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In my last blog post, I introduced a two-part series on the two most important factors to consider when deciding whether or not to launch an outbound lead generation team: complexity of the sale and lead generation economics. In this post, I’ll address the first of those two factors.

outbound lead generationAs mentioned in the previous post, average sales cycles (ASC) is one component of sales complexity. In addition to ASC, the complexity of sale can be determined by a number of other components, including the:

  • Average sale price (ASP)
  • Number of people involved in the decision
  • Number of touch points required to close the sale

A complex sale typically requires multiple touch points just to get a call or meeting scheduled with the right decision makers. It also often requires calls with multiple people who each play a role in the buying process, such as the technical evaluator, influencer, user, business decision maker, and/or financial decision maker.

Additionally, a complex sale’s buying process typically takes longer than 30 days, and is most prevalent in situations where the ASP exceeds the amount that the decision maker has the authority to sign-off on without getting additional approvals from his or her superiors. Often times, this type of sale is also referred to as an enterprise sale.

Because procurement processes and approval thresholds can vary so much across companies, products, and markets, it would be difficult to say that there is a universal threshold for ASP and ASC, at which it does or does not make sense to launch an outbound lead generation team. However, in our experience we’ve found that a good rule of thumb is that when the ASC > 30 days, and ASP > $25,000 it is almost always a complex sale.

In a complex sales situation, sales reps can carry a smaller number of opportunities in their pipeline and they must spend more time focusing on those opportunities to increase their chances of winning. This means that they have less time to dedicate to prospecting and building new pipeline.

For example, if your deals require the initial call, technical demo, proof-of-concept, and multiple conversations with several different corporate department heads, then an outbound lead generation team that qualifies and sets up the initial call for the sales team can be hugely beneficial.

A non-complex sale is typically much more transactional and is characterized by shorter sales cycles, lower ASPs, fewer decision makers, and fewer touches required to get the deal done. If the ASC is <30 days, and the ASP is low enough that your buyers can make a decision without getting too many additional approvals, then you likely don’t need to hire a team of individuals to be responsible for outbound prospecting.

For smaller deals with shorter sales cycles, that hand-off process between lead generation and sales can completely overcomplicate things and turn prospects off. In the non-complex selling situation, your sales reps should be able to balance their time between doing their own prospecting, pipeline management, and closing deals.

So, if your ASC is greater than 30 days, ASP is greater than $25,000, and your sales process involves several touch points in the buying process, then there is a good chance that an outbound prospecting team would be a great way to enhance your go-to-market strategy.

In my next post I’ll describe the second factor that you should consider before making the decisions: lead generation economics.

Ori Yankelev is a Sales and Marketing Associate for OpenView Venture Partners, working with the firm’s
portfolio on developing great business development and inside sales teams.

  • http://twitter.com/ProSales_Mike Mike Faherty

    Ori, So glad I found your blog. This is a great piece on the elements to consider before building an internal outbound lead generation team. As a marketing firm that specializes in delivering outbound lead generation programs for technology companies, we help clients everyday build these teams through an outsourced model. These clients have already made the decision that lead generation is a smart move for their business based on the economic drivers you articulate, but they still don’t have the internal expertise to create and manage a team effectively. This is where outsourcing this function with the right partner can achieve the same or better results quicker and with a fraction of the challenges of building it yourself.