Telemarketing: "monitor a few things well'.
* TELEMARKETING; "MONITOR A FEW THINGS WELL" When Gordon Gossage joined MathSoft three years ago, the company "really didn't know where its revenues were coming from." Besides a conventional dealer channel, MathSoft had set up a small direct sales force and a two-person telemarketing department, ran direct-response ads in more than a dozen technical journals and computer magazines, and experimented occasionally with direct mail and card deck promotions. This scatter-shot selling strategy produced a fair amount of revenue-- $2.8 million--but the company was nevertheless running in the red. The problem: The cost of converting leads into sales was too high. To get the company's selling costs under control, Gossage began by pulling together an elaborate cost-tracking system. Based on data from the new system, MathSoft decided to jettison its field sales effort and began beefing up the company's fledgling telemarketing group. In fact, telemarketing quickly became the centerpiece of MathSoft's new sales strategy: Today, the department's nine "telesales" reps (who follow up more than 8,000 leads a month from advertising, direct mail, and public relations campaigns) now produce as much revenue as the company's entire network of dealers. But Gossage points out that raw revenue numbers don't reveal much about which channels--or individual sales programs--are profitable. So he's gradually expanded MathSoft's tracking system to monitor virtually every aspect of the company's marketing effort, from lead generation through to final sales. The result is a "flood" of sales data--prospect names and demographics, media response rates, and statistics about each telemarketing rep's daily activities. But Gossage cuts through the noise by extracting a few carefully chosen ratios that he says are reliable indicators of overall performance trends. "It's better to monitor a few things well," he says, "than look at masses of meaningless numbers." Gossage pays particular attention to four ratios that he believes are critical for making sales management decisions: * Cost per lead: Gossage insists it's "completely useless" to compare different publications simply on the basis of how many bingo card leads and phone inquiries they generate, but he does track lead costs carefully to measure the relative effectiveness of MathSoft's ad campaigns and promotional offers. (A strong MathSoft ad can generate two or three times as many leads as a weak ad, Gossage has found.) on average, he notes, MathSoft spends about $15 to acquire a magazine lead and 13-$14 for a direct mail lead. * Conversion rate: Once or twice a year Gossage "rigorously" surveys a 10,000-name sample of prior leads to identify which leads turned into actual sales. He uses this data to measure the real performance of the various technical publications and computer magazines where MathSoft advertises. "We've dropped a bunch of magazines with low costs per lead but lousy conversion rates," he says. (Gossage also says his conversion analysis underscores the overall importance of MathSoft's telemarketing operations. The latest conversion study shows that 24% of leads turn into sales when MathSoft's own sales reps make a follow-up call, he says, compared to only 17% when prospects talk to dealers. If we didn't have our own telesales reps and just relied on the channel, we wouldn't be a profitable company.") * Revenue per sales hour: MathSoft follows up its sales leads with direct mail offers, demo disks, promotional discounts, and--when possible--telemarketing calls to nudge the customer to make a decision." Gossage says he tries to hire phone reps who are skilled at closing sales (as opposed to explaining technical features). To measure the month-to-month performance of these reps, Gossage tracks average revenue per sales hour--the money a rep produces for each hour actually spent talking to customers. Gossage reports that his top reps typically bring in about $800 an hour, average performers bring in 500-$600, and neophytes about $300. * Talk time: Unlike many telemarketing managers, Gossage doesn't monitor the total number of calls his reps make in a day. Instead, he prefers to track the number of hours per day that each rep spends on the phone. "I've found that the best reps average a little less than four hours a day of connect time," he says. "Over four hours, the quality goes down, and less than three hours isn't enough effort." Talk time and sales per hour are especially useful statistics for motivating under-achievers, Gossage adds. "I just point out how much more money they'll make if they spend 10% more time on the phone." Gordon Gossage, vice president of sales and marketing, MathSoft Inc., 201 Broadway, Cambridge, Mass. 02139; 617/577-1017.
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|Title Annotation:||MathSoft Inc.'s VP of Sales and Marketing offers tips on measuring the effectiveness of a telemarketing operation|
|Date:||Sep 24, 1991|
|Next Article:||Software with an attitude.|