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Why Your Competitors Are Paying for High Quality Outsourced Software Sales Leads

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If you’re a B2B software company owner, CEO, COO, VP of Sales, or Sales Director, you’ve likely wondered about outsourcing your B2B software sales. If so, the next thing you’d want to know is “how much does this cost?” 

It’s natural to want to pay the lowest possible price for outsourced sales leads. Let’s face it, being in sales, we’re all trained to look for a good deal. 

But, do you really want to cut a “good deal” when it comes to your software sales leads?

Is working with a low-cost vendor the best approach for outsourcing your lead generation? 

In this article, we break down:

  • why your competitors are willing to pay for high quality outsourced sales leads,
  • the difference between low quality and high quality leads, and
  • what you should consider when paying for outsourced sales support. 


Let’s start with how to determine the right investment to make in lead generation. 

 

Customer Acquisition Cost – Is it really about getting customers at the lowest possible cost?

If you look at the top Google results for calculating your Customer Acquisition Cost (CAC), you’ll see a number of articles aimed to help you reduce your CAC. 

Simply put, your CAC is your entire cost of sales and marketing over a specific period of time, divided by the number of customers that you have acquired in that period. 


CAC = (total cost of sales and marketing) /
               (# of customers acquired)

 

So for example, if you spend $100,000 to acquire 1,000 customers, your CAC is $100.00. 

Most startups and software companies understand that they need to invest in their CAC to build their business and be profitable over the long term. 

If you don’t invest in your CAC – content marketing, paid ads, demos, sales calls, etc… – you will miss out on customers, revenue and stall the growth of your business. But, if you spend too aggressively, your CAC payback period will outpace your revenue growth, and you will struggle to recover your CAC investment. 

At first glance, you might think the goal is to reduce your CAC – why wouldn’t you want to spend the lowest possible amount to attract customers – right? 

Wrong.

When you reduce your investment in lead generation and sales, you are also directly reducing the quality of the leads you’re attracting – hang tightwe’ll explain more about this later. 

The goal is to optimize your CAC so that you are strengthening the effectiveness of your sales and marketing investment. The objective is to invest in proven channels, approaches and talent that will deliver you the best returns so that you aren’t wasting your money and you are growing based on high quality leads that will turn into a high Customer Lifetime Value (CLTV) for your business. 

 

The Difference Between Low Quality and High Quality Leads

You know the saying, “you get what you pay for?” 

Well, that couldn’t be more true when it comes to the quality of your leads. 


Why does lead quality matter?

 

Good Leads vs. Bad Leads

Quality

Good Leads 🥳

Bad Leads 🥴

Outcome

  • Worth the investment
  • High chance of conversion
  • High chance of retention and loyalty 
  • High chance of investing in upgrades
  • Good brand advocates
  • Excellent referral sources
  • Drain your company’s time and resources
  • Have a low chance of converting
  • Have a low retention value
  • Won’t invest in upgrades
  • Are not ideal brand advocates 
  • Aren’t the referral sources you want

Characteristics

  • Aligns with target audience
  • Has a problem or need you can solve
  • Is motivated to do business
  • High decision making power
  • Ready to build a mutually beneficial relationship
  • Deepens the relationship 
  • Does not align with target audience
  • Aren’t interested in doing business
  • Low decision making power
  • Is in it for a “1-sided” relationship 
  • Takes what they can get

Investing in poor quality leads is like throwing your money out the window. 

 

Why? 

 

The bottom line is they have a low probability of converting into a sale, and even if they do, their chance of retention, loyalty, upselling and referring you to other leads is incredibly low. And then, even if they do stay on as a customer and refer you, they are likely referring you to other low quality leads with similar motivations. 

We like to think of investing in low quality leads like building a house on a foundation of hay and sticks – and we all know what happened to the two little pigs that chose that approach. 

Companies that end up with a high volume of low quality leads usually do one or more of the following things:

  • Invest the lowest possible amount in lead generation and sales
  • Look for shortcuts to growing their lists
  • Have poor lead qualification 
  • Resort to “spray and pray” marketing tactics that aren’t data driven
  • Invest in low talent outreach 
  • Only focus on one or two channels for outreach
  • Apply overly aggressive or too passive of an approach to prospecting 


The Tale of Two Leads

Here’s a quick story for you that recently happened here at Hyperio.ai. At Hyperio.ai we deliver qualified leads for B2B software companies that want scalable growth – so as you can imagine, we hear stories from our prospects on the regular. 

Recently, one prospect told us that they had just tried a 3-month experiment, investing only $2,000 a month with a low-cost sales outsource vendor to find more leads and book demos for their software business. You can imagine how that went, so we’ll skip to the end of this tale and tell you the outcome – they said to us “you get what you pay for.” Their low-cost outsourcing “solution” didn’t deliver leads that converted. Their $2,000 monthly spend went down the drain, and worst yet, they missed out on opportunities and any return on their investment. 

But, let’s take a closer look at this story for the sake of understanding why any company could have avoided making this mistake upfront. 

If you invest only $2,000 in SDR work, that means that one full-time person is making approximately $11 per hour – but more than likely $7 per hour when you account for overhead. At just $7 an hour, there is a very low chance that these SDRs have the coaching, training, experience, tools and proven approaches to find, qualify and deliver high quality leads. 

Now, the average SDR salary right now is approximately $60,000 a year. If you add about 30% for benefits and taxes to the employer, now we’re at $78,000 a year – plus add on management, coaching, training, and percent utilization under 100% through the year,  and you are closer to $90,000 per year – which works out to an investment of about $7,500 a month – and remember this is just for one full-time SDR. 

The takeaway from the tale above, is to be very cautious when you compare quotes for your SDR work and your cost-per-lead. The chances are, the lower the quote, the higher the chance you aren’t getting a Sales Qualified Lead (SQL) and you’re likely getting a Marketing Qualified Lead (MQL) at best. 


What Should You Pay for Outsourced Software Sales Support? 

To answer this question, there are a number of factors and variables that you need to consider. 

First, ensure that you have a good understanding of your CAC and CAC/LTV ratio. 

Next, determine if outsourcing is right for your business. Here’s a handy pro and con list to determine if outsourcing your sales for your B2B software business is right for you. 

Then, you’ll want to check out a number of companies that specialize in sales for your industry – ex. B2B software sales. The quotes will likely vary depending on the exact services you are looking for, but what it comes down to is weighing the cost and quality of the leads. 

Consider if the vendor you’re looking to partner with:

  • Has deep and long-standing expertise 
  • Targets outreach to your ideal customer profile
  • Strengthens your value proposition messaging and competitive positioning statements
  • Uses automation and intelligent workflows for outreach
  • Optimizes their workflows based on data and insights 
  • Provides in-depth onboarding
  • Offers a dedicated SDR model – focused on you and your account 
  • Provides transparent reporting and metrics 


At
Hyperio.ai, we do all of the above and more. 

Our methodology is based on best practices derived from more than 35 years of B2B software selling experience. Whether you’re interested in our services, or just want to chat about lead generation, we’re happy to share our expertise and talk with you about how you can grow your business – commitment free!

Book a no obligation call with us today! 

 

And, if you don’t give us a shout, let us leave you with some helpful and free advice: 

Be wary of any company that claims they can start selling “right away,”  will deliver “thousands of leads to your door,” or has the “lowest possible cost per-lead.” The chances are, if you are hearing these things, they’re too good to be true. 

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