Those of us who work closely with staffing firms have noticed that frequently their growth is hindered by asking salespeople to fill a role that is more appropriate for someone wearing a marketing hat than a sales hat. Salespeople are most effective when they are allowed to spend more of their time closing job orders – activities that keep them close to the money. Using salespeople to perform lead generation and education tasks better suited to marketing is ineffective and wasteful. There’s a better approach.
This current approach of relying on salespeople for the lion’s share of lead generation can be envisioned by the diagram below. The salesperson starts with a contact list consisting of existing and prospective clients, begins contacting the individuals on the list usually by calling and/or emailing, then begins the process of creating awareness and educating the contact of the firm’s capabilities with the goal to arrange a meeting and obtain a job order.
The Flow of Work for a Salesperson to Obtain a Job Order
This process begins by limiting itself to what is usually only a narrow segment of potential clients and then places the time-consuming onus of educating the prospect about the firm and its capabilities on the salesperson. This can be a costly approach to generating revenue as indicated by the following illustration.
The Monthly Sales Process per Salesperson
(When using salespeople for lead generation)
Assumptions:
- The average annual total direct cost of a salesperson (salary, benefits, etc.) is $65,000 or $5,417 per month.
- 80% of a salesperson’s time is spent making sales calls for a monthly cost of $4,333.
- 80% of their time spent calling is directed at existing clients and 20% of their calling time is targeted to non-clients.
Hence:
- The monthly cost/salesperson of calling existing clients = $3,466
- The monthly cost/salesperson of calling non-clients = $867
- The monthly average number of job orders per salesperson originating from sales calls is 7 from existing clients and 1 from new clients.
- The cost per job order for existing clients = $495
- The cost per job order for new clients = $867
If you have your own numbers do the math. We don’t think you’ll come up with numbers that vary much from ours.
Why Limit Your Growth? There’s Now a Proven Way to Acquire More Clients at a Reduced Cost per Job Order
Over the years, the buying process for staffing services has grown in complexity. Relying on your sales staff as the sole, or even primary source of revenue growth, especially for new clients, is limiting. The days when one decision-maker from the client’s organization selected their staffing services provider are largely gone. As the diagram below indicates, prospecting has become more difficult.
Just how much the B2B buying process has changed is recounted in a study conducted by Linkedin that gathered input from more than 6,000 buyers, marketers, and salespeople.
This study, which assessed how the B2B buyer’s journey has changed, offers many insights including a couple that are particularly relevant to staffing firms looking to grow their market shares. The first one, also apparent in the graph above, is the growth in the number of people now involved in vendor selection. For example, vendor selection that might have in the past been made by HR now might include representatives from IT and/or Finance. The second finding of interest is that B2B buyers are now looking for deeper insights when making purchasing decisions. This should have a direct effect on how staffing firms generate and nurture leads. The top of the sales funnel where awareness of the vendor’s offering is created must encompass a wider target audience with synchronized and consistent messaging.
To attain market growth, your salespeople should be focused on closing job orders and filling those job orders – not making hundreds of unanswered phone calls and sending out buckets of unsolicited and unwanted emails. Staffing companies looking to juice their growth need to take the dollars now spent on salespeople doing their marketing and invest it in a marketing growth strategy. The two charts below combine to show a succinct picture of the magnitude of investment firms are making in digital ad spending and their expectations/goals regarding that investment.
The first chart based on numbers collected by market research firm Precedence Research finds an actual and projected compound annual growth rate of digital advertising spending of more than 9% between 2021 and 2030. This nearly double-digit annual growth is an indication of the value firms are realizing and expect to continue realizing from their investments in digital ad campaigns.
Source: Precedence Research: Digital Ad Spending Market
The second chart that appears below is based on a study conducted by the Interactive Advertising Bureau (IAB) that surveyed more than 200 ad investment decision-makers at a mix of companies and ad agencies. When asked about their top three goals for their media investments more than 60% of respondents ranked the acquisition of new customers in their top three. This highlights the importance firms place on targeting marketing spend where they can get the most bang for the buck. Your most dedicated salesperson might make 100 calls a day and perhaps speak to 20 prospects – if they’re lucky. An effective digital ad campaign can reach 1,000 prospects a day – with messaging that speaks to their needs and engages them.
Source: IAB: 2023 Outlook Survey
Digital marketing has changed the economics of lead generation. Some years back one study found that inbound marketing costs 61% less per lead than traditional outbound marketing. It’s no mystery why digital lead gen is so widely and aggressively embraced.
The Cost per Job Order Using Salespeople vs. Digital Ad Campaign
If our earlier assumptions are accurate, and they are based on our experience, the cost per job order using salespeople at every juncture of the marketing life cycle can fall between approximately $500 – $900. So how does this compare to the cost per job order through leveraging an outsourced lead generation campaign?
One of the notable differences between using salespeople to be engaged in the entire marketing life cycle as opposed to using proven marketing techniques to drive leads is the potential size of the target market. While on any given day a salesperson might make 50 to 100 cold calls, a well-planned and executed marketing campaign will reach thousands of prospects.
For this comparison, we’ll look at two examples. The first campaign will be targeted at prospects who have never been clients. The second campaign is targeted at existing clients. The underlying assumption is that the conversion rate for existing clients will be higher than that for non-clients because of the lack of a history with this group. Non-clients require a greater investment to build the level of trust that existing clients already have.
Campaign 1 – Targeting Non-Clients
Assumptions: (based on experience)
- A monthly spend of $1,000 for media
- A monthly outsourcing cost of the campaign of $3,000
- 3 hours of salesperson cost to close a job order
- 1,000 website visitors per month of which 5% convert to leads and 30% of those convert to job orders.
Given these assumptions we derive a cost per job order from the advertising investment of $266 (1,000 x .05 = 50 x .3 = 15 then $4,000/15 = $266). If we add 3 hours for a salesperson to close the job order, then the total cost per job order is $359.75 ($266 + $93.75) ($65,000/2,080 = hourly fully loaded cost of $31.25 x 3 = $93.75). This reduces the cost per job order from new clients to less than half the cost of using salespeople to generate and close job orders.
Campaign 2 – Targeting Existing Clients
The cost-effectiveness of targeting existing clients via a digital ad campaign is even more dramatic:
Assumptions: (again, based on experience)
- A monthly spend of $1,000 for media
- A monthly outsourcing cost of the campaign of $3,000
- 1 hour of salesperson cost to close the job order
- 500 website visitors per month of which 10% convert to leads and 50% of those convert to job orders.
Given these assumptions we derive a cost per job order from the advertising investment of $160 (500 x .10 = 50 x .5 = 25 then $4,000/25 = $160). If we add an hour for a salesperson to close this lead (from an existing client) then the total cost per job order is approximately $191.25 (using the same $31.25 hourly cost as above). This is less than 40% of what it costs per job order from an existing client when compared to the cost of salespeople spending hours on the phone.
The following table offers a summary comparison of the estimated cost per job order using salespeople in a lead generation role versus investing in a digital marketing campaign using salespeople to close sales from campaign-generated leads.
When you align your tactics with your target market, growth results
Growth-focused staffing firms should leverage the power and cost-effectiveness of digital advertising. It offers much wider reach and can cut costs per lead to about half of what it does to use your salespeople to make hundreds of unanswered and unwanted calls. It allows your salesforce to do what they do best – transform leads into sales. Digital marketing techniques level the playing field against bigger competitors. A recently conducted research report published by the Connected Commerce Council substantiates the value of digital advertising for smaller firms. It found that 69% of small-to-medium-sized advertisers indicated that they would have been unable to launch/sustain their business without targeted digital ads and the same percentage said it would hurt them to lose the opportunity to use targeted digital advertising. Staffing firms that don’t take advantage of the opportunities for growth offered by digital marketing are going to find themselves left in the dust by their competitors. Still not sure? Go check out your competitors’ ads.
