How lead generation agencies charge, and what to check before you sign

The kinds of lead generation agency

Most lead generation companies sell one of four things, even when the website lists all of them:

• Outbound calling teams, who ring a list, qualify people on the phone and pass on the ones who fit.
• Email and LinkedIn agencies, who build a list and send sequences from accounts set up for the purpose.
• Appointment setters, who do either of those but are paid on meetings in your sales team's calendar.
• Content and paid media agencies, who run ads and landing pages so leads arrive as enquiries.

Pick the kind that matches how your buyers already buy. For which channel suits you, read our guide to B2B lead generation. If you only want meetings booked, read our piece on appointment setting.

How lead generation agencies charge

Few agencies publish their prices, so you'll usually get a quote after a call. Published or quoted, the model should say what a unit is, what it costs, how much notice ends it, and what a failed lead does to the fee.

Scroll sideways to see the whole table.

The trap in paying per lead

Paying per lead sounds safe. You only pay for results. But if the contract doesn't say what a lead is, the agency decides, and it gets paid more for counting generously. Someone who said "send me something" to get off the phone can end up on your invoice.

Write the definition down before you sign. Name the job titles and company sizes that count. Say what the person must have told you: a problem you solve, a time frame, who else decides. Give yourself a set number of days to send a lead back, and agree that rejected leads aren't billed. Meetings work the same way. Pay for meetings held with the right person.

Contract terms to check

• The list, the call notes and every contact record should be yours, in your CRM, and stay yours when the contract ends.
• The agency should tell you where the names came from, and the consent or exception it relies on to contact each one.
• In Australia the contract must say the agency will comply with the Do Not Call Register Act. In the UK, ask who screens against the TPS and CTPS, and how often.
• Ask whether they also call for a direct competitor of yours, into the same buyers.
• Check how many days' notice either side gives, and whether a minimum term sits behind a "month to month" headline.
• Agree how many days you have to reject a lead or meeting, and what happens to the fee when you do.

The compliance rules, in Australia and the UK

The rules cover the business the calls and emails are for, so you can't hand the risk to the agency. In Australia, the Spam Act covers email and SMS, and it's up to you to prove consent even when someone else sends the messages (ACMA, avoid sending spam). Calls fall under the Do Not Call Register. In the UK it's PECR and the TPS, and the ICO says to check a bought list yourself even if the supplier says it was screened (ICO, live marketing calls). Our guides to the Telephone Preference Service and the Do Not Call Register cover the detail. If you sell into the UK, our UK page covers how we work there.

Questions to ask before you sign

• Who will make the calls or write the emails, and do they work on other clients' campaigns at the same time?
• Can we see the call recordings and the email replies, including the bad ones?
• What do you report each week, and is it from our CRM or yours?
• Which clients like us have you run for, and what did the funnel look like in month three?

How to run a 60 to 90 day test

Give the agency time to learn your pitch, then judge the funnel over two or three months. Keep the list rules and the lead definition the same the whole way. If you already run outbound yourself or with another agency, run both side by side on comparable lists. That's how DStv tested us: head to head against its incumbent vendor on the same campaigns, and we became its preferred vendor for that work. On the Premium upgrade campaign we converted 34% against the incumbent's 11.13%. Overall it came to 203% better conversion (DStv case study). Those were calls to existing DStv customers, so borrow the method and leave the rates aside.

Track each stage weekly in your CRM. Here's a worked example of a 90-day scorecard, with numbers made up to show the arithmetic.

Scroll sideways to see the whole table.

Say the test cost $18,000 all in. That's $450 per meeting booked, about $643 per meeting held and $1,800 per qualified opportunity. Compare that with a per-meeting quote, because a cheaper booked meeting can cost more once you count no-shows. Then set the cost per opportunity against what an opportunity is worth to you, from your own close rate and deal size. That comparison decides whether you keep going.

The stage that fails tells you what to fix. Few conversations points to the list. Plenty of conversations but few meetings points to the pitch. If booked meetings keep not going ahead, the usual cause is that nobody is confirming them the day before. At Nectr, confirming appointments by SMS and email, with buyers qualified first, cut no-shows from 40% to 30% (Nectr case study).

Questions

Is outsourced lead generation worth it for a small business?

It can be, if your sales team has time to follow up and your deal is worth enough to cover the cost of an opportunity. If nobody calls the leads back within a day or two, fix that first. An agency will only fill a pipeline that leaks.

Should the agency work in our CRM or theirs?

Yours. You see every call and reply as it happens, the history stays with you when the contract ends, and the weekly numbers come from one place both sides trust.

Next step

If you're weighing up an agency, book a call with me. Bring the quote you've got and last quarter's funnel numbers, and I'll tell you what I'd put in the lead definition and the test. Our team in South Africa runs telesales and outbound calling inside your CRM, with a weekly review, and you can read how we work before we talk.