Telemarketing Cost Per Sales Lead

Definition:

This KPI measures the cost incurred per sales lead done through telemarketing. This is a KPI-class

Business Objective behind this KPI:

• Maximizing Tele-marketing Effectiveness on Sales Lead Generation
• Maximizing the accuracy and quality of Leads database
• Minimizing the telemarketing costs, while maintaining the effectiveness

Explanation & Specification

The telemarketing cost is a good indicator for your telemarketing and cost management efforts. One has to careful on how you define it. Telemarketing cost here is the total cost of all telemarketing call made. Let's take an example where you have made 100 telemarketing calls. Out of which, you had 10 wrong or dead numbers, 20 calls converted into next conversion step and 2 calls converting into sale. If you incurred USD 1000 for these 100 calls, you will have the following values of KPIs:

• Telemarketing cost per lead=1000/100=10 USD
• Telemarketing cost per accurate lead=1000/90= 11.11 USD
• Telemarketing cost per lead, converting into next conversion step (like customer meeting) = 1000/20 = 50 USD
• Telemarketing cost per lead, converting into sales = 1000/2 = 500 USD

Farther is the conversion step away from the telemarketing step, looser is the linkage of this KPI with the business objective. Therefore immediate next conversion step after telemarketing has a strong linkage, and final sale conversion has a loose linkage.

Inclusions & Exclusions

Telemarketing costs can have different shades, it can include the direct cost (staff, telecom costs, acquisition cost for telemarketing databases, telemarketing software costs) and also the indirect costs (IT back-bone like LAN and WAN costs, facilities costs, fully loaded cost per employee..). Calculations of these costs become easier if you have fully or mostly outsourced your telemarketing.

Sales Leads Telemarketing calls are those calls where you are making a cold call or having first verbal contact with the customer (say if customer has filled up 'please call me'request your POS..). If you are calling a customer after the initial contact has been made, it may as well be considered a part of sales conversion process, and not telemarketing, and is excluded from the calculation

Clarity is needed on

Different conversion steps need to be defined, in terms of what will be considered as completion. If not done, the metrics go misrepresented. For example, when we say something as cold lead conversion to warm lead through tele-marketing, the definition of warm lead should be defined. A warm lead can be:

• A customer asking to call-back again OR
• A customer asking for the brochures to be sent OR
• A customer agreeing for a meeting etc.

Success factors for this KPI

As mentioned above, more are the conversion steps between telemarketing and final sale, less if the impact of telemarketing effectiveness for the sale closure. The success factors for this KPI-class are:

Effectiveness

• Strength of your telemarketing script.
• Training and Orientation of your telemarketing staff
• Ready FAQ, to be prepared for any queries by the customer.
• Information you have about the lead before you make a telemarketing call
• Level of customization you do in your telemarketing scripts depending upon the customer profile
• The level of information you gather on the customer in the telemarketing. This helps in the next line of conversion steps.
• A good brand-recall value. If customer has heard about your product, he or she will be more receptive.

Cost Management

• Productivity of telemarketers through telemarketing process and level of automation
• Facilities and Infrastructcure
• Right mix of out-sourcing and in-sourcing

Root Cause Analysis and interpretation

If the value of this KPI is low, it means that either your effectiveness of telemarketing is low or your one of the above success factors is not working. You can do a root cause analysis by:

• By applying different training and telemarketing scripts and analyze the results.
• Conducting a survey of customers who converted and did not convert, to understand the customer voice.
• Analyzing the accuracy of information in the telemarketing database by sample checks.
• Look at your brand-recall results.

Measures-Facts associated with this KPI (Refer dimensional modeling in data Warehouse section)

• Number of Sales Leads
• Number of calls made per sales lead (You may be making more than one call for a sales lead)
• Number of telemarketing staff
• Cost of telemarketing

Dimensions and some of their attributes (or cuts)over which you can slice and dice the KPI.

• Product
• Location
• Sales Channel
• Telemarketing company (a telemarketing unit is internal to an organization and it may be hiring the telemarketing companies)
• Tele-marketer (specific tele-marketer team or an individual person)
• Lead value-slab (high value, medium value)
• Lead priority (high, medium, low)
• Lead Source (external database, existing customer, point of sale..)
• Time period

Direction of improvement

Maximize

Industry Relevance

All

Functional Relevance

Sales & Distribution