What You Really Get From a Commission-Only Outsourced Sales Program
There are several types of payment options available when utilizing outsourced lead generation programs. At LeadJen, we use a blended payment model, as we have found it incentivizes the best sales behavior. While other models are based on producing as many leads as possible, or not rewarding sales achievements through commission, our method is aimed at the core of what we provide – high quality, no nonsense leads that will convert into opportunities.
We sat down with Jen Burdess, VP of Finance and Operations, to talk about the different kinds of payment methods commonly seen in outsourced lead generation, and why we have chosen an option that best suits our business model.
How are Outsourced Lead Generation Services Compensated?
There are three primary methods of payment for outsourced lead generation: commission only, hourly, and the blended model.
The commission only model pays based on how many leads are generated for a company. This model can be effective for generating a large quantity of meetings, as sales development representatives are incentivized to get as many as possible to maximize their profits. The hourly model has no commission structure: it is simply designed to pay employees an hourly wage, regardless of how many leads they produce. A blended model takes from both and merges them together: a flat fee plus a commission component.
While benefits exist for each of these models, it is important to recognize what each of these models encourages and the drawbacks to them.
The commission only model produces a high level of performance, but lacks the benefit of quality assurance. Employees are encouraged to set as many meetings as possible, but doesn’t take into account meetings that aren’t qualified. No investment is made in the client’s success or failure from those appointments, meaning while you will be getting many leads, the quality will be more questionable. We call these types of customers “tire-kickers” – people that, in the analogy, test the wheels of a car without getting into it, driving it around, and seeing how it will perform on the road. A commission only approach does not take serious interest into consideration.
The hourly model pays employees for their time, but does not take into consideration the results that they produce. Whether you make one lead or 100 leads, each employee is walking away with the same paycheck. Statistics have shown that incentive-based initiatives can produce up to 22% more results from any given team. By not rewarding outstanding sales behavior, you’re discouraging performance by pandering to the lowest common denominator. While this model provides employees with stability that can result in higher retention and morale, at best it can only develop a good sales team, as opposed to a great one.
Why Does LeadJen Use a Blended Model?
We follow a blended model payment approach because we have found that it produces the best results from our employees. LeadJen employees are highly qualified in their lead generation roles, completely invested in a client and why the product they have is important and valuable to potential customers. By giving a well-rounded payment structure, employees can focus on both numbers and quality.
A great lead generation company is based on producing meaningful results – LeadJen commissions employees on a portion of qualified meetings to ensure that the service you are getting from us has value. When we set an appointment, we make sure it is as qualified as a lead can be from a cold call. We’re looking to make sure we’re talking to the right person, the right organization, that the pain that the company has is real and can be fixed by the product or service you have to offer. Our team is incented to hit quotas so that our clients are getting valuable meetings.
If you don’t mind leads that want more information (“tire-kickers” who aren’t particularly interested or sold on the product that you have to offer) a commission only model may work for you. But this isn’t the case for all companies. If you have a targeted market with specific criteria, an aggressive sales role, or meetings set that will provide you with real opportunity, seek out a lead generation company that follows a model that will bring out the best from their employees. People who need results must use methods and models that produces them.
LeadJen is a lead generation company dedicated to success in appointment setting services. We focus on the needs of your company – knowing your product inside and out so that when you go into a meeting, your customers are already invested in what you have to offer. A quality lead generation company doesn’t just provide numbers, but results that you can count on.