Has anyone on the forum tried telemarketing to acquire new clients?
I received a phonecall from a company yesterday saying that my area is free and for £ 800 per month they would generate the same value of new fees. Say £ 9,600 per year = new clients to the value of £ 9,600.
It seemed to me that this may work for larger accountancy practices but for a small bookkeeping / accounting practice this amount seems extortionate although I guess it's a potentially quick way of growing.
I also thought what I could do with £ 9,600 instead; new website, leaflets, local newspaper etc. and it seems like alot of money as i'm sure i'd have some change too.
Did they say what they would do if they didn't generate the same value in new fees Ben? That is a lot of money each month, how many clients would you need, to generate £800 per month?
There was no guarantee to reach £ 800 per month, but they did say they would keep generating leads until you had acquired £ 9,600 of new client fees.
In terms of how many clients would be needed, that's hard to say - as it depends on how many services each client requires and the hours that it takes.
In my opinion, this does not seem like it is suitable for a sole practitioner - but I may be wrong.
So, the firm generates £800 of revenue in exchange for £800 of your profit.... NO.... for £800 of profit reinvested I would expect a return based on profit margin therefore, if your firms profit margin is, say 50% over costs for £800 of advertising you would expect a minimum return of £1600 of revenue in order to regenerate the £800 invested.
The rate that they are quoting is basically your entire first years return for each new client you pick up through them.
Their quote is open ended so they guarantee to return £9600 but that may take more than a year to generate. Does one client generating £400 per year for 24 years count as £9600 in new reveniew?
Of course you are guaranteeing to pay £800 per month so your timescales are set whereas there's are not.
The whole arrangement is one sided. Avoid like the plague.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
@Woody88 - if you are ready then telemarketing is a great way of building your practice.
By ready I mean having your packaging and sales systems sorted so you maximise the return on your investment along with the right operations.
@Shamus - what about considering the lifetime value of new business, including the referrals they will bring?
In our experience clients stay with bookkeepers/accountants for many years. The average "churn-rate" is 6% so clients could be with a firm for 15-20 years. But, if we assume 7 years and 25% profit margin (after employee costs or an adjustment for the owners time) and an average fee of just £800 with 1:3 referral the return on £9,600 would be £22,400. Having said that, I would expect a 2:1 return on telemarketing so for an investment of £9,600 I'd expect at least £19,600 in new business. This would be total lifetime value of £44,800 which is a 467% return, not bad when compared to other investments.
I see where your coming from with the lifetime value of a new client - but I just can't get my head around paying so much per month on only telemarketing. In my opinion, this money could be used to cover many other forms of marketing and with some change left over.
I have read some stats that said that telemarketing is a proven way of acquiring clients but for now the cost is too high!
