April 1, 2015

What Marketers Should Know About Buying Leads

Businesses, like people, are strapped for time and money, which makes time- and money-saving alternatives quite appealing.


So for marketers tasked to generate leads, the option to buy leads from external sources can be appealing. But this begs the question: Should marketers buy leads? Are purchased leads the equivalent of fast food – quick and cheap, but an unhealthy and harmful shortcut in the long-term? We turned to three experts for some insights on the topic.

Different values and costs
“Buying leads” can mean a lot of things to a lot of different people, says Daryl Colwell, vice president of business development at integrated digital media agency MediaWhiz. Leads might opt in to be contacted by a brand off of a registration site, a practice known as data acquisition or co-registration; then there are leads that come off an aggregator site where the user never comes into contact with the brand until they get a call from a sales representative or an auto-responder email.

“The truth about buying leads is that there is a different value to each lead,” Colwell says. “A lead of a user signing up on your website coming off a search engine will have a much greater value than someone simply opting in off another registration-based site.”

Colwell notes that this doesn’t mean one lead will be more profitable for your business than another. “Marketers need to budget their cost-per-lead spend differently for each type of lead.”

Tracking progress
What all marketers must do is track the progress of each purchased lead through the sales funnel, Colwell says.

“Know your key performance indicators (KPIs) through this process and manage them aggressively,” he says. “Don’t simply classify a lead as a sale or not a sale. Understand how many you were able to reach on the phone and/or opened an email; how many wanted a free consultation; how many completed the secondary application; how many showed up at your business for their appointment; how many needed financing to enroll in school; etc.”

Colwell adds that marketers should place benchmarks at each point of the process to help them be smarter about the sources of their leads. This will allow them to be better at optimizing their budget for leads that are more profitable.

Words of warning
All that said, there is an obvious case to be made against the practice of buying leads. If the analogy of purchased leads as fast food in the introduction paragraph holds any truth, it would follow that getting into the habit of purchasing leads from external sources is a bad idea, especially in the long run.

“There are a lot of online lead-generation services that mostly create spam leads by leveraging email marketing and PPC (pay-per-click) strategies so the leads would cost less than $5 and then be sold at astronomical numbers,” says Duran Inci, chief operating officer of Internet marketing company Optimum7. “Lead generation is expensive, and the key is to be able to generate high-quality leads. The only way to do this is to execute an online marketing and targeting strategy flawlessly.”

“The problem is that there is so much confusion – and snake oil – out in the marketplace today,” says Dan McDade, president and CEO of B2B prospect-development firm PointClear. He notes that marketers are paid and rewarded for the quantity, not quality, of the leads they bring in. Also, technology solutions are more efficient than ever at pushing more poor-quality leads to sales very quickly.

“In my experience, buying leads in volume from a list company is counterproductive because it wastes valuable time and money,” McDade says. “Bottom line: Sales reps need fewer, more-qualified leads to close business and drive revenue. The qualification process is just that — a process, not something you can purchase from a list broker.”

The topic of buying leads is nuanced, and the discussion will vary based on the particular needs of a business. While there are reasons against purchasing leads from external sources, at the very least, marketers should be keen to the considerations of heading down this road.

By Jason Hahn

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