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25 June 2012

Marketing

Telemarketing vs. SEO: Lead Generation ROI Examined

In a 2007 survey by Mac McIntosh, which looked at the effectiveness of B2B sales generation methods, 27.1% of respondents claimed that telemarketing was the most important marketing activity for their business. In contrast, only 18.8% of respondents claimed that online advertising was a critical part of their sales generation process.

Whilst it’s not surprising to see some resistance to digital at that time- after all, it’s still in the process of mainstreaming today- I suspect that many marketers are still chucking thousands of pounds into contracts with telemarketing agencies without exploring options such as SEO as a means of generating leads. For those of you reading this who find themselves in that situation, I’d like to show you how you could save thousands in marketing spend and almost double the number of leads coming through your door.

Hiring a Telemarketer

Let’s imagine you’re a broadband Internet supplier looking to increase your market penetration in the UK. You want to offer discount broadband connections for a limited period to new customers. You’ve approached a telemarketing agency who’ve told you they can supply outbound support eight hours per day at £15 per hour (this is about the average cost per hour). Excluding the cost of a database, the support alone will cost you £31200 per year.

Now let’s say on average a telemarketer can generate two leads per hour- that’s about 10% of all calls made within the hour resulting in a potential customer requesting more information about the broadband offer. On a monthly basis, the telemarketing agency will generate 346 leads, which ultimately equates to 4160 per year.

Let’s assume that your target conversion rate is 5%. That would give you 17.3 conversions on a monthly basis, costing you £150 per conversion.

Hiring an SEO Specialist

An SEO specialist will look at the keywords your potential customers will be using to search for the types of products you offer.

seo stats

So, in this instance, let’s take “broadband internet” as one of our key search terms. Locally (UK), 1300 searches per month are carried out on this term. The job of the SEO specialist is to make sure that you get as much of the traffic from this search volume by increasing your site’s ranking, and since 95.91% of clicks are made on the first page of the search results, with nearly half of all the clicks being made on the first result, it’s clearly very important to rank as highly as possible for your target keywords.

Knowing this, you approach an agency who, after having carried out a full audit of your website and assessed the competitiveness of your target keywords, agree to work on your site for £1000 per month. The goal now is to ensure that your site starts to bring in more traffic through search. For “broadband internet”, the maximum amount of traffic you could expect to receive is 585 visits per month ranking at position one, as 45.46% of all clicks are on the first search result.

serp click distribution

After a few months, your site overtakes your biggest search competitor and finally you’re holding the top spot for “broadband internet”. Now, 239 more potential customers are engaging with your company’s broadband offer than they are through your telemarketing activity. Assuming once again an average conversion rate of 5%, each month you can expect to see 29.3 conversions online, costing you £34.18 per conversion. That’s  £115.82 cheaper than your telemarketing agency can provide, AND you’re seeing nearly twice as many conversions.

At this point, you start to wonder why you never thought about SEO before…

Considerations

Done properly, telemarketing can be an effective way of generating business, although arguably it performs better in a B2B rather than B2C environment. One of the big draws for many marketers is the fact that telemarketing can be switched on and off relatively quickly, and therefore can provide seemingly instant results. SEO, on the other hand, does require time and patience, and is therefore better considered as part of a longer-term strategy.

The figures above, however, clearly demonstrate that investing in SEO and attracting qualified traffic online is by far a cheaper and more effective way of increasing sales. Several reasons for this include:

Market Penetration

Ranking in the top position means your site will be seen by nearly half of all the potential customers searching for your target keyword. Your nearest competitor will only see 16% of those visitors, and any site ranking below the first page will have to share the remaining 5% of traffic from searchers that bother to go beyond the first 10 results.

Brand Equity

In 2011, Google published data that revealed online shoppers visited 10.4 sites before making a purchase. Increasing your site’s visibility will also support brand activation and help build your reputation within the market. In contrast to SEO, telemarketing, which doesn’t enjoy the best of reputations anyway, isn’t very good at promoting positive awareness of your brand, and can actually have a detrimental effect if carried out badly.

Limitless Qualified Leads

Powerful telemarketing, as is almost all marketing, is reliant upon the detailed segmentation of customer data. Sometimes this data is collected by the company itself (e.g. comprising subscribers etc.) or the data is purchased (e.g. comprising potentials who match a defined buying persona). Even when the data is mined to within an inch of its life, there’s no guarantee that you’ll be able to sell successfully to your database. Of course, this is the dread of marketers everywhere.

In contrast, the 82.6% of Internet users who use search engines daily are actively trying to find a solution to a problem. Because of this, the number of potential opportunities open to your company is determined only by search demand volumes, and not by the size of a contact database or data-purchasing budget.

Despite my obvious bias towards digital, I don’t want to write off the use of telemarketing because I think each marketing channel has its place. And I am under no illusion that online marketing alone is enough to generate leads sustainably. However, I do want to highlight to marketers that there are significant savings and real gains to be had by investing in SEO. The numbers, as they say, speak for themselves.

By Adam Cowlishaw

 

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