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Cost Per Lead: In House vs Outsourced

Is it really expensive? 

If your SDRs are performing their own Lead/Contact Research or if your Cost Per Lead is expensive at the moment, you may find this read useful. Otherwise. Feel free to check out our other content here – playbooks.

I used to buy Starbucks coffee almost every single day. Costing me $10 to $13 for every trip. 

Though there are alternatives, I just prefer the taste of their coffee, the way their beans are roasted is perfect to me. 

But spending $200 to $260 per month is significant, so I started considering other options, other brands were either too acidic or plain horrible. So what did I do to get high-quality coffee? 

I bought their beans, had them grind it up for a coffee filter, and decreased my monthly coffee spend down to $50 to $60 per month. That gave me access to a blend of my choice, great-tasting coffee, and at a way lesser cost. 

What may be expensive at first to many can actually be cheaper if you do the math. 

What about Lead Research? 

SaaS Solution*PaaS Solution
$0.50 to $0.83 per lead$0.80 to $2.67 per lead
Quick ExportWeekly Export
Direct Dials included (if available)Direct Dials excluded (may be purchased when available)
Verification and Cleanup NeededVerification and Cleanup already done
*Based on sources from public reviews and feedback given by users.

Value Stream Map of Generating a Contact with an Easy Ideal Customer Profile. Easy Ideal Customer Profile is defined in terms of finding the Decision-Maker or Influencer, easy company qualification, and easy to find information. 

Diagram

Description automatically generated

Gleaning from the Value Stream Map, we can deduce that it takes 5 to 6 minutes to get the right contact information. Based on personal experience and client feedback, 20% to 30% of the contacts from databases are decayed or no longer viable for use, so checking the information and relevance is a must.

Let’s do the math: 

If 30 average net new contacts are needed per day for an SDR to engage with, and it takes 5 to 6 minutes to get valid contact information. Then it takes 150 minutes to 180 minutes to get a full batch of contacts accomplished and ready for engagement. That translates to roughly 2 to 3 hours per day. When the research required is more complex, then more time is taken. 

Find out how much you are spending on your lead research, and how much money and time you could save with the help of TaskDrive’s team

Go to Cost per lead calculator

Some sources even mention that to get better engagement rates and responses, one must spend time finding markers and information for an SDR to engage with.   

Clients I’ve personally interviewed expressed that their SDRs spend 25% to 50% of their time doing contact research. Why are we doing the math of time? Because time is GOLD. Time spent on a non-revenue generating activity is time spent and lost. In Six Sigma, when time is lost, DMAIC projects, Lean and Six Sigma methods are used to reduce defects in time and quality which translates to savings. 

So there is money spent when your own SDRs conduct research, regardless of when using a research software or doing it manually. Either way, validation checks are important to protect your domain from spam filters for poor deliverability or simply feedback from prospects that they aren’t the decision-maker or not a fit, to begin with. 

Getting the math from the beginning and what we’ve discovered, let’s do the new math. 

On-shore SDR Payscale*$44,984.00
Monthly Rate$3,748.00
Money Spent on Research (25%-50%) Monthly$937.00 to $1,874.00
Cost Per Lead at 25% to 50% Time Spent for 600 Leads (Full Scrubbing) at $0.50 per SaaS lead sourceMinimum: $937.00/ 600 leads $1.56 + $0.50 = $2.06 per leadMaximum: $1874.00/ 600 leads$3.12 + $0.50 = $3.62 per lead
SDR Payscale Source

So if your SDRs do full scrubbing of leads or their lead research, then the cost per lead significantly goes up. Even at a 30% scrub or margin of error, the cost per lead still goes up. Apart from this, when we expect SDRs to execute a multi-channel approach, the time spent on research could have been spent on doing phone calls, LinkedIn engagement, or hyper-personalization.

Not all of you who read this may find this relevant, but if you find it relevant, what can you do to address this? 

Here are some solutions: 

  1. Hire Internal Staff who dedicate themselves to performing contact research. This translates to payscale differences but isn’t as expensive as an SDR’s that can bring down the cost per lead. 
  2. Hire a freelancer from freelancing websites like UpWork or Fivver. Consider the time you have to spend managing the freelancer and make sure it isn’t significant time spent at your own expense. Check the data quality to make sure that it is good. 
  3. Hire an agency that has a full team of support staff and Lead Researchers that functions to be an extension of your team.

Cost savings of hiring an Agency to do the research work for you: 

In-HouseAgency*
Monthly Total Cost for 800 Leads (Minimum at $2.06 per lead In-House)$1,648.00$1,599.00
Monthly Total Cost for 800 Leads (Maximum at $3.62 per lead In-House)$2,896.00$1,599.00
Overhead Costs (Management, Equipment, Office, Tools) Minimum Cost$610.00Included
Overhead Costs (Management, Equipment, Office, Tools) Maximum Cost$1,220.00Included
Spend Minimum vs Savings Minimum$2,258.00($659.00) Savings
Spend Maximum vs Savings Maximum$4,116.00($2,517.00) Savings
*800 leads per month for Agency based on Industry Average.

Aside from savings, the quality of leads need to be considered and the time is given back to SDRs to make a hyper-personalized campaign, the savings alone simply don’t justify why you should hire a dedicated resource for research but also the possibility of having a better ROI when your SDRs are able to focus on building your pipeline instead of doing admin work. 

Did you find anything interesting from this read? Or do you have questions? 

Let me know!

General Manager at TaskDrive

Create sales conversations with TaskDrive so that your team can focus on high-value activities.

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