What should one enquiry cost a professional services firm?

Ask what an enquiry should cost and the answer most firms receive is a number, as if enquiries were priced like stationery. They are not. Take two invented UK firms with the same £4,000 fee for a new client and the same market. The first turns one enquiry in five into a client and can pay up to £560 for each enquiry before it loses money over two years. The second turns one in ten into a client, and its ceiling is £280. The fee is identical and the ceiling halves. Nothing a supplier publishes can tell a managing partner which firm theirs is, and the sum below takes about ten minutes.

Why a quoted price per enquiry says little

A price per enquiry describes the seller's side of the deal, and the value of an enquiry sits on the firm's side. Two things change the value without changing the price: what the practice earns from the client it wins, and how often it wins one. A figure drawn from another firm's book therefore proves little about this one, which is why this article quotes no benchmark.

The useful question turns the price around. Instead of asking whether a number looks high, ask how much the firm could pay and still be better off, and test every quote against that. A quote that looks expensive may sit well inside the ceiling, and one that looks cheap may sit outside it.

The ceiling in four lines, with invented figures

Every number below is made up to show the method, and none is a UK average. The invented firm is a professional services practice with a typical new client who pays £4,000 a year. Replace each line with the firm's own figure before drawing a conclusion, and use fee income from the accounts rather than a remembered figure.

What counts as an enquiry

The conversion rate in line 4 belongs to a definition, and the firm and the supplier may not share one. A firm that counts only calls from a person who wants the service has a different rate from a supplier that counts every form submitted, including the ones from people who wanted a job or a supplier of their own. The sum works only if the rate and the count use the same definition.

Suppose the invented firm's rate of one in five applies to enquiries it has judged worth a call, and a supplier reports every form. If half the forms are not worth a call, the rate on the supplier's count is one in ten, and the ceiling on that count is £280, not £560. The quote did not change. The measure did. Write the definition down before comparing quotes, and ask any supplier to report to it.

Testing four invented quotes against the ceiling

Divide what a supplier charges in a month by the enquiries it promises, then set the answer beside the ceiling. The four quotes below are invented, and the promised counts are the quote's own claim rather than a result. The firm's one in five applies.

Read the table with the definition above in mind. If the enquiries in quote B are counted so that only one in ten becomes a client, its ceiling falls to £280, and the £300 it costs is now over it. Quote A survives the same test, which is the sort of margin worth looking for. None of the four tells the partner who will win the work, only which are worth a conversation.

How the years you count move the ceiling

Line 3 is a judgement about patience, and it changes the ceiling more than most partners expect. With the other figures held, one year gives £280, two give £560 and three give £840. The extra years only exist if clients stay, and the practice's own leaver records are the evidence for that. A managing partner who cannot say how long a typical client stays should count one year and treat the later years as a bonus.

Counting more years also lengthens the wait. A ceiling that assumes three years of fees means the spend is recovered in year three, and a practice that needs cash back sooner should not borrow against fees it has not yet earned. The sum shows the limit and the partners decide where under it to sit.

What the firm controls, and what the supplier does

Of the four inputs, the supplier touches one, and it is not the one that moves the ceiling most. An agency can change how many enquiries arrive and, to a degree, how well matched they are. The other inputs belong to the practice, and conversion is the largest: who answers the phone and what is said on the first call. At a rate of one in three the invented ceiling is about £933, and at one in ten it is £280. That difference comes from inside the firm.

It follows that the cheapest improvement to the ceiling may be an answered call, not a better quote. Our article on how long before an agency should show results explains why a small firm's monthly count cannot settle a verdict quickly, which matters here because a ceiling can only be tested against enquiries that have had time to become clients.

Choosing the order of the routes

A ceiling lets the firm rank routes by what each costs per client, rather than by how familiar each feels. A referral route can go through the same sum, as the referral ledger for an accountancy practice does with its own arithmetic. Our worked ranking of routes by cost for a mortgage broker applies the same discipline to cash and time together. The point for any UK firm is the same: put each route on a cost per client and compare like with like.

What we examine before introducing a specialist to a firm is set out on our page for accountancy practices, recruitment agencies, tax advisory and financial advice firms. We apply it to the numbers a firm brings, which is why this sum is worth finishing before the first conversation.

Starting the log that makes the sum true

The conversion rate is the one input a firm cannot estimate from memory, and a log is the cure. Record each enquiry on the day it arrives, with how it came in, who took it, whether it was worth a call and what it became. Twenty lines give a rough rate. Fewer than that, and the honest course is to run the sum at a low and a high rate and work to the lower ceiling.

The log also protects the practice later. A supplier's report can be set against it line by line, and a gap between the two counts is a conversation worth having early. Without the log, the report is the only record and the firm has no way to read it.

When not to hire an agency yet

Do not appoint a supplier until the practice knows its conversion rate and what a new client is worth to it. Without them no quote can be judged, and the first quarter becomes a discussion of whether the numbers look good. Wait too if the ceiling comes out below what any supplier would charge, which is a useful finding: it says the answer is to raise conversion or fee before buying more enquiries. And wait if nobody has the hours to answer an enquiry within a working day, because a paid enquiry left unanswered is the surest way to waste the ceiling.