The median conversion rate of leads to opportunities fell below 10%, indicating that many outsourced sales campaigns waste money on unqualified meetings. You cannot correct poor targeting by increasing the number of emails sent.

To optimize your outsourced pipeline-building efforts and understand how lead generation companies work, you need to gain an understanding of the distinct mechanical process used by these companies.

This guide contains the detailed step-by-step processes, pricing risks, delivery limitations, and operational models of vendors required to conduct an audit of your external sales partner.

The Math Behind How Lead Generation Companies Work

By outsourcing your top-of-funnel labor, an external sales team allows your internal team to concentrate on closing business.

A well-run agency's marketing practices will be based on an extremely precise and predictable mathematical basis for how they operate, so there’s no guesswork involved in how an agency runs its highly predictable marketing practices. Across the industry, the average cold outreach campaign will exhibit an overall total response rate of around 10%, with a positive response rate of around 2.2%.

Of the positive responses obtained, lead-generation companies will successfully schedule a meeting with approximately 1.2% of the total contacts contacted. Finally, from these meetings, the number of qualified opportunities built within the CRM system averages around 0.6%.

Cold emailing, when directed toward a targeted audience, continues to generate a very healthy and profitable ROI, averaging $36 of revenue generated for every one dollar invested in cold emailing, as long as it is derived from quality, accurate data.

Your revenue potential will be impacted directly by the amount of time it takes to reach out to a lead after they’ve shown interest. Data shows that if you reach out to a lead within five minutes after an inbound indication of interest, the likelihood of that prospect signing a contract is nine times greater than if you don’t immediately follow up.

The Core Workflow: How Do Lead Generation Companies Work?

Lead generation companies operate using a very strict, step-by-step process.

Ideal Customer Profiles and Negative Fit Rules

The ideal customer profile (ICP) represents all of the characteristics of your best customers, while the negative fit rules represent all of the characteristics of your worst customers.

Many companies only focus on the positive fit and do not consider the negative fit. The companies that have a professional lead generation agency spend just as much time defining their negative fit criteria to save themselves from wasting their sales reps' time on unqualified calls.

The agencies will define your ICP by combining their expertise in analyzing the firmographics of your company, the job title of the person that you wish to reach, and the buying signals that they have received recently to determine which accounts are the most likely candidates to buy from you. The agencies need to also create a defined list of failures or disqualifications.

For example, any companies that are using competitive software solutions (and/or incompatible with your own), or any companies that have annual revenues below a specific threshold. Without these negative fit boundaries, an agency will be scheduling appointments with people who have no real ability or budget to purchase your product.

This will completely destroy any trust created between the agency's outsourced team and your internal sales teams, thus ruining the campaign before it has even had a chance to scale. The target is bad, so the messaging is bad. The ideal customer profile is built upon this combination of data.

Data Sourcing and Verification

The agency does not magically have buyers – they purchase access to large databases of companies' contact information.

The agencies are using enterprise-level data platforms to scrape contact information, firmographic data, and intent signals on companies from every corner of the market. To build the initial raw target list, they compare this data against various public records, partner data feeds, and social media platforms.

Once the initial target list is created, the agency runs all of this data through an extensive verification process and uses strict validation software to ensure that all email addresses used are valid before sending a single email.

This is a critical step; if you are sending messages to dead email addresses, your messages will produce "hard bounces," and this will damage your technical email-sending infrastructure. The only thing that truly has any value, is verified data.

Outreach Sequences and Timelines

Sending emails sporadically will not create new business opportunities.

The successful target agency utilizes a detailed sequence architecture comprised of eight to fourteen separate touchpoints over a thirty to sixty-day period (in most markets); it will rely heavily on a multi-channel approach, and spread out over multiple channels (including) cold email, phone calls, and targeted social media uses.

This multi-channel approach is dependent upon the seniority of the prospect as to which channel to utilize. E.g., senior-level executives often require (individually) numerous phone calls and a more personal level of interaction; whereas lower-level manager prospects respond equally well to standardized email.

Agencies assess multiple angles of the message against various buyer segments to identify the compelling reason(s) that will generate a meeting. Identifying the specific, immediate business pain associated with a single customer is crucial.

CRM Routing and Pipeline Hand-off

The act of booking a meeting is an intermediate step of the overall sales cycle.

The most fundamental element of any operational process comes at the point of the final hand-off of the lead from the lead generating company to your internal organization. The lead generating company must identify/qualify the prospect through the use of standard operational criteria - budget, authority, need and timing - prior to forwarding the lead to you.

Once the lead has been qualified, the lead generating company will route the lead data, chat history and meeting notes directly into your CRM system through the use of pre-set automated triggers. A well-coordinated and carefully planned 20-minute "handoff meeting" is vital for your internal sales representative to fully understand the reason why a prospect originally agreed to have a follow-up call with them during their initial call with you.

Without this information, your internal sales representative will appear unprepared when they receive the "hand-off" from you via a calendar invite. Inadequate hand-off meetings create significant problems for you and your internal sales representatives, often resulting in cancelled meetings and lost revenue in the future.

Pricing Models and Contract Risks

The pricing model you choose will determine which party suffers the consequences of a campaign's failure or success.

Flat Monthly Retainers

With a flat monthly retainer, you are transferring 100% of the financial risk associated with this campaign to your business.

The retainer pricing model requires that you (the client) pay a fixed fee to a lead generation agency for every month in the amount of $3,500-$12,000 per month regardless of the performance of the lead generation agency. The lead generation agency includes in their pricing the cost of all of the software used to get leads, all the human resources needed to generate leads, and all of the data used to source leads.

They also manage the entire campaign process including the day-to-day execution of the campaign, managing the email inbox of your company where you receive leads, and making cold calls following the marketing strategy that has been provided to them by you. However, if your prospects reject their message(s) or if their emails go to a spam folder, you still owe them money for their services.

The retainer pricing model is only logical for large enterprises that have a well-established and proven product or service, and use the retainer model to "rent" (outsource) temporary sales representatives to increase their sales volume. You are paying for the raw labor; you are not purchasing a specific result.

Pay-Per-Appointment and Pay-Per-Lead Pricing Models

The performance pricing models force the lead generation agency to take on the commercial risk associated with your business.

As a result, many agencies will take advantage of these pricing models and set the bar for themselves low enough so that they can achieve the desired volume of sales. This creates an unhealthy dynamic for both buyers and the agency, as the agency will send the buyer the most compelling leads they have available.

The risk of high volume leads with no quality control is a huge financial risk for any company.

Hybrid Pricing and Shared Risk

Hybrid pricing and shared commercial risk is the safest approach to running a business for companies in the mid-market.

Agencies that operate under a hybrid pricing model will typically charge a lower monthly retention fee to cover their fixed costs of labor and software (usually several thousand dollars), and then they will add on a smaller performance bonus for each qualified meeting that occurs.

By creating a shared commercial risk model, agencies are incentivized to provide customers with real live leads by splitting the risk evenly between both parties. This protects the client from total loss and allows your business to avoid paying high retention fees for no actual sales opportunities.

When companies work with an agency to help develop a pipeline and create a long-term sales relationship, companies are able to bring on board new clients with better quality leads because the incentives from both parties are aligned.

Common Campaign Failures

At this point, most campaigns appear to be successful on the surface but are not successful in real life.

Spam Filters and Domain Reputation

High email volume has no value if it becomes lost in spam. Heightened competition among inexpensive lead generation providers causes several to employ large-volume campaigns, often without allowing enough time to warm up the sending domains through artificial email behavior.

A proper warming cycle takes several weeks of slow, artificial email activity to develop trusted sender status with the principal internet service providers (ISPs), such as Microsoft and Google, in order to ensure that accurate server record configuration occurs prior to sending the first email message.

By bypassing this important phase in order to achieve rapid results, domain reputation collapses rapidly, resulting in a drop in inbox placement rate to zero. That is the primary reason for high customer churn rates at inexpensive, volume-oriented email shops after about three months. Patience is required to deploy technical delivery infrastructure.

Held Versus Booked Meetings

While a booked meeting does not provide a direct financial return to your company, it is important to understand how booked meetings relate to held meetings. This is a critical factor when evaluating how lead generation companies work and measure success.

The most common mathematical mistake made in outsourced sales is to track booked meeting rates instead of held meeting rates. Booked meetings represent prospects' agreement to accept a calendar invite, but this does not equate to them attending the scheduled call or listening to your pitch.

Therefore, agencies need to monitor the percentage of booked meetings that convert to held meetings, and then the number of held meetings that provide pipeline opportunity sales. If an agency charges $300 per booked meeting but only half of those prospects participate in the call, then your real cost per held meeting is $600. When developing your financial model, always base it on held meetings.

Understanding the Agency and Platform Landscape

The marketplace is dominated by managed service agencies, data platforms and software providers.

1. Belkins

The company provides omnichannel appointment setting via email and social media. Agencies typically charge a retainer between $4,000 and $10,000 monthly, which largely depends on the campaign’s scope and the marketed industry.

The agency manages everything from gathering data, to booking the final calendars of your marketing campaigns – without having to manage anything in-house. This model works well for mid-market teams looking for a completely outsourced, volume-based approach, but not wanting additional in-house staff. They will handle all the aspects of your outbound efforts.

2. CIENCE

CIENCE has created a very modular, digitally-driven outreach model.

Instead of just having one flat fee for their service, CIENCE creates different tiers of pricing structure for what you are actually utilizing. Typically, buyers pay a one-time initial setup fee of around $5,000. Thereafter, they will incur an ongoing monthly fee for the strategic account team estimated to be around $2,000 and also a monthly software platform fee of approximately $499.

Any additional capacity for sales development representatives will be charged on top of these three fees. Thus, the average managed service fees for CIENCE will likely range between approximately $5,600 and $15,000 a month and are geared toward teams with extensive integration requirements. The $5,000 startup fee provides assurance that the agency covers its initial costs to provide these services.

3. Martal Group

The Martal Group focuses on only B2B (business-to-business) technology and software companies.

Martal Group provides an international and multi-channel managed service offering that is designed specifically for growing global outbound sales efforts. Martal Group provides pricing based on custom quotes. Based on reported data points, they estimate their monthly retainers to range from around $4,000 to $12,000+.

The main focus of the Martal Group is that they are able to provide much better technical sales messages than generalist agencies due to their narrow technical focus. Technology sales involve using a highly specialized vernacular and messaging.

4. Callbox

Callbox was founded as a company dedicated solely for enterprise operations and global account-based marketing.

Instead of utilizing a single representative, they instead use entire campaign pods to attempt to take on all stakeholders simultaneously from a single, large enterprise. The cost of these pods varies greatly according to region, with an estimated monthly fee ranging from $15,000–$30,000 (utilizing public calculators), but the investment is often justified by the significantly coordinated assault to the multiple sales channels of the multiple stakeholders or multiple channels approach.

The account-based marketing approach requires a tremendous amount of coordination between many team members.

5. SalesRoads

SalesRoads offers a phone-centric approach to securing executive appointments through their local representatives.

Rather than sending countless e-mails to target prospects' notoriously filled inboxes, they directly call the prospect's workplace. With pricing starting at $6,000–$9,950 for a four-week period (and ranging up to $16,750 for two full-time representatives), the company is best suited to industries where buyers do not engage with the digital world, but will answer their phones during the workday.

Local resources (SalesRoads) continue to be very effective in communicating with local prospects through phone calls.

6. Leadium

Leadium operates as a boutique agency with an emphasis on high-quality research.

They conduct complex campaigns across phone, text, social media, and e-mail, and provide a significantly more affordable entry point for new customers (around $1,000 per month) than larger corporate competitors (with few exceptions).

This allows smaller businesses to test a highly personalized, research-intensive outreach effort without having to commit to large quarterly financial contracts. Highly detailed account-based research consistently produces better results than random high-volume.

7. Cleverly

Cleverly uses a very productized model for creating outreach opportunities through social media.

Rather than developing highly complex omnichannel approaches for generating connections, the company has opted for a more streamlined approach that consists entirely of automated connection requests and automated in-network direct messages. Starting at $397 monthly, it is a low-cost option for solo sellers to evaluate social selling. You won't reach all of your markets with the single-channel method.

8. Sopro

Sopro is primarily UK-based and uses a traditional retainer model.

Their entry-level packages are priced around £3,000 monthly for complete outbound strategies. They will set everything up (e.g., tech, contacts), work within the daily sending limits, and will deliver qualified responses to your inbox.

They focus very heavily on compliance with European regulations and where your prospects fall within regional targeting rules. Their focus on your market's borders means you will not have mass issues with your legal obligations. You need regional expertise; otherwise, you'll experience lots of very large legal compliance failures.

9. Upcision

Upcision works exclusively on a pay-per-lead or pay-per-appointment basis.

This forces the third party to take all of the performance risk; therefore, you only pay for leads their team produces. Upcision is the best option for small to mid-sized businesses, targeting contracts approximately between $5,000-$100,000 per year.

You should keep track of the quality of prospects submitted, so they do not send you unqualified leads to charge you for. Performance models are designed to match your internal process.

10. Sapper Consulting

Sapper Consulting, which is known as Regie, is another example of the subscription model that strictly purchases based on meeting counts.

By attaching fees to a predictable amount of meetings placed, they share the commercial risk with their client. This model provides the best support for mid-sized companies needing a stable, reliable flow of initial sales calls coming into their existing internal sales teams; no more roller-coaster budgeting. Cost predictability will create a more stable revenue stream and allow you to plan better.

11. SalesHive

SalesHive's business model relies upon a monthly subscription based on usage.

Because agencies typically have different prices based on the number of leads generated, using SalesHive means you always know what your spending will be every month. Your monthly cost will be based solely on the execution of the SalesHive system and the hours spent creating the leads.

This gives you full visibility into your quarterly marketing budget, and there are no surprises at the end of each month from variable rate invoices. Predictable operating costs make it easier for you to scale your business safely.

12. IntentLedSales

IntentLedSales has replaced random volume with highly-targeted outbound marketing campaigns that are based on 'signals'.

Their method is a combination of targeted email campaigns and social media outreach, combined with a proprietary AI-based service that handles inbound reply conversations. IntentLedSales offers a free pilot program to allow you to see how their approach works before you are billed.

Once you decide to move forward with the service, you will be billed only for meetings that are actually held. This eliminates the risk of paying for meetings that are never held. You only pay for meetings that are actually held, so your marketing budget will be protected.

13. VA Masters

VA Masters is a company that provides dedicated virtual assistants rather than managing a service for you.

The company provides a dedicated worker to create lead lists and manage your lead generation process. You will pay an hourly rate of between $8.50 and $14.50 for your dedicated worker.

VA Masters was created for teams who want to retain total ownership and control over their lead generation pipeline, lead data, and lead sending domains, but prefer to have physical work done by outsourced workers who build your lead lists. You must have a solid understanding of your lead generation strategy when you purchase raw labor from VA Masters.

14. LeadGenius

LeadGenius is solely focused on providing businesses with custom sourced data, and to build comprehensive profiles of their customers and prospects.

They put together an extensive outreach program for their clients' benefit, but will not conduct an outreach program on behalf of any of their clients; rather, they guarantee to provide their clients with the most thorough and most accurate contact information necessary for their clients to implement for their internal enterprise sales teams.

They offer various pricing models that are customized and scaled based on the level of complexity and size of the database needed. Having quality baseline data will alleviate the majority of the reasons for any outbound outreach malfunctions.

15. Apollo.io

Apollo is an online hybrid data generation and automated email tool.

Apollo charges a subscription fee of between $50 and $150 per user per month. This subscription allows internal teams to create lists and deploy automated follow-up email sequences from a single intuitive interface.

Apollo, being a pure and online software solution, means that companies are responsible for developing strategies for the use of the software; they must also manage their domain technical infrastructures and write their emails. When using software tools, companies need to have a high level of operational experience to utilize the tools efficiently.

16. ZoomInfo

ZoomInfo serves as the de facto standard for the global business contact data marketplace.

With an annual subscription fee ranging between $10,000 and $30,000+, ZoomInfo provides companies with a globally accessible, highly accurate, and exponentially higher-volume business contact database than its competitors.

Companies can utilize ZoomInfo as their contact information resource to supply to their internal sales teams, but just as with Apollo, users must develop strategies for sales and how to effectively use the database. The vast amount of enterprise data housed within ZoomInfo requires a large and dedicated internal team that has been trained in utilizing the data effectively.

17. Refine Labs

Refine Labs is a demand-generating agency whose focus is to eliminate the use of cold outbound.

Starting with an initial assessment fee of $35,000, they audit clients on their competitive positioning and implement high-level paid search media to generate inbound interest from buyers. Refine Labs offers business solutions that allow buyers to find them, rather than through a series of cold cold-email outreach initiatives. Inbound demand generation firms often require substantial capital funding to fund startup costs.

18. COSEOM

COSEOM is an agency-focused demand generation firm that operates in more than one language and serves many markets.

They utilize a customized retainer method for demand generation based on the nature of the target market and language-specific needs of each target market. In particular, COSEOM can help businesses penetrate existing intent-to-purchase search intent markets that contain scarcely-regulated cold-email practices. Search intent typically has a much quicker and greater conversion rate than should-be cold email outreach does.

19. GrowLeads

GrowLeads is an agency that believes in total operational process transparency.

Unlike many agencies that continue to keep their operational methodologies secretive, GrowLeads has published all of their methodologies from profiling, developing channel selections, drafting and distributing messaging, to providing final reporting of results.

Therefore, GrowLeads is not simply competing on a pricing basis against less costly competitors; they are competing on providing credibility to their methodologies. Through transparency of process, potential clients may develop a certain level of trust in GrowLeads long before contracts are signed.

20. RevenueFlow

RevenueFlow serves as an aggregator of pricing intelligence rather than a direct provider of leads.

As RevenueFlow is not a direct lead provider, their work includes informing buyers as to vendor intelligence signals and allocating risk allocation throughout the industry, thereby helping buyers negotiate more favorable contract terms with their agencies. RevenueFlow provides the marketplace with the data needed to keep buyers from being ripped off in long-term financial contracts.

The Vendor Validation Protocol

Do not make any fee payments to your vendor's external team simply to pay them for receiving a large number of replies. Fully understanding how lead generation companies work means knowing what to demand in your contract.

If your proposed vendor refuses to provide you with their domain warm-up schedules AND their explicit negative-fit criteria prior to signing, DISMISS the proposed vendor deal.