A seemingly clear question, all telemarketing services should be based on per appointment compensation. Shouldn’t telemarketer only receive payment when they are successful? Why should a telemarketing company charge per hour even if they are not producing results?
It is worth mentioning, when Idea2Result begun, our motto was clear: “no results, no payment”. However, the devil, as they say is in the details, so we will attempt to present our thought process from “per appointment only” compensation to “per hour” or “hybrid” approach.
Advantage of PER APPOINTMENT ONLY COMPENSATION
This one is easy. Client only pays if appointments take place. Cost per appointment is fixed, with a meaningful track record of conversation to sales; the total cost of the sale becomes transparent. If you know how much each sale costs you from a telemarketing effort it creates a fundamental platform for company’s growth. If your ROI is positive – go with it, your business has no boundaries.
Many of our prospect clients start the conversation with a firm hold on this advantage. Let’s begin to dissect all the intricacies, assumptions and implications of such “per appointment only model”:
1. Misalignment of Interests
The telemarketer and the client all want the same thing – getting appointments, right? Not so simple. Every client’s time is precious, that is the reason they have outsourced telemarketing. Let’s look at a few examples of a campaign:
#1: 10 appointments generate 1 sale
#2: 5 appointments generate 2 sales
Which is better for the client? Easy – #2, an average of 2.5 appointments for a client instead of 10 appointments per close. However, which one is better for the telemarketing company? Clearly, it’s #1. Summary of interests:
Client – Closings
Telemarketing Company – Appointments
Typical rebuttal to this point goes something like this: “I only want qualified appointments”. Ok, but let’s realize the complexity of the “qualified”. Clearly, it must be a decision maker, but level of interest can vary greatly based on the flow of the conversation:
“We just need 10 min of your time and, if we can’t save you money, we will pay you $500!”
“Are you interested in learning more about my service and product and will you be making a purchase decision?”
Which approach is in the best interest of the telemarketing company? And which approach best suits the client? This fundamental misalignment of interests creates a relationship gap and potential room for conflict. Appointment setting formula has many variables and, in order for a telemarketing campaign to work, a telemarketer must become part of the team – not an adversary.
2. Endless Stream of Conflicts
What could be more straightforward then “I will pay you for each appointment which happens”? Not so fast, let’s examine various possibilities of why an appointment could be canceled:
– Prospect forgot
– Prospect couldn’t make it and didn’t call and app was not rescheduled
– Prospect changed his mind but says no one called
– Our client’s schedule changed and they can’t make the appointment which ends up not being rescheduled
– Other reasons and possible misunderstandings
Considering the financial pressure on per appointment only compensation, which appointments are compensated and which are not? How do we decide? Even if recordings are provided to prove that each appointment was scheduled, is it fair for the client?
3. Pricing for Per Appointment Only Compensation
Before going into details on this question, many people say, “Idea2Result is a telemarketing company, haven’t you been doing this long enough to be able to price appointments?” The answer is yes and no. We have been involved in hundreds of campaigns, and there is one common denominator: THEY ARE ALL DIFFERENT. Appointment setting formula includes so many variables, to determine the exact number of appointment to be scheduled is simply unrealistic.
Three possible outcomes for per appointment only compensation guess for pricing:
I. Per appointment fee is too low and Telemarketing Company will stop the campaign or renegotiate to per hour
II. Per appointment fee is too high and client will renegotiate or begin per hour
III. Per appointment fee is just right and per hour breakdown is acceptable for all involved
All outcomes create either the end of the campaign or a reasonable per hour rate which allows the campaign to continue. However, let’s keep in mind that with Per Appointment Only compensation, there is continued fluctuation and what worked last week might not work this week for one of the parties as data, target marketing, economy or other factors change.
4. Day to Day Relationship with Telemarketer
In a Per Appointment Only option, team environment is hard to accomplish. Telemarketer will be forced to keep the “eye on the ball only”. Administrative tasks, email communication, training and other communication with the client are potentially taking precious time away from needing to make the appointment to get paid. This creates too much pressure. Not knowing if you will get paid that day, week or month is good for sales people for motivation, but is extremely difficult for telemarketers who are making hundreds of calls per day and often take serious abuse on the phone.
Ideal environment for a telemarketing campaign allows for team work, support and cooperation. This is the only way to build telemarketing success.
5. Employee Retention
Telemarketing companies have a choice to make with “per appointment only” compensation campaigns:
I. Mirror employee compensation to client’s compensation – paying telemarketers per appointment. Finding strong agents to agree to this compensation style is extremely difficult. Long-term retention is very low due to the added stress, burn out is much higher. Furthermore, many campaigns call for appointment to be scheduled multiple weeks out, telemarketers can’t wait to get paid until appointment happens. Telemarketing company would have to take a chance by paying telemarketer and risking that appointments might not happen and they need to collect back this payment.
II. Pay employees per hour and charge client per appointment. Possible, very high pressure situation for everyone involved and creates an environment conducive for conflict, see #3 regarding pricing.
6. First Time Telemarketing Campaign
Many of our telemarketing campaigns are first time clients looking to experiment. They don’t know if their service or product can be sold through a telesales avenue, they want to experiment and tweak endlessly (weekly, daily or even hourly), until optimal balance is reached and campaign begins to work or is declared unpractical for their industry. Coming up with a per appointment only compensation for such campaigns seems absurd, it is a guessing game and the chances of hitting the right per appointment fee is very small, at least one party is bound to not be satisfied in this relationship.
In addition, if the telemarketing company does a phenomenal job for two weeks and the client comes up with the finding that his campaign should not utilize telesales, isn’t this conclusion valuable for the client? What if the Telemarketing Company has 10 clients in a row, all of whom experiment and determine at the end that their campaigns are not or telesales? By this point, Telemarketing Company is probably out of business or lost all its’ employees.
There are many other implications for the “per appointment only” compensation module from attendance (where agent feels they only want to call when they want since they are getting paid for results) to billing (which is extremely intense on larger campaign with many appointments) to verification (by telemarketing company to make sure appointments didn’t happen if client is not paying).
1. Per appointment only compensation if possible for extremely narrow type of industries and must be addressed with extreme caution of the relationship risks.
2. Look for a telemarketing company which doesn’t have long-term commitment. Although we advocate hourly compensation, we don’t advocate a situation in which a client is stuck for 1 month or more paying per hour and not getting results. Idea2Result pricing calls for 1 week prepayment with a satisfaction guarantee, refund of unused hours at any time. Furthermore, a hybrid pricing model, such as $9 per hour plus $20 bonus per every appointment which happens, removes much pressure discussed above yet offers additional incentive many clients seek.
A lack of the long term commitment presents a very considerable incentive for the employee. Telemarketer and his company realize you can stop at any time, their every hour counts just like if they earned per appointment only compensation without the downside.
As we finish this Chapter on April 27th, 2011; we have no documented success stories of any clients utilizing per appointment only compensation successfully for a long-term from any telemarketing company. This includes thousands of conversations with prospect clients and hundreds of our clients. We continue to be open and receptive to learning and evolving our way and we hope you find this chapter helpful in understanding the hidden facts of “per appointment only pricing”.