Pay per Lead or Pay Per Hour for Telemarketing Lead Generation? Pay Per Hour is Better

Introduction

Telemarketing lead generation has been a popular marketing strategy for many years. It involves contacting potential customers over the phone to generate interest in a product or service and ultimately convert them into paying customers. However, when it comes to compensating telemarketers, there are two common payment models: pay per lead and pay per hour. In this article, we will explore why pay per hour is better than pay per lead.

The Difference Between Pay Per Lead and Pay Per Hour

Pay per lead (PPL) is a compensation model where telemarketers are paid based on the number of leads they generate. A lead refers to a potential customer who has expressed interest in the product or service being offered by providing their contact information such as name, email address, or phone number.

On the other hand, pay per hour (PPH) is a compensation model where telemarketers are paid based on the number of hours they work. This means that regardless of how many leads they generate during those hours, they will still receive payment.

Advantages of Pay Per Hour Model

Predictable Costs:

One major advantage of PPH over PPL is that it provides predictable costs for businesses. With PPL, businesses may end up paying more if their telemarketers generate more leads than expected. On the other hand, with PPH model businesses can budget accordingly since they know exactly how much money will be spent on salaries each month.

Better Quality Leads:

Another advantage of PPH over PPL is that it encourages telemarketers to focus on generating high-quality leads rather than just quantity. When compensated based on the number of leads generated, telemarketers may be tempted to generate as many leads as possible without considering the quality. However, with PPH model, telemarketers are incentivized to spend more time on each call and ensure that they are generating high-quality leads.

Reduced Turnover:

PPH model also helps reduce turnover rates among telemarketing staff. When compensated based on the number of leads generated, some telemarketers may feel discouraged if they are not able to generate enough leads or if their colleagues are generating more than them. This can lead to frustration and ultimately result in high turnover rates. However, with PPH model, all telemarketers receive equal pay regardless of how many leads they generate which reduces competition among them.

Disadvantages of Pay Per Lead Model

Incentivizes Quantity Over Quality:

One major disadvantage of PPL over PPH is that it incentivizes quantity over quality when it comes to lead generation. Telemarketers may be tempted to generate as many low-quality leads as possible just so that they can earn more money.

Unpredictable Costs:

Another disadvantage of PPL is that it provides unpredictable costs for businesses since the amount paid depends on the number of leads generated by each telemarketer. This makes budgeting difficult for businesses since they cannot accurately predict how much money will be spent on salaries each month.

Case Study: Pay Per Hour vs Pay Per Lead

A study conducted by a UK-based marketing agency found that using a pay per hour compensation model resulted in better outcomes compared to using a pay per lead compensation model.

The study involved two groups of 10 experienced telesales agents who were tasked with selling an insurance product over the phone. One group was compensated based on the number of leads generated (PPL) while the other group was compensated based on the number of hours worked (PPH).

The results showed that the PPH group generated higher quality leads compared to the PPL group. The PPH group spent more time on each call and were able to build better rapport with potential customers which resulted in a higher conversion rate.

Additionally, turnover rates among telemarketers were lower in the PPH group since they did not feel discouraged if they were not able to generate as many leads as their colleagues.

Conclusion

In conclusion, pay per hour compensation model is better than pay per lead when it comes to telemarketing lead generation. It provides predictable costs for businesses, encourages telemarketers to focus on generating high-quality leads rather than just quantity, and reduces turnover rates among staff. On the other hand, pay per lead incentivizes quantity over quality and provides unpredictable costs for businesses. Therefore, businesses should consider using a pay per hour compensation model when compensating their telemarketing staff.