Often telemarketing is seen as a gateway into a sales career, a stepping stone to be exploited and transitioned from as soon as possible. It’s this mentality that impacts the quality of work delivered by most telemarketing companies, and combined with a low salary, high commission/pay on performance business model it breeds high quantity, low quality appointment setting campaigns. The focus is on a rep achieving their commission (a set number of appointments), not on what is best for the client or delivers the most revenue for them.
This is not the fault of the rep, but the failing of a business model that is pay on performance and the subsequent sales culture it breeds.
It’s clear why companies choose telemarketing that requires them to pay on performance/delivery model, at a glance it seems to promise low financial risk, if the telemarking company doesn’t deliver, they don’t get paid. On the surface this seems like a good idea, but it missing 2 crucial aspects.
- Trust - how can you work in partnership towards a common goal if you don't trust the 3rd party
- Pay per appointment model looses focus on the true objective of a campaign, this is not the number of appointments, it’s the value of the sales pipeline generated by the campaign
Would you rather have 10 appointments and generate 100k pipeline, or have 5 appointments and generate 500K?
So why do telemarketing companies use this business model? One answer is that it’s easy to sell, which is handy because it also means they have a high turnover of clients due to the negligible value these campaigns deliver. Here is the catch 22, how can you build trust within a business model that allows it (and is designed for it) to be broken?
The final point I’ll make in regards to this, is the immense cash flow pressures it puts on telemarketing companies. Producing lower quality and easier to book appointments becomes not a choice, but a necessity in order to produce anything approaching predictable and steady cash flow.
Addimus used this business model for many years, and we found in order to build trust and retain clients the business had to take on huge risks in terms of the campaigns we agreed to run. If a campaign was harder than expected it would overrun and we would loose all profitability very quickly, and that was the price we paid for honouring contracts and not compromising on the quality of appointments delivered. This, however, was not sustainable.
We have since moved to a daily rate model and now our clients measure us not by the number of appointments, but by the value of the pipeline they generate from the appointments we set. We’ve also noticed a change in mentality from our clients, now the depth of collaboration is much deeper and we are able to really become part of their team and work in true partnership.
The transformation from re focusing and looking at what a telemarketing campaign is supposed to deliver strategically (revenue) and not tactically (number of appointments), means that we are now delivering better results, and our clients are generating greater pipeline from less appointments.