Outsourcing your telemarketing or running it in-house?

Before you decide whether to run your own lead generation, sales prospecting or inside sales programme, or to outsource it, have a look at the real cost of doing it yourself.

When you can hire a telemarketer for around $25/hour, it follows that the cost of running an in-house programme must be much less than outsourcing it.   In fact, when you take into account all of the indirect (hidden) costs you’ll actually be paying at least $60/hour to run your in-house operation. And because things rarely go exactly to plan, it’s likely that the real cost will be around $80/hour.

Here’s why…

The basic hourly rate you will pay the telemarketer will be somewhere between $25 and $30/hour depending on skill level. Can you pay less than this? Yes, but as with all things, you get what you pay for. Do you want someone experienced who will get results, or do you want someone who’s cheap? There’s a great saying in business: “If a professional is too expensive for you, try hiring an amateur”.

The actual costs of running your own internal SDR/lead generation/inside sales team can be broken down into 4 areas:

1. Direct costs (wages & on-costs)
2. Indirect costs (all the other costs you incur to establish, support and run the operation)
3. Items that you don’t get when you run the programme in-house
4. The cost of things that go wrong

 

Direct Costs (typically $38-$45/hr)

• Wages
  While you will pay your lead generator somewhere between $25 and $30/hour depending on their level of skill and experience, you also have to add:

• Sick leave@ 5 days per year = $937
• Holiday pay@ 4 weeks per year = $3,750
  Public Holidays @ 13 per year = $2,438

(Note: these are added on because with an outsourced resource, you do not pay for sick leave or holiday time.  Every single day and hour you pay for is worked)

• Sales commission@ 15% of salary = $7,350
• Superannuation@ 11% = $5,675
• Worker’s Compensation@ 5% = $2,450
• Payroll tax@ 5.45% = $2,670

Can you pay less than this? Yes, but you get what you pay for. Do you want someone experienced who will get results, or do you want someone who’s cheap?

Remember: “If a professional is too expensive, try hiring an amateur”.

 

Indirect Costs ($10/hr)

Typical indirect costs include:

• Recruitment @ $5,000 per year (assuming you hire the right person first time)
  Includes recruitment advertising as well as your time to shortlist and interview applicants and your time to train the new recruits. It’s an annual cost because most telemarketers will only stay in the role for around 12 months. After this they will either want a promotion or they’ll leave in search of a new challenge. Either way you have to replace them.
• Telephone calls @ $30 per week = $1,560 per year
• Training, management & supervision$12,899 (allowing 1 hour/day, however more will probably be required, especially in the early stages). 
  Assumes that the supervising manager’s salary is $96,993 ($80,000 + Super, Payroll Tax, Worker’s Compensation)

• Other overheads@ $1,040 per year
  Includes software licenses, computers, telephones, email accounts, etc

Note: If you only need a part-time lead generation resource, these fixed costs will remain more or less the same, potentially doubling the impact on the hourly rate.

 

Forrest Contact Campaign Inclusions ($12/hr)

There are additional items that we provide at no extra cost and that are not included in the direct or indirect costs.  When these are added to the cost of running your internal campaign rather than deducted from our hourly rate, the cost goes up.

• Campaign set up @ $1,500
  Includes script writing, strategy setting, assistance on list generation, internal agent briefings and training on your campaign

• Account Management @ $10,625 per year
  A dedicated resource taking full responsibility for your campaign and ensuring that it runs smoothly, without you or your team having to constantly manage it.  This resource is separate to the time our Call Centre Manager and Team Leaders support the agents working on your campaign

• Ongoing Sales Team Management and Development @ $6,000 per year
  Includes ongoing agent skills training and development

• Live Online reporting@ $5,200 per year

 

And what about when things don’t go to plan

All of the costs above assume that everything goes well. But as we all know in business, things rarely go exactly to plan. Here are some of the common challenges you may face and that we overcome on a regular basis to ensure that your lead generation campaign is delivering the right outcomes week after week :

• Your initial strategy is not working.
  The leads you’re getting aren’t the right ones, perhaps your telemarketer is finding it very hard to engage with your target market, or your sales message is not resonating with these decision makers.  While you might spend 1 month trying to refine and fix this issue (at a cost of $9,024), we will be across it and will typically have a fix in place within one to two weeks (a saving of $4,512).

• You recruit the wrong person.
  These things happen, but by the time you’ve realised that they can’t do the job you need them to do, you’ve probably lost 2 months of results (at a cost of $18,049).  If one of our agents is not generating the results we expect for you (no agent is outstanding on every campaign), we will have replaced them on your campaign within 1-2 weeks (a saving of $13,537).

• You have to replace your telemarketer.
  Either because of low performance or because they find another job.  It will take at least 3 weeks to recruit and train a new person (downtime cost $6,768)

• You telemarketer doesn’t work as fast as they should.
  A 10% shortfall in productivity is just 1 – 2 fewer calls per hour, but this amounts to almost 3,000 calls over 12 months and potentially 40 – 50 fewer appointments per year.

 

When one of the above events occurs, the cost of running your own in-house lead generation rises to at least $72/hour. When two of these events occur, your costs jump to over $80/hour.  If you have to replace under-performing telemarketers more than once per year, the costs go up even further.

So, when you look at the real costs of an in-house lead generation solution compared with an outsourced one, you’ll see that they are actually very similar.  But with an outsourced solution all of the headaches disappear, replaced by peace of mind that a professional SDR/lead generation/inside sales provider is looking after all of the issues for you.

Keeping in mind the real costs, if you still want to run your own in-house lead generation team, click this link to download my book“The Ultimate Guide to B2B Sales Prospecting” which will help guide you in setting this up and avoiding many of the common pitfalls.

To explore this topic further, watch Owen Richards’ Outsourced vs In-house Sales vlog below. Owen joined the Forrest Contact team in 2008, heading up the Operations team for 7 years. In 2015 Owen returned to the UK, partnering with us to found and open Air Marketing Group in 2016, a 75% replication, 25% innovation business model to Forrest Contact. 8 years on, both Forrest Contact and Air are continuing to grow and have big ambitions to disrupt the outsourced sales market internationally.