice.  Of course it can be a very effective way of covering the risks of a telemarketing campaign and it can have it’s merits if budgets are tight.  What I am pointing out is not to assume that management information will be available for all prospects who were contacted as part of the campaign and to consider this as part of longer term marketing plans and longer term return on investment.

Consider an alternative of a fixed rate campaign, specifically targetted to your desired audience at between £150-£200 per day.  This is professional and conducted on behalf of one Accountancy firm only (not in a 3rd party telemarketing company name) which automatically can make a much better first impression. 

Not not only is this likely to generate at least one quality appointment per day thus automatically breaking even with the pay-per-appointment cost, the chances of converting the appointment to a signed up client is significantly increased as there is no other competition from the lead being sold to the Accountants competitors.  We provide a  full management report with detailed comments on conversations along with individual email addresses and areas of potential future opportunity for ongoing marketing activity. 

If pay-per-appointment is still a preferred option then a good half-way house can sometimes be “exclusive basis only” where the cost is more than what it would be if divided by 6 potential clients but not the total amount ie; £400.  At least that way the calling is in your name as opposed to a 3rd party agency name and there is also the option of the list being provided by the Accountant and returned at the end of the campaign with comments.  Be aware though that not all agencies/telemarketers are prepared to do this however as it is generally more profitable to generate appointments from pre-existing prospect pipeline from previous campaigns and marketing activities.

A couple of other considerations are how loyal will clients be if they were poached away from one Accountant on the strength of a 3rd party telemarketing call?  Could this happen again so easily?  Is the lifetime profit of that client likely to be less than if the client was obtained via another route such as word of mouth recommendation?  The Accountant may have to work much harder than average to keep the client.  I would be really interested to hear peoples experiences on this.

For this particular client we have now put a proposed plan in place to recover from their unfortunate telemarketing experience.  This will help them obtain new clients both in the short term and medium to long term and to keep their professionalism and integrity intact  (but I won’t be giving all of my secrets away!)

Finally, I have generalised a bit in this post but my aim has just been to share a few pointers when considering main pricing structures. I hope it helps.  

Regards,

Maxine

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