At most technology companies, Services teams interact with customers at a rate of 5-15 times as often as their Sales counterparts. TSIA member companies are utilizing expand selling best practices to leverage these interactions to generate hundreds of millions of dollars in qualified upsell and cross-sell opportunities with their existing customers.  

This past spring, TSIA launched an in-depth survey on the practice of generating leads through Services touchpoints. It was the first study to go into depth around the practices and key metrics that are most tightly connected with success in this effort. While the specific findings of the survey are only available to TSIA members, I’d like to share one of the more interesting pieces of information that came to light from the survey data. We discovered how remarkably low-cost these Services-generated leads are. In the hopes of helping companies like yours understand what an incredible opportunity there is to be had in this area, we’re making this cost-of-lead data public. 

A Look at the Cost of Leads from Other Sources

HubSpot and other marketing platforms estimate that a lead generated by inbound marketing channels, whether a blog post or other activity that drives an inquiry, costs between $70-110 per qualified B2B lead. The cost of generating a lead through outbound marketing, whether through CPC advertising, direct mailings, or other outreach, is as high as $220 per lead.

Similar costs are incurred for lead generation by Sales Development reps. In general, a prospect will pick up the phone on one out of every 10 cold calls, and about 2 of those 10 will result in a lead, giving them about a 2% hit rate overall. If you take the total number of leads that a rep generates, and arbitrage that number against their total compensation and time spent on lead generation, the number likely will come out to roughly the same price as a marketing-generated lead.

lead generation from services  

(Click image to enlarge.)
Sources: TSIA Lead Generation Through Services Survey, 2017 and HubSpot "State of Inbound Marketing 2015."

Not Just Cost-Effective, But Effective

In contrast, TSIA research shows that Services-generated leads are far more economical, and are perhaps the most cost-effective leads currently available in the B2B technology sector.

In our 2017 Lead Generation Through Services Survey, TSIA utilized the following method for calculating cost-per-lead: We looked at the time that a Services rep spent talking to the customer about a potential opportunity, then added the time that the Services rep spent inputting the lead into the system, usually into a custom screen that was connected to the CRM. If the company utilized any human curation or intervention between lead generation and passing to Sales, that time was factored in as well.

Once the total time spent per lead was calculated, we applied the time against the TSIA-benchmarked US hourly rate of the services delivery rep in question. After performing this analysis, we found that the cost-per-lead fell anywhere between $6.70 for leads generated by Support Services and $73.80 for leads generated by Professional Services. The more relationship-based services teams, such as Customer Success, took slightly longer to discuss an average opportunity, whereas the fix-and-repair services delivery reps such as Field Services technicians or support engineers took less time to speak with the customer when generating leads. The latter, therefore, had a lower relative cost.

cost per lead in technology companies  

(Click image to enlarge.)
Cost-per-lead by service organization Source: TSIA 2017 Lead Generation Through Services

Making Services-generated leads even more appealing is that there isn’t any out-of-pocket cashbeing spent in the process of creating these leads. The call or interaction with the Services rep is going to happen anyway. The time spent on lead generation is merely an opportunity cost—the time used to create an opportunity rather than moving on to the next case. In fact, if the customer is in a paid support or managed services contract, it can be argued that the customer is actually paying for the cost of the lead generation, driving the actual cost down to practically zero.

The leads that Services professionals generate turn into qualified opportunities over 50% of the time, and 20-27% of them result in closed deals. That compares favorably to marketing or inside sales leads. This indicates that services-generated leads aren’t just cost-effective, but effective.

How to Generate These Low-Cost Leads

If you’re interested in taking advantage of these Services interactions to generate leads with existing customers, TSIA recommends you take the following steps to get started. Far more detailed instructions are available to our members, in research such as the recently-published paper, “Getting Started with Expand Selling.”

Step 1: Set Well-Defined Boundaries and Achievable Goals for Your Pilot

Start with a services delivery group where you have full visibility into their success metrics and full control over their processes. As with any experiment, you need to solve for a minimal number of variables. Also, don’t expect millions of dollars in pipeline in the first 6 months. The purpose of the pilot is to prove that lead generation can work, and to see how it will be implemented in the best way for your company.

Step 2: Secure an Executive Sponsor

In nearly all cases where a pilot has been successful, the group running the pilot has secured the blessing and support of a member of the senior leadership team before beginning with the rollout. This will help you gain the cooperation of Sales, Sales Ops, Marketing and other functions that will be dealing with the leads after you generate them. There will be some rough spots as you get started, and an executive sponsor can help make sure all parties stick with it.

Step 3: Hand-Select a Volunteer Group

Chances are, there are people in your Services, Support, and Success organizations who are already having upsell and cross-sell conversations with your customers. These are the people you want to start with when you launch your pilot. And remember, lead generation should always be a voluntary activity. It is only done when taking a lead is directly in the best interest of the customer, and only after the problem at hand has been resolved.

Step 4: Be Flexible on the Metrics

For whatever group you select, make sure to give them some relief on their core metrics. If this is for Support Services, give them the extra leeway on time-per-call and grace on the number of cases resolved. If you are encouraging your Field Services or Professional Services teams to start taking on more upsell and cross-sell responsibilities, consider making these functions part of their direct hours. This will take much of the pressure off them to try this new experiment.

Step 5: Piggyback off of an Existing Process

Don’t create new systems or processes to start. Perhaps you have a dedicated Inside Sales team doing outreach and qualification who can have that first conversation to qualify the leads your Services teams uncover. Perhaps you can leverage your marketing team’s MQL process. Keep the initial effort as uncomplicated as you can, if for no other reason than you might have to do it over once you understand how things are actually working at your organization.

Step 6: Attack It and Track It

Expand selling pilots must be mercilessly tracked, and if you’re going to get permission and funding to grow the program, your data must be impeccable. Give yourself enough time and data points to make sure the data is sound, and again, keep as much of the pilot as possible under your own control.

Step 7: Recognize the Victories and Lay the Groundwork for an Expand Selling Culture

You should start to see the results of your program within about 6 months, though his time frame may vary depending on the length of your company’s typical sales cycle. In the meantime, make sure you’re tracking the first downs as well as the touchdowns. When a lead moves up the forecast into the qualified pipeline, make sure you report on that, and talk about the success in your team meetings and newsletters. Once other teams find out about the success your pilot group is having, there’s a good chance they’ll want to jump onto the bandwagon.

Learn More About Getting Low-Cost Leads and Expand Selling

TSIA’s Expand Selling line of research is aimed at bringing together the people, process, and technology required to drive cost-effective leads and revenue from existing customers. The full results of our Lead Generation survey are available to our members, who also have the ability to ask questions of the TSIA Research team, have access to webinars, and interact with others in the Expand Selling member community, where you can discuss best practices with companies who are facing similar challenges.

I go into more details on not only the cost of services-generated leads, but also the overall revenue potential in the white paper, “Generating $7 B2B Leads from Your Customer-Facing Teams,” available for download here. Also, if you’re interested in participating in TSIA’s latest survey around the upsell and cross-sell motion, please click here to be taken to the survey page.

 
 
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Steve Frost

About Author Steve Frost

Steve Frost is the vice president of expand selling research for TSIA. Throughout his career, he has held various leadership and business development roles at companies like Google, Netscape, and Loudcloud, helping them define their go-to-market strategy and business development tactics. Steve is dedicated to helping technology organizations understand and implement new sales approaches that are both helpful and contextual to their customers, as well as utilize services touchpoints to drive new leads, increase revenue, and provide better customer outcomes.

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