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Outsourcing Lead Generation: How to Calculate Lead Generation Outsourcing Costs?

Lead generation is a crucial part of marketing, but it can be challenging and time-consuming. Many B2B companies choose to outsource their lead generation due to the demands and complexities involved. The cost of outsourcing lead generation services can vary depending on several factors such as the provider, project scope, and deliverables. The cost per lead and average cost per lead are common metrics used to calculate the cost. Determining the number of leads needed involves considering marketing-driven deals, leads needed to meet those deals, and the lead-to-opportunity ratio.

Introduction

Lead generation is one of the most critical aspects of a marketing strategy. Around 19% of the HubSpot survey respondents stated that lead and traffic generation is the biggest hurdle in 2023.  Lead gen is not a simple exercise. It is challenging and time consuming because there is no one-size-fits-all formula for generating leads.
Thus, B2B companies are often faced with the dilemma of having to build in-house lead generation teams or outsource the function.
Due to the demands and complexities involved, most B2B companies choose to outsource their lead generation functions. But even as they do so, there is always the underlying question of what the cost of outsourcing lead generation would be for the company.
In this article, we explore what lead generation outsourcing entails and how lead generation costing is done. But let’s start with unpacking lead generation.

What is Lead Generation?

Lead generation refers to the number of people who engage with your company in order to decide whether they will buy or not.
On its site, HubSpot defines lead generation as “the process of attracting and converting strangers and prospects into someone who has indicated interest in your company’s product or service.”
Lead generation does not focus on conversion – even when people visit your site and fail to take the action you want, they become leads.
The most critical thing to bear in mind is that there are two main types of leads:
  • Marketing Qualified Leads (MQLs): These are prospects that you have enticed successfully to engage with the marketing efforts your company puts forth. A good example of MQLs is website visitors who complete an offer form on your landing page
  • Sales Qualified Leads (SQLs): These are people who have interacted with your business and taken actions that indicate intention to become a customer. Examples of Sales Qualified Leads are people who make a reservation or send an inquiry about a product or service

What Is Outsourcing Lead Generation?

Lead generation outsourcing means getting external companies to build your company’s sales pipeline. Such companies do this by performing a wide range of lead generation activities, including cold calling and product or service promotion for your company. Prior to outsourcing lead generation, B2B companies can check whether their current staff have the capacity and skills to perform the task. Most companies can opt for in-house lead generation if they have experienced teams working on generating leads full-time. This lead generation is also preferred where a company’s primary leads come from inbound marketing strategies.
On the flip side, a B2B company will be inclined to outsource its lead generation function when:
  • It lacks sufficient resources to establish a fully-fledged lead generation function internally
  • Their primary leads are generated through outbound marketing strategies like appointments and cold calling
  • They have a good lead qualification process and need to develop one for lead generation that involves all parties

Why Outsource Your Lead Generation Process?

  1. Focus on selling
  2. Cost-effective
  3. Fast results
  4. Easy lead nurturing
  5. Boost productivity
  6. Experimenting with new strategies
Do you have a small company with limited resources? Do you need help finding good lead-generation partners locally? There could be several reasons for you to outsource your lead gen process.
Outsourcing lead gen is essential for companies because it helps with the following:

Focus on selling

Sales reps spend almost an entire day writing emails each week. Moreover, 40% of agents say prospecting is the most challenging part of their job. This means that the average sales representative only spends one-third of their day selling.
Due to this straightforward fact, salespeople aren’t concentrating on what they do best—selling. Therefore, your sales teams can optimize their sales pipeline and sell more by outsourcing lead generation.

Cost-effective

A small business or a startup needs more resources to hire and train an in-house marketing team to find sales-qualified leads.
Outsourcing is a straightforward solution to this issue. You’ll have immediate access to a team of pre-trained experts whose sole mission is to find new customers.
If you’re on the fence about outsourcing, consider how much it would cost to do it in-house. However, the long-term benefits of hiring an outsourcing specialist can sometimes outweigh the costs.

Fast results

An outsourcing partner can use their competence to keep your sales pipeline swamped with qualified leads, freeing up your sales team’s time.
Instead of wasting time looking for new leads, your staff can devote their full attention to converting quality leads into customers.

Easy lead nurturing

Prospective customers require nurturing and trust in your company before they make their first purchase. Adobe states that 7 in 10 people buy from brands they trust. Unfortunately, if your team needs more time to devote to this, you may miss out on sales-ready leads.
The right outsourced provider can help here. They’ll spend time nurturing that potential client and ensuring they’re sales-ready before handing them over to your team.

Boost productivity

Bringing in an outside lead generation team is like turning on a lead faucet. In a relatively short period, you can have a new source of leads pouring into your sales team.
Building internal teams, as well as developing and implementing new channel strategies, takes time. Unfortunately, you might need more time to do so while running your business.
But, the outsourcing team has no such problem. They have a well-trained team and the latest technology to find and nurture high-quality leads based on your business objectives.

Experimenting with new strategies

Your in-house sales team is busy managing internal operations and interacting with potential leads. So, they might need more time to experiment with new lead generation strategies.
In contrast, outsourced lead generation partners can help you drive leads from different sources. They can run various lead generation campaigns like content marketing, email marketing, and more.
Based on the results, they can also help you understand marketing channels from where most of your leads are coming.

How Much Does It Cost Outsourcing Lead Generation Services?

  1. Cost Per Lead
  2. Average Cost Per Lead
If you are outsourcing lead generation for the first time, you may be wondering the kind of costs a lead generation company would charge you. Often, several costs are summed to determine the total cost of lead generation. While these costs can vary depending on the lead generation channel, but the most includes::
  • List Purchase: These are costs relating to the purchase or renting lists like third party addresses and telemarketing lists for use in direct marketing
  • Media Distribution: Costs related to reaching a company’s target audience
  • Incentives: Expenses that relate to giving discounts or rewards to high value prospects
  • Campaign DesignCosts relating to creating effective marketing campaigns
  • Agency and LaborCosts relating to hiring lead generation agency to manage marketing processes such as SEO for digital marketing campaigns
  • Other costsCosts related to managing marketing campaigns in besides the ones listed above
With this in mind, let’s look at the various metrics that are used to calculate the cost of lead generation:

1. Cost Per Lead

This metric is commonly used to determine the efficiency of a marketing campaign. It is pretty simple to calculate. It is calculated by taking the total amount spent on a marketing campaign and dividing it by the number of leads that have been generated from the campaign
Practical Example:
If you spent $5,000 on a pay-per-click campaign and converted 500 visitors into leads, a cost-per-lead calculation can look like this:
Cost per Lead = $5,000 / 500 = $10.
Most people may want to keep the cost per lead as low as possible to maximize their return on investment. But this does not work in lead generation. In fact, it is the opposite – the higher the cost-per-lead, the more qualified the lead.

2. Average Cost Per Lead

Statistics show that the cost of generating one lead is $40 to $190. It  also shows that the cost per lead (CPL) fluctuates based on industry, company size, and revenue, as shown below.
Industry wise Average Cost Per Lead
From the image above, the CPL increases as the size and revenue of the company increases. Companies that have a revenue of $500+ million and 1000+ employees tend to pay more per lead while those that have less than 50 employees and a revenue that is below $1 million spend less per lead generated.
Even so, the average CPL varies from one industry to another based on industry competition and target market. Here’s the average CPL by industry – from the lowest to the highest- based on data from different source:
Average Cost per Lead By Company type
According to this data, Healthcare and Technology have the highest average CPL at $162 and $208 while retail and non-profits have the lowest at $34 and $31 respectively.

How Many Leads Do You Need?

  1. Marketing Driven Deals
  2. Leads Needed to Meet Marketing Driven Deals
  3. Lead to Opportunity Ratio
The first step towards determining the cost of lead generation is knowing the number of leads you need. When it comes to the cost of outsourced lead generation, just knowing how much each lead will cost you is not enough. You also need to be clear on the number of leads that you will need to reach your revenue targets.
When you outsource your lead generation function, the aim is to increase revenue and enhance efficiency in your campaign. There are several metrics you can use to determine the number of customers and leads that you will need to meet your revenue targets. These include:

1. Marketing Driven Deals

Marketing driven deals refers to the number of deals your company needs to close to realize the set marketing driven revenue.
Marketing-driven revenue is basically the total income your company gets as a result of the marketing efforts it rolls out. To calculate your marketing-driven deals, you need to take the marketing driven revenue and divide it by the average sale price.
Example:
If you have set your marketing driven revenue at $630,000 and your average sale price is $900, your marketing driven deals would be:
Marketing driven deals = $630,000 / $9000 = 70 Deals
This means you need to close 70 deals, each worth $9000, to meet your revenue target of $630,000. The number of deals here represents the number of customers you need to realize your marketing driven revenue target.
The average sale price is the amount each customer spends on your company. It is calculated by taking the total net sales and dividing it by the number of units sold.

2. Leads Needed to Meet Marketing Driven Deals

Once you have your marketing-driven deals, you can go a step further and determine the number of leads you will need to get those deals.
The easiest way to calculate this is to divide the number of people who visit your shop or website by the lead conversion rate.
Let’s use a 2% customer conversion rate in this example.
To determine the number of leads you’ll need to close deals that will enable you to meet your marketing driven revenue, take the number of deals needed (70) and divide it by the lead conversion rate.
Number of Leads Needed = 70 / 0.2 = 3,500 leads
This means you need to generate 3,500 leads to get 70 customers who will spend $9000 on your business.

3. Lead to Opportunity Ratio

This metric helps B2B companies in measuring the number of leads they need to convert one lead into a customer. If you use a predicted lead opportunity ratio of 3, it means that for every 3 generated leads, you have an opportunity to convert one lead into a customer.
To determine the number of opportunities needed to convert 70 customers, multiply the predicted lead opportunity ratio by the number of deals or customers:
Number of Opportunities Needed = 70 x 3 = 270

Tips to Find the Best Outsourcing Lead Generation Company

  1. Ask Google
  2. Read case studies
  3. Explore reviews
  4. Data collection ability
  5. Ask about the lead generation process
  6. Key metrics
Now that you know outsourcing lead generation services are cost-effective and time-saving for your company, the next step is to find the best outsourcing partner. You can find many great lead-generation companies today.
But, finding the best company that can understand your business objectives and audience and fit in with your in-house team takes a lot of work. There are a couple of things that you can consider while selecting the best suitable outsourcing lead-generation partner:

Ask Google

Like everything in your life, you can ask Google for the best outsourcing lead generation company. Typing this “outsourced lead generation company” keyword into your Google search bar can leave you with many great options.
Google
But, you must go for the only top 10 solutions. The reason?
It is simple if these companies have been able to score 1st position on the Google ranking, this shows their potential to rank your website on the first page too.

Read case studies

Once you have made the list of potential lead generation companies, the next step is to read all their case studies. Case studies can help you understand how the company uses different marketing strategies to generate leads for various companies.
You must specifically look for case studies in your business niche. For example, B2B businesses should look for case studies.
It can help you understand what resources the company uses to overcome B2B lead generation challenges. It can also give you a fair idea about their clientele.
At the UnboundB2B website, we have published various case studies on all our services so prospects can better understand our work approach.
UnboundB2B Blogs

Explore reviews

Reviews are the best way to know the actual potential of a lead generation company. But remember one thing; we are talking about reviews, not testimonials.
Testimonials are client feedback that a company shares on its website or business profile. No company will share negative feedback on its website, so testimonials are less trustworthy than reviews.
So, you must use third-party review websites to know what previous customers have to say about a company. The best third-party review websites are Clutch, G2, Capterra, etc.

Data collection ability

Your B2B lead generation provider identifies a target audience that matches your ICP (ideal customer persona) and collects their specific information. Examples of such information include:
  • data on demographics (name, email, phone, contact details)
  • firmographic information (companies revenues, employees details, locations)
  • data from technology (technologies that companies use)
  • psychographic information (interests, habits, preferences).
Based on this data, SDRs create personalized outbound campaigns to target your potential customers. Using cutting-edge high-tech tools and software, they can keep your customer data on the platform up to date and secure.
Ensure your lead generation company has the resources and technology to find relevant information on your potential leads. In addition, they must have sound data to launch successful marketing campaigns.

Ask about the lead generation process

It is the most important tip on the list. Before hiring a company, inquire about its lead generation strategy to create personas, target prospects, and generate leads.
It is the most important tip on the list. Before hiring a company, inquire about its lead generation strategy to create personas, target prospects, and generate leads.
  • Does your company create ideal customer profiles by analyzing various customer characteristics such as profession, income level, education level, and so on?
  • Do they know all the latest email marketing trends to reach out to potential customers on time?
  • Is the company familiar with omnichannel marketing strategy to generate inbound and outbound marketing campaigns?
  • Are sales representatives comfortable with the latest appointment scheduling software to book appointments with busy business executives?
  • Do they have a proper client onboarding process and documentation?

Key metrics

You’re spending time and money to hire a lead generation company to help your company grow. This, however, is only possible if you have access to key metrics.
As a result, it’s critical to inquire about how they report key metrics and how frequently they do so. These metrics include conversion rates, the number of visitors to a landing page, email marketing open rates, paid ad clicks, and so on.
The best way to monitor these metrics (KPIs) is to work with the company to establish key performance indicators. Then, KPIs serve as a guide to achieving your lead generation objectives.

Let’s Find the Best Outsourced Lead Generation Partner!

Instead of spending money and time generating leads internally, outsourcing lead generation is the easiest way to get the number of qualified leads that B2B companies need to push their sales revenues up. This option works particularly well for companies with a limited number of prospects.
The cost of generating leads is affected by different factors, including lead generation channels, company size, revenue levels, and industry. Lead generation is about maximizing the return on investment on each customer acquired. Where the return on investment is high, the cost per lead is also high.
Return on investment is high, and the cost per lead is also high.
So, if you want to hire the best B2B lead generation company to grow your business consistently, connect with our team today. We have the best quality tools, marketing strategies, and databases to help B2B businesses. So, let’s connect to discuss this in detail.
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Gaurav Roy

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