When should my appointment setting program begin to pay back?
In May 2010, I sat across from a client and we were having a tough conversation. We had been running a lead generation and appointment setting program for a year. While some early deals were starting to bubble up, the program hadn’t yet paid back against the investment. The board was putting pressure on our client, the director of marketing.
This is a common conversation, as marketing directors try to balance the demands of their board with the dynamics of the industry.
This client made the decision to stay the course for several reasons:
- They had a 12-month sales cycle, so it wasn’t realistic to expect a lead generation program to start generating significant revenue in under 12 months. In order for that to happen, an appointment would have to be set on the first day of the program and closed successfully. It’s possible, but not likely.
- We did our homework. We worked together to connect the appointment setting campaigns to forecasted opportunities. That allowed us to show what would be closing and when it would likely close to more accurately represent the break-even and ROI timelines.
- The client understood that not all appointments would have the same urgency to buy. We were able to build that into the forecasting and could show a major hockey stick trajectory of growth from these appointments in the future.
The impact? (Check it out!)
While the first year value of closed-won deals is a pretty exciting trendline against investment, the most important part is the break-even timeline. We started the program in June 2009 and the breakeven happened 18 months later in November 2010.
To calculate the breakeven of a lead generation program, I recommend using the following formula where “x” is the average sales cycle. Make sure to think about sales cycle length for outbound generated deals and not just deals from referrals and inbound leads that tend to close faster.
1 year+ average sales cycle = 1.5x for breakeven
6 months to 1 year sales cycle = 1.5x to 2x for breakeven
3 months to 6 months sales cycle = 2x to 2.5x for breakeven
Under 3 months sales cycle = 2.5x to 3x for breakeven
These are conservative numbers. However, if an investment is going to be made in lead generation, it is a leading investment. Give it time to yield and don’t pull the plug too early!
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About Jenny Vance
Jenny Vance is one of the leading women entrepreneurs in Indianapolis. She is the co- founder of LeadJen, a lead generation company, which she has grown to nearly 100 employees serving hundreds of companies across the United States, ranging from start-ups to Fortune 500. She also is co-founder of Salesvue (formerly Jesubi), a CRM software…