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Wednesday, February 11, 2009

We regularly get asked whether we work on a "pay-per-appointment" or "pay-for-performance" basis for our appointment setting services.

It's worth exploring the subject further to explain our views on this compensation model for appointment setting and why we believe there's a better way.

Pay-per-appointment sounds like the holy grail for most clients.

It appears (at first glance, anyway) as a zero risk option. With the popularity of Google's pay-per-click and other pay-per-lead online offerings it sounds like a no-brainer, right?

Well, like most things in life, it's not that straight forward.

Here are 4 things to consider if you're looking at pay-per-appointment or pay-for-performance appointment setting:

1) Compensation - it's pretty much universally acknowledge that commission-only sales compensation packages have been discredited. Think of all those mis-selling scandals within the pensions sector. It may still exist in the world of double-glazing and time-shares (do you want your business associated with these people?) but elsewhere business has realised that a balanced compensation plan which includes both a basic and performance element is the best way.

Why? The main reason is that performance-only plans motivate people to only be interested in making a short-term sale and encourages manipulative, aggressive and hard-selling tactics (watch the films "Tin Men" and "Glengarry Glen Ross" for more on this).

In the context of pay-per-appointment setting this translates to a boiler-room approach to closing the meeting at any cost.

After all, no meeting means no money so why should they care if they upset a few people? Think about all those arrogant sales people who've cold-called you in the past, pushing for you to agree to something that you weren't interested in and simply ignoring what you were saying just to close the deal. Do you want those people calling your potential clients and representing your company?

2) Quality - OK, so you've got your appointment, the next thing you need to think about is whether it's any good. I've written previously about this (see my post Just what is a qualified appointment?) but it's worth stating again.

A "qualified" appointment means that the person booking the meeting has to apply their skill and judgement to evaluate the quality of the appointment before agreeing to book it. This involves asking qualifying questions and deciding whether the meeting is worthwhile.

If you want a qualified appointment then your appointment setter needs to actually decide to not book some appointments.

When I talk with prospective clients they all want good quality, qualified appointments with senior decision makers. No-one wants to waste their time, do they? So our clients are trusting us to follow a process which includes qualifying out some opportunities before agreeing to book an appointment. If we follow that process correctly, it inevitably means that we may work hard, pitch a number of decision makers and not book any appointments - because they didn't qualify.

Does that make sense?

People pay us to set up qualified appointments. Our performance can be evaluated in a number of ways, one of which is the number of appointments we book, another is the number of decision makers we pitch and qualify, and a third is linked to activity (such as time worked).

We've not got a problem being rewarded on a results-focused basis (all our fees have a performance-based element) but it needs to fairly reflect what we actually do.

3) Pipeline - another thing about pay-per-appointment or pay-for-performance appointment setting is that it only focuses on short-term results at the exclusion of developing a longer term pipeline of contacts.

As I've blogged about many times before (see Is telemarketing a short or long-term investment?) much of the value in a telemarketing campaign comes from developing relationships over a number of touches. In addition, utilising integrated marketing tactics, such as email marketing, seminars, direct mail, etc all add to the overall ROI.

When you pay-per-appointment you really are only seeing the tip of the iceberg and have no visibility of what's below the water line. Pay-for-performance appointment setting companies will not give you any details about who else they've called, the conversations they've had or even what stage other prospects are. You'll get no feedback on future requirements, competitors, review dates, etc.

Any why should you? You're only interested in the appointment, right?

What this means is that while you're only working with the 1% who have agreed to see you, your competitors are building relationships with the 99% who want more info, have future requirements, and generally are not ready right now.

Do you think an appointment setting company is interested in sending your latest piece of thought-leadership collateral? Are they motivated to nurture those relationships so that you're positioned to be invited on the next RFP?

Of course not! You're not paying them to do that, are you?

4) Risk - finally, the most over-looked element of pay-per-appointment or pay-for-performance appointment setting is an appreciation of risk. Most companies consider the model to be zero-risk. But, the reality is that it only eliminates one risk - the risk of paying and getting no appointments.

As we've covered already, there are other risks associated with pay-per-appointment models that are rarely acknowledged.

There's the risk that the person calling is so motivated to book an appointment (if they don't book an appointment they don't get paid, right?) that they'll be aggressive, use manipulative techniques and generally strong-arm the prospect into booking. Or perhaps they may just come across as desperate, booking the appointment for "just 15 mins" in a way that positions your time as worthless.

Remember, as far as the prospect is concerned it's your company calling them. Is that a risk you want to take?

Another risk we've looked at is the risk of wasting your time. How much does it really cost you to attend a sales appointment? Whether you're a sales person or business owner I guarantee that it's more than the cost of making the appointment.

If you get sent on a wild-goose-chase of an appointment that's been squeezed out by a paid-on-results telemarketer it will cost you. Unqualified appointments cost you in many ways, including the fact that while you're kicking your heels in reception, waiting for someone who's in their office wondering why they agreed to see you, you could be seeing someone who does want to buy.

And, finally, there's the "opportunity risk".

I'm talking here about the risk that you're leaving money on the table, letting your competition build relationships which you have no visibility of, and basically having no control of the marketing process.

This latter point about control needs some explanation.

Pay-per-appointment firms generally use their own data. This is typically a well-worn database of contacts that is shared across multiple campaigns for multiple clients.

Have you asked yourself why most of these pay-for-performance appointment setting firms focus on just one sector? It's so they can re-use the data and contacts they have. And if you're going to re-use the data then working exclusively with one company per sector just doesn't make sense.

Let's leave to one side the fact that they will often be calling on behalf of your competitors at the same time as they're working on your campaign; handling competing clients actually allows these firms to leverage their success (ever wondered why your competitor always seems to have signed into the same companies you meet with?)

Anyway, they also use the same data because they're not going to invest in new data just for you, after all, you're only paying for results. And if they're using the same data, after a while they get to know the "usual suspects" who will always see someone for an appointment. That's their low-hanging-fruit, right?

So they go after them first, get you a quick initial flurry of appointments, everything's looking great.

Then, a few months into the campaign, it starts to dry up a little. The number of meetings coming in slows down. The quality is dropping, further still. And all the while time is ticking, targets are getting closer and you're not getting the traction you need.

Why is this?

The reality is that once you get past the low-hanging-fruit and the lucky-you-called-me-today's, there's a lot of graft needed. Activity needs to continue, diligently calling back, sending info, building those relationships.

For the pay-per-appointment firm this is a diminishing return on their time.

Why should they be investing in building a pipeline they're not acknowledged for? Better to move into the next new client and start harvesting that low-hanging-fruit again.

We've worked with clients who come to us after they've been through this process and have spent months spinning their wheels. They can't get any meaningful data, they've had a handful of good, bad, and ugly appointments and now the pay-per-appointment setting firm isn't returning their calls.

Of course, if you've got no money to invest in marketing then pay-per-appointment might be all you can afford in the short-term. Who knows, you might just get lucky and close one deal quick enough to keep paying for more appointments. In my experience, it seldom works out that way.

Or perhaps you've got a hungry sales team of road warriors and you just want to keep them busy. Pay-for-performance appointment setting could be for you. After all, look at the number of meetings and activity targets they're all hitting.

But, surely there's a better model than that?

Over the years we've found it's better to have a fee model that strikes the right balance between fees that ensure focused activity and a performance element linked to revenue generated.

With us you pay some fixed fees (which are significantly below usual day rates of telemarketing companies), plus a % commission on revenue generated from appointments attended.

We believe this model ensures both that activity is focused and that we have a common objective of only delivering qualified sales appointments that don't waste your time.

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Posted by: David Regler @ 10:38 am |   | Links to this post  

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  1. Feedback At 8:54 pm ~ Blogger davidp said...

    Great stuff I am VERY interested in this type of service. I hate making cold calls and trying to set up appointments to meet with business owners. Thanks for the info.
  2. Feedback At 9:27 am ~ Blogger Jenna Simpson said...

    This post is really stuffed with the nuts and bolts of pay per appointment. The author has written an in-depth review of what pay per appointment is.

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