Leads on the Line

When a California factoring company was looking for new clients seeking business loans of up to $1 million, it could have instructed its sales force to make cold calls. Instead, it hired American Teledirect, a Houston telemarketing firm, to place outbound calls to businesses in need of cash. The results were dramatic. “We provided them with more than 200 leads,” says Barry Thomas, director of operations at American Teledirect. The telemarketers’ nearly 2 percent close rate “surprised us,” he says, because establishing million-dollar leads is never easy.

Today, more companies selling high-ticket products and services are turning to telemarketing firms to generate leads for their direct sales forces. “Companies would rather have their salespeople talking to people who are already prequalified,” Thomas says. “Telemarketing companies generate leads so field sales can come in and do what they do best, sell face to face.”

The factoring company, which provides cash to clients in exchange for its accounts receivables, had generated clients through cold calling before, but there was so much rejection that “it burned out the reps,” Thomas says.

The company, which Thomas declined to name, turned to telemarketing for the first time this year. During a three-month period that began in January, American Teledirect made about 38,000 dials and contacted 17,000 businesses, mostly “apparel and other companies that have a cash need to manufacture their products and have accounts receivable after delivery,” Thomas says. The factoring company provided the list of companies to call, because “they knew the clients and were already out there prospecting.”

American Teledirect charges by the hour and uses hourly rates to calculate results. The 222 leads it generated represented 0.5 qualified leads per hour, which is a lot, Thomas says, considering that just one deal for such a high-ticket item could generate enough profit to pay for a month of telemarketing.

The success was due to the highly targeted list. “They defined their customers and did a good job providing companies of the type and size best suited for cash needs,” Thomas notes. The list targeted companies that gross between $1 million and $10 million a year, have an average invoice size of at least $100 and sell on net 30 or 45 terms.

The script used by the telereps, which American Teledirect wrote, was also a key to success. “We got to the point very quickly,” Thomas says. The reps identified the factoring company and immediately offered additional financing. If the company expressed interest, the rep asked a series of qualifying questions to determine if the prospect met the factoring company’s customer requirements.

The calling strategy was to identify and speak directly to the decision maker at each company. “We try to get past the gatekeeper, which is often a process in itself,” Thomas notes. If the contact was in a meeting or on the phone, the telerep would automatically place another call later. American Teledirect’s fully automated phone system cues callbacks at specified times that are coordinated with the prospects’ schedules.

Besides providing leads, the American Teledirect program helped the factoring company build a database by keeping accurate records of the companies called, so that callbacks can be placed to the companies in a future campaign.

The American Teledirect program was outbound, with calls placed from the company to a predetermined list of names. But telemarketing companies conduct inbound programs, too, generating leads from calls that come into a company’s phone lines.

Zacson Corp., a Pleasanton, California, telemarketing firm, conducted an inbound program for a high-tech manufacturer by answering calls that came into the company’s 800 phone numbers. The numbers had been published in ads the company placed in The Wall Street Journal and other publications. After answering the calls, Zacson reps asked a series of questions geared toward qualifying the leads. The company established A to D leads, based on whether they met a series of criteria, from their budget, to their time frame for purchase, to their level of interest.

“We qualify the leads to determine which ones are hottest,” says Alayne Kerbert, Zacson’s director of project design. “We capture the information, set them up to receive literature by fax or mail and the next day the leads go to the client for follow up.”

Ads for a variety of products or services may be running at once, but Zacson handles them with ease by establishing a different 800 number or extension for each one. The calls come into a specific line and are passed to reps who read customized scripts for each product or service with the goal to establish as many leads as possible, so reps have the liberty to “override the system if the prospect has good input,” Kerbert says.

One of the reasons telemarketing is so valuable as a lead generation tool is because it does such a good job of qualifying leads. Techniques like modeling, based on the latest computer technology, enable telemarketers to refine large lists and call only the names that will likely accept the offer.

John Calk, general manager of ITI Marketing, an Omaha, Nebraska, telemarketing firm, says the company might start with a list of 500,000 names, call 50,000 to test an offer, then determine what qualities the prospects who accepted the offer shared. “Then we build a model and run it against the rest of the 500,000 names and call the others that make the grade.”

Calk says that modeling, which has been used for years with consumer lists, is relatively new for business-to-business telemarketing programs. He says the industry has entered phase two, in which modeling will be used to append data to business lists before they are used for phone programs. “To get the best possible world of phone sales and setting up appointments for field sales, you need a relatively complex system,” he says. The system uses the latest modeling software, like IMA and Edge, which can be used to amend a list so that it becomes a more valuable tool for generating the best prospects.

Besides modeling, telemarketing firms also engage in prospecting, which involves gathering detailed information about names on the list so companies can better target them. As it generates leads for Attachmate, a Bellevue, Washington, software firm, Matrixx Marketing, a Cincinnati telemarketing company, profiles each prospect, determining what kind of computer system and network they have and how their desktop systems are set up. The information is invaluable to field sales, “because it gives them a familiarity with the company’s system,” says Jim Ferron, a national account manager at Matrixx. “It puts them one step up on the competition. They already have an in.”

Like modeling, profiling enables companies to target certain names on a list, such as companies with a certain dollar volume, number of employees or type of computer system. With this knowledge, a salesperson can more easily sell to a company or ignore it altogether if it doesn’t seem viable.

Armed with the latest software, phone switching systems that can process calls instantaneously and a highly qualified work force that can discuss virtually any product on the phone, telemarketing companies are making great strides in the business-to-business world. Their lead generation programs demonstrate how valuable they can be to direct sales forces, who often struggle to develop their own leads.

Perhaps the biggest drawback to business-to-business telemarketing is that the leads it generates aren’t always used properly. “The biggest downfall is the back end,” says Wayne Harper, vice president of sales for West Telemarketing, an Omaha, Nebraska, firm. “If companies don’t track the leads to measure the response and revenue gain by the telemarketing efforts, the programs will fail because the client has no way of evaluating the return.”

Harper also says field salespeople don’t always cooperate with telemarketing programs because “they may be reluctant to turn over their responsibility to a third party. It’s admitting they didn’t do well.” Consequently, Harper says sales managers must “initiate an internal marketing effort to get sales to buy in.” Harper invites sales managers to tour West’s facilities to teach them everything they need to know about telemarketing.

“It’s a process of evolution for companies to integrate telemarketing into their normal operations,” he says. But once they do, they’ll find out how telemarketing can boost their business by generating leads they’d be unlikely to get themselves.