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In our multi-part blog series on organizational convergence, TSIA’s Phil Nanus and others have written extensively about the convergence of sales and services in an XaaS world. For a great primer on how these lines are blurring, be sure to read his blog post or Chapter 7 of the Technology-as-a-Service Playbook. A much less talked about topic, however, is the convergence of marketing and services, and their potential to work together to drive cost-effective leads and revenue from existing customers.
According to HubSpot and other sources, the cost of an inbound marketing-generated B2B technology lead is between $50-100, with the median being just over $70. As stated in HubSpot’s 2014 “State of Inbound” report based on annual survey results, the cost of an outbound marketing generated B2B lead was $220.
Sales-generated leads are about the same cost, though getting there requires a little more math. The average compensation, including commission, for an inside sales rep is just under $50,000. That works out to about $200 per day. A good rep will make between 50-100 outbound communications per day. The hit rate for lead generation on cold calls is about 2%, and for email is about 4%. If you blend those together, you can stipulate that a productive rep can find 3 actionable leads per day (although I’ve run inside sales teams, and this estimate is probably a bit high). Even at that aggressive conversion rate, it comes out to around $67 per lead. Outsourced lead generation companies charge between $75-150 per qualified meeting they set up, so the numbers align.
A productive sales rep can find 3 actionable leads per day at around $67per lead.
Services-generated leads are much cheaper. In the course of their interactions with customers (which happen at a rate at least 10x that of sales), your services delivery teams will come across new opportunities with your customer base. TSIA Expand Selling provides the frameworks, coaching, and research necessary to safely convert these touchpoints into actionable sales leads without compromising the core mission of services or their status as trusted advisor.
Services-generated leads are much cheaper. In the course of their interactions with customers (which happen at a rate at least 10x that of sales), your services delivery teams will come across new opportunities with your customer base.
The total time-per-lead-generated by a services rep is around 20 minutes on average. That includes the time talking to the customer about the opportunity and time spent inputting the lead into the CRM or other system they use for tracking. The average US salary for a support engineer is around $70k, or $35 per hour. If it takes 20 minutes to take a lead, that’s $11.67 per lead, or between 7-22x less expensive than other sources.
An important note: that number does not represent a hard cost for these services-generated leads, but rather only an opportunity cost. Meaning, the call is going to happen anyway, and this is just 20 minutes of time that the rep isn’t spending on another call. Plus, the customer is actually paying for the call where the lead is taken. Depending on how you approach the accounting, the incremental cost of these leads may be even less, because there is little-to-no cash out of pocket being spent.
Marketing and services are coming together in more areas than just lead generation. The marketing function has advanced deeper and deeper into the sales cycle over the last 20 years. Prior to the internet age, customers might have gotten a direct mail piece or would stop by a trade show booth, but the vast majority of the information they needed to make a purchase came from, and was controlled by, salespeople. As the dot-com era dawned, it became easier and easier to research information about technology offerings and their sellers. In the social media era, prospects can easily connect with people who are already deep into their implementations, read candid reviews, and ask their peers the questions they previously might have asked a salesperson. If the services teams can’t get customers to adopt their technology or realize the value they seek, prospects will find out. Customer success becomes key to customer acquisition.
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In the world of XaaS, easy adoption and lack of friction allow potential customers to use and purchase software without ever interacting with a salesperson. This freemium model has led to a situation where the services team, usually customer support, may be the first human contact the customer has with your company. It becomes the job of services to not only inform and help the customer, but to also tee up the sales team to sell value-add services or enterprise-wide licenses—in other words, the traditional role of marketing. Services, sales, and marketing must all work together to inform the customer and make sure the initial adoption of the technologyleads to bigger and better things for both the customer and the seller.
Given these remarkable opportunities, it’s critical that marketing and services have to be on the same page. TSIA member companies who utilize their services teams to generate sales leads with existing customers are generating tens of millions of dollars in qualified pipeline. They are doing so without compromising the core mission of services as trusted advisor or seeing decreases in their core metrics. This survey will capture the key performance indicators associated with lead generation through services touchpoints, and examine the associated practices that lead to success. Anyone who participates will have access to the useful results. Click here to take the survey and contribute to TSIA research.
Read more posts in the "TSIA Organizational Convergence" blog series:
Post Date: March 16, 2017
Steve Frost is the vice president and managing director of revenue research and advisory for TSIA. He also serves TSIA’s vice president of expand selling research. 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 grow their services, subscription, and XaaS revenue by optimizing their practices for growth throughout the customer lifecycle.
The Technology Services Industry Association (TSIA) is dedicated to helping technology and services organizations large and small grow and advance in the technology industry. Find out how you can achieve success, too. Call us at (858) 674-5491 or we can call you.