As you know, new business development (BD) is critical to success. First, I’ve never come across a firm that has a repeat work rate of 100% (I want to hear from you if you do!). Second, to provide advancement opportunities for emerging leaders, you must develop new client and project opportunities.

Perhaps the most challenging aspect of this is getting your foot in the door to begin the relationship-building process. Doing so can be challenging and frustrating for even the most seasoned BD professional. That’s why some firms employ outside lead generators to place the often-dreaded cold calls.

Does it work? Let’s explore.

The Business Case

Any regular reader of The Friedman File knows I’m not a fan of cold calls (see The Death of the Cold Call: May it Rest in Peace). In a nutshell, cold calls typically yield a low ROI and thus have a high opportunity cost. I’d rather see firms employ strategies to turn cold calls into “tepid” calls through referrals, strategic market positioning, and other tactics.

However, sometimes using skilled lead generators (they prefer not to be called telemarketers) can be a cost-effective way to jump-start new BD and gather valuable market intelligence along the way.

I talked with two industry firms — 900-person E/A firm SSOE (Toledo, OH) and 50-person architecture/urban planning/program management firm The Jones Payne Group (JPG) (Boston, MA) — who are benefitting from this approach.

At SSOE, 80% of the firm’s revenue comes from 50 clients, so identifying and cultivating new clients is vital. SSOE’s BD culture taps both seller-doers and full-time BD professionals — 11 to be exact. “We have people who are great farmers, but aren’t great hunters, and vice versa,” says Vince DiPofi, SSOE’s executive vice president and chief strategy officer. “When seller-doers are busy doing, they’re not selling, so we have to rely on additional resources. And our BD people go through cycles in which they’re away from the office for long periods of time meeting with prospects, but then come back and have to generate another round of meetings. Employing outside lead generators diminishes the lull between meetings. They ensure that there’s plenty of game out there for the hunters to pursue.”

For JPG, the underlying need for using lead generators was diversification into a new market sector. Two years ago, the firm’s IMS/GIS Group got its feet wet using lead generators to sell WeaverPRM®, the firm’s cloud-based software designed to organize and manage parcel and property-based activities. JPG’s Architecture Group, which has a strong resume in public housing, hired a lead generator to help break into the affordable housing market. “They already knew our firm and the WeaverPRM® product, so it was a no-brainer,” says Sarah Degutis, Architecture Practice Group Lead.

The Process

SSOE has worked with COACT, a local Toledo lead-generating firm, for the past eight years. COACT did an evaluation, followed by a planning session, to help determine target clients for this initiative. Prior to the session, SSOE’s marketing group conducted background research on capital spending plans and target facility types, and developed a desired client profile based on successful past engagements. DiPofi acknowledges, “They understand our company as well as we do and can express that with confidence to clients.” SSOE worked with COACT to develop an elevator speech, including the firm’s value proposition and how they want the firm represented. COACT validates the targets by determining if they outsource particular services and if so, to whom, with the goal of arranging meetings.

JPG engaged InTeleSearch to contact 100 developers — a huge, daunting task for even the most seasoned sales professional. JPG worked with InTeleSearch to create an elevator speech, information sheet and an interview guide. If a target contact wanted additional information about JPG, or to schedule an introductory meeting, InTeleSearch handed the lead off to Degutis.

Both COACT and InTeleSearch note that they’re calling on behalf of their client when placing the outreach calls.

Potential Downsides

One concern I raised with both JPG and SSOE is whether relying on an outside party for lead generation sends a message to seller-doers and others that BD is someone else’s responsibility and discourages a firm-wide BD culture. This does not appear to be a concern for either JPG or SSOE. “The best use of our staff resources is developing qualified leads, not placing cold calls. I’m not interested in having them place 100 calls to get 8 leads,” says Michael Payne, president of JPG. SSOE’s DiPofi adds, “Some staff completely embrace it and see the value, while others choose to do their own thing. For those who do their best BD on the golf course, using outside lead generators doesn’t work for them. But others who embrace a more modern sales process are more likely to be fans.”

Measuring Results

At first glance, measuring results and ROI seems straightforward. Do outreach calls result in meetings, proposal opportunities and wins? However, there are some interesting nuances. DiPofi observes, “We find that success is less tied to COACT and more directly related to the managers on our end and how well they manage the process. Some will say, ‘Here’s my prospect; call me when you get a meeting.’ In our experience, abdication doesn’t work well. We see our best results when our managers work closely with COACT and there’s robust information exchange.”

SSOE measures ROI by opportunities generated at what cost, not projects won — acknowledging that the proposal and presentation processes, as well as project pricing, are outside COACT’s control. “We calculate a ratio that compares the value of an opportunity to how much we spend on the opportunity. COACT’s efforts have resulted in new work each year. We track this within our accounting system,” says DiPofi.

For JPG, the 100 calls resulted in 10 meetings and another 15 developers who asked for additional information. “I’ve been keeping in close touch with 6 of the 10 developers and am getting an RFP from one,” says Degutis. “But this isn’t just about lead generation. There’s the aspect of focused market research,” adds Payne. “InTeleSearch gathers valuable information about the prospective client, what they outsource and to whom. We’re testing the marketplace for a potential project type to determine whether there’s sufficient demand.”

Are you outsourcing lead generation? I’d like to learn more about your experiences. Please call (508-276-1101) or e-mail (rich@friedmanpartners.com) me.