The High Price of Low-Cost Lists

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1 MECLABS Reduces Telecom Company s Cost per Lead by 60 Percent in One Month When resources are limited, it can be tempting to purchase the least-expensive contact list. After all, what s the difference between a list that costs $1 per contact and one that costs $24? The MECLABS Leads Group discovered it s far more than merely $23.

2 The High Price of Low-Cost Lists MECLABS Reduces Telecom Company s Cost per Lead by 60 Percent in One Month When resources are limited, it can be tempting to purchase the least-expensive contact list. After all, what s the difference between a list that costs $1 per contact and one that costs $24? The MECLABS Leads Group discovered it s far more than merely $23. Experiment Reveals the High Price of Low-Cost Lists Contracted by a leading telecom organization to generate leads, the MECLABS Leads Group proposed conducting an experiment to see how they could do so more efficiently. They decided to identify which list would generate the highest number of leads in the shortest amount of time. The goal: To give their client the best return on their teleprospecting investment. Experiment: Background and Design Experiment ID: Telecom organization data test Location: MECLABS Leads Group Research Library Test Protocol Number: LG1001 Research Notes: Background: A telecom organization engaged MECLABS for lead generation Goal: To determine if higher cost/higher quality data can drive down overall cost per lead by focusing on the most efficient list source. Primary research question: Which campaign data source will drive the most efficient value? Test Design: Four multi-source lists, a user-generated list, and a single-source list were tested under consistent experiment conditions, with 300 accounts and 80 hours of teleprospecting. Under consistent experiment conditions, MECLABS tested: A list provided by the telecom organization this was used as the control. Its cost per record was merely $1. Four lists purchased from brokers. These ranged from $3 to $24 per record. (Why so much for the highest-price list? Each contact on was verified.) A list purchased from a community-based source, like Jigsaw. 2 Copyright 2011 MECLABS LLC. All rights reserved.

3 Segments Record Cost Validated Multi source 1 $24.00 Phone role-based Multi source 2 $14.50 Phone title-based Multi source 3 $6.00 Phone validated Multi source 4 $ validated User generated $1.00 Business cards Single source $0.49 No validation Experiment Results: Here s an overview of how each list performed: Segments Record Cost Call Per Lead List Count Leads Cost Per Lead List Cost Call Cost Multi source 1 $ $ $24,000 $92,400 Multi source 2 $ $ $22,620 $132,132 Multi source 3 $ $ $14,850 $152,460 Multi source 4 $ $ $8,430 $162,278 User generated $ $ $9,350 $287,980 Single source $ $ $6,380 $252,175 Teleprospecting professionals had to call 240 contacts to attain a single qualified lead from the list provided from the telecom company. For every 11 calls they made, a lead had to be disqualified the contact or his organization was simply not within their target market. Furthermore, it turned out 67 percent of the contacts on their list were no longer with the company! In contrast, only one percent of the contacts on the most expensive list were no longer with the company. Telesprospectors only had to make 77 calls to attain a qualified lead. How often did they have to disqualify a lead? Only once every 90 calls. 3 Copyright 2011 MECLABS LLC. All rights reserved.

4 60.85 % Decrease in Overall Campaign Costs The $24/record list requires 60.85% less investment than the $1/record list Segments Record Cost Cost per Lead List Cost Call Cost Total Cost Multi 1 $24 $373 $24,000 $92,400 $116,400 User-gen $1 $954 $9,350 $287,980 $297,330 Difference ($14,650) $195,580 $180,930 What you need to understand: The best deal, a list that cost $1 per record, would have resulted in a campaign that was more than 2.5 times more costly than a campaign using the most-expensive list. The test proved that a list that looks like a deal at the outset will cost you dearly in the long run: Cheaper lists have a higher number of inaccuracies. What are you paying for if nearly 70 percent of the list is worthless? It takes significantly more time to produce an opportunity. In the case of the telecom company, the cheaper list would have required nearly three times the hourly investment of the most expensive list to produce a single lead. Here s how this plays out in the numbers: When you add in both the cost of the list and human resources, the cost-per-lead from the most expensive list was $373. The cost per lead from the least expensive list was $950. Overall campaign costs would have been $92,000 with the most expensive list versus $297,000 for the least expensive. 4 Copyright 2011 MECLABS LLC. All rights reserved.

5 Overall Campaign Costs $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Multi 1 Multi 2 Multi 3 Multi 4 User-gen Single The MECLABS approach revealed an important lesson: Cheap lists cause campaign costs to skyrocket when you add in the time spent by your team to eliminate bad data and finally reach a viable lead. In this case, a teleprospecting campaign executed by the cheap list would have cost 2.5 times more than that of the most expensive. Return on investment is predicated on how much revenue you can drive in the least amount of time. That s why MECLABS conducts experiments like this to conclusively prove efficiency. We optimize your revenue streams to ensure every penny, and every minute, of your investment is well spent. 5 Copyright 2011 MECLABS LLC. All rights reserved.

6 Optimize your Sales and Marketing Funnel MECLABS is a science lab (primary research) with a consultancy (applied research). We conduct rigorous experiments in the new science of optimization and we apply our discoveries to help leaders optimize the financial performance of their sales and marketing programs. MECLABS has partnered with organizations ranging from Fortune 50 companies to emerging businesses to drive breakthrough financial gains and provide sales and marketing enablement. Current and past Research Partners include: Learn more about Research Partnership opportunities: MECLABS.com/engage Copyright 2011 MECLABS LLC. All rights reserved.