If you’re calling prospects to set up appointments or for lead generation, you actually can see what it’s costing you to obtain a new customer. First, you need to know the number of leads it takes before you get one customer—two, five, ten, and so on. When you know this, you can find out the cost of generating one lead by adding all your telemarketing costs over a week or month and dividing by the number of leads you were able to get. Multiply your lead cost by the number it takes to get one new customer, and you’ll know the telemarketing cost to acquire one customer. Add in the cost of your salesperson, and you’ll find the total expense needed to acquire one new customer.
If the amount scares you, it should—you’re paying it! Now you can find out whether you made a profit by dividing the sum of all new order amounts by the number of new customers. Figure your percentage of profit and see whether it’s higher or lower than the sales cost. If you’re near the break-even point, you can consider whether your customers will be repeats and how often to see whether your strategy is paying off.
Even if you’re not making a profit on the order, do everything you can to entice the customer to reorder. Reorders will always produce more profit than a first order just because there is a much lower sales cost. Actually, there may be no sales cost at all—you just take the order and process it.
If you train your telemarketing people well, they should become more efficient and reduce the average cost of a lead. Practice and fine-tuning will pay off in the long run, and you’ll quickly get to know who your best telemarketing people are.