General Question, Had a discussion with an online lender today.

The lender has all the work they can currently handle given their system as it stands today.

They are not saying they don't want to grow in the future, they are being realistic about taking care of the current leads they have right now.

What business wants to be inundated with more than they can handle and as a result, provide horrible service and gain a bad reputation?

Steve

That would have been a reduction of 90%.

Maybe they didn't trust your figures.

Cost Per Acquisition for the lender was $100.00 just to be clear this would not replace there current process just enhance.

They were offered a (Free) test that would lower their per lead cost to around 24.00 per lead funded.

I sat in the meeting for one of my investors, I wanted to see the product pitch, I was kinda shocked with the response of this Marketing Manger.

Hi Frank,

Obviously, it can be very useful to learn and truly understand why clients say "no".

Lowering cost may not be their top priority right now.

Did you discuss their goals, and does your proposal perfectly match with their top priorities?

Many businesses want to grow as fast as they can, if they prioritize lowering costs, especially lower marketing costs, it often leads to fewer leads, lower quality leads, and slower growth rates. Perhaps, in this case, this is the true issue?

Profit-driven marketing strategies are known to outperform cost center based strategies by a large margin. A focus on lowering costs might be sending out the wrong message if this is a growth business that has adapted profit-driven marketing strategies.

There is also a capacity issue that might need to be addressed. It makes no sense to have an unbalanced ratio of sales capacity to lead generation ratio, as well as sales to delivery capacity ratios. Does you proposal take balancing these levels into account?

And, there is a credibility issue that you may be struggling with. If something sounds too good to be true, it general is too good to be true. They might not believe your projections if they are far off from their own practical experience. They may have already been down the path you have proposed with less success than you are projecting.

And finally, there is a natural resistance to change, especially when something is working. Most businesses will not want to change something that is working. "Don't fix it if it is not broken", is a wise old adage. Generally speaking you need to have a solution that is more then a little better than the current system, people are not going to disrupt a working system unless they are convinced that the payoff is substantially greater then their current system, and even the it will be done very cautiously, if at all.

I suggest that you try a down-sell strategy. Offer to run a small scale low-risk test, one that will not interfere with their existing plan, and let them get comfortable with your plan, your skills, and your ability to execute, then you can reopen negotiations after you have an established track record with this business.

HTH,

Don Burk

Having been on the end of a number of these pitches I can tell you that there are a lot of considerations that have to be made.

Most of these are financial and range from 'what if this fails?' to 'what if it succeeds?'

f I am thinking that this could work my thoughts are:

1. How do we stand contractually with our current lead suppliers?
2. If we test do we decrease our normal purchase of leads or add this on top?
3. How will we deal with the extra calls?
4. What happens to our abandoned rate?
5. Do I need to hire extra staff?
6. Is there space in the training teams schedule to train new people?
7. Do I have the right staff members to promote to cover the new teams?
8. Whats the cost associated with recruitment?
9. How many extra sales are required to break even?
10. What do we do with the extra staff if this trail fails?
11. How sustainable are the leads?
12. How good are the leads?
13. Can these leads be up scaled?
14. Where is the customer on the sales journey?
15. How old are these leads?
16. Who else has had them?
17. Who else is getting them?
18. Who is this company selling the leads?
19. What is there track record?
20. Who do i know that has used them?
21. Which budget does all this come from?
22. What is the business argument for change?

Here are just a few numbers regarding staff

Wage 20,000
Recruitment Agency fee 5,000
Training 2,500
NI and Pension 3,400
HR + Misc 4,000

So that's nearly £35k per new employee i need to set aside.

Plus I need to promote someone and that leads to extra costs both in terms of salary but also associated costs and yearly bonus. You are talking nearly half a million to bring in a new team.

and that's before I have to think about whether i need extra office space, desks, chairs, computers, bandwidth, etc

Growth can be a terrible thing for a business and terms like viral imply uncontrolled growth which can be a killer.

Currently it takes about three months to go from making a decision to hire a new team to them taking their first call so there also needs to be a lot of foresight in the planning.

I'm lucky in that its my business and my decision but a lot of managers have to fight for budgets and so cutting may not be on their agenda

The growth options seem super appealing Frank but like other Warriors are saying, it can be too much from a management standpoint. They also would be yanked violently outside of their comfort zone. Even if you make some serious coin and see success, this is scary as hell to some folks. Not me LOL....but some folks.