Know When It’s Time to Invest in Outbound Lead Generation

December 5, 2012

In your constant pursuit to grow your company timing is often everything. Avoid wasted time and missed opportunities by recognizing when to invest in outbound lead generation.

Knowing the right time to invest in outbound lead generation

In many ways, outbound prospecting is a lost art in the Internet age.

It often doesn’t get the attention it deserves in the funnel-building process, and many businesses — particularly expansion-stage businesses that lack brand recognition and have no real traction in their target market segments — miss out on the myriad benefits it can provide. For example:

  • Lower costs: It’s almost always cheaper to develop a sales opportunity through a cold call than it is to create a marketing-driven opportunity.
  • Valuable market testing: Outbound prospecting typically provides critical feedback and intelligence from potential customers, which can help businesses fine tune their messaging, and identify the marketing channels that will most effectively reach their target prospects.

There are numerous reasons why companies may choose not to invest in an outbound prospecting program, but it’s important to make sure they’re not based on misconceptions.

Common Misconceptions

Prospects hate to be cold called

While it’s true most people aren’t immediately receptive to cold calls, if the message being delivered is compelling (i.e., your value proposition is effective) then you’ll eventually break through — especially if you’ve identified the right customer segments, and uncovered your prospects’ needs and pain points.

Marketing programs need to be implemented before outbound prospecting

That’s just not true, largely because it takes a significant amount of time to build a real marketing organization. If you wait until that’s complete, you’ve likely wasted time that could have been spent engaging in multiple outbound conversations that would have helped you build your message, originate new sales opportunities, and create momentum for your sales team.

Your pipeline must be large enough to support the foreseeable future

Yes, having a substantial sales pipeline is helpful when creating an outbound prospecting team, but it’s not a prerequisite. That’s because, in the early stages of growth, your pipeline may or may not accurately reflect who your true target prospects are.

By executing an outbound prospecting initiative, you’ll naturally create a better pipeline because you’ll acquire feedback and intelligence that directs you toward your ideal market segments and buyer personas.

With those misconceptions out of the way, when does it make sense to have an outbound prospecting team instead of an inside sales team that performs its own prospecting and closes its own deals?

I’ve always argued that growth-stage companies should consider building an outbound prospecting program as soon as they’re capable of doing it.

Outbound prospecting isn’t just about opportunity creation. It also allows you to capture value points and objections from buyers and test new messaging and pitches with immediate, tangible feedback. Ultimately, that intelligence can help you tune your sales, marketing, and product development efforts around the right things, which inevitably makes every component of your organization more efficient.

There are, however, some instances that are more ideal than others.

You should consider building an outbound prospecting program when:

Your sales are deemed complex

If you’re selling into organizations that involve multiple groups, executive sign-off, and an average selling price (ASP) greater than $100,000, then it’s probably in your best interest to have an outbound prospecting team that can establish the initial touch point, build relationships, and help the sales team gather critical early intelligence.

Your deals require multiple touchpoints

If closing a sale isn’t as simple as calling a prospect, making your pitch, and closing the deal over the phone, it’s probably a transaction that’s best facilitated by an outbound prospecting team.

Think you’re ready to launch a lead gen team? Not so fast!

6 questions to answer before launching a lead generation team

OpenView’s new infographic walks you through six tough questions you need to answer first.

Sales organizations that are purely inside sales driven are typically highly transactional with a lower ASP. If your deals require the initial call, proof-of-concept, and multiple conversations with several different corporate department heads, then an outbound prospecting team can be hugely beneficial.

Ultimately, company stage or size shouldn’t really factor into whether or not a business builds an outbound prospecting team. It has much more to do with the factors described above: ASP, sales cycle complexity, and the buyer journey.

It’s also important to consider your cost-per-lead. If you’re paying $1,000 per lead for $10,000 deals, then an outbound prospecting team doesn’t make much sense. If, however, you’re paying $1,000 per lead for $1M deals, then there’s immense value in having an outbound prospecting team generating those leads.

The Bottom Line

Companies should consider the price of their product, the complexity of their sale, and why their prospects buy when they’re considering building an outbound prospecting team — not ancillary concerns like whether or not those prospects will want to be cold called.

If all of those things jump off the page and you’re an expansion-stage company that happens to also need to validate its message, then building an outbound prospecting team should be a no-brainer.

SVP Marketing & Sales

<strong>Brian Zimmerman</strong> was a Partner at OpenView from 2006 until 2014. While at OpenView he worked with our portfolio executive teams to deliver the highest impact value-add consulting services, primarily focused on go-to-market strategies. Brian is currently the Senior Vice President of Sales and Marketing at <a href="">5Nine Software</a>.