How Much to Pay for Leads Depends on Lead Quality, Source & Results

A high number of leads, which are offered at a very low cost per lead, usually result in anemic sales results. Yes, you can buy "leads" in large quantities for as little as $1 each, but these simply represent companies that may -- or more likely, may not -- be interested in actually purchasing your services. The point is there is an enormous gap in quality between a list of "leads" and real-time leads that represent buyers who are actively seeking your services.

If you've been reluctant to purchase leads from a lead generation company (for whatever reason), you could be doing your business a big disservice by missing out on one of the richest sources of leads available. Some marketers hold back simply due to their uncertainty over how much to pay for leads.

What you may not know is that seasoned lead buyers gladly pay more for leads whenever those leads represent pre-qualified and verified prospects who exhibit an active willingness or readiness to buy. It simply makes logical sense.

But before purchasing leads from an online generation company, ensure that it offers filters that allow you to precisely specify the type of leads and associated demographics that are most likely to purchase the services you offer. This increases the relevancy of your leads, which means you get targeted leads based on your lead selection criteria.

The better, more professional lead-gen companies also follow another best practice: They use live human beings to contact every potential lead before offering them for purchase. This ensures that lead buyers receive correct and accurate contact information. This single factor alone greatly increases the speed, ease and profitability of working a lead.

Lead Quality Depends on Lead Source

The source of your leads also affects lead value and, therefore, the price you should be willing to pay. The best lead suppliers offer leads at various value-based pricing levels, allowing you to buy, for example, premium, real-time leads versus slightly older leads offered at bulk rates, or a combination of the two. Many slightly aged leads represent bona fide prospects who simply have a longer time-to-purchase cycle.

Leads generated by your company's own online marketing efforts may cost less, but the closure rate for leads generated from internal campaigns was less than 20% for two-thirds of business services firms recently surveyed by InsideUp.

Leads from any source should never be evaluated on subjective measures, but tested - and return on investment is the best measurement. Be sure to keep your ROI expectations reasonable, however; don't expect a $1000 lead spend to turn a $10,000 profit within six months.

When determining ROI for purchased leads, the thing to measure isn't the initial cost per lead but what your new Customer's Lifetime Value>, or CLV, is over several years. The repeat purchases from each customer can add up to several thousands of dollars over the years of your business relationship.

Results: Compare, Compare, Compare
One of the best ways to get an accurate picture of how purchased online leads perform versus other lead sources is to create a comparison table or model based on transaction data and campaign results. Include revenue, market share and profits, volume, conversion of leads and direct response metrics. See which ones perform better.

After weighing such factors as lead-to-sale ratio and average profit margin for each sale, many marketers have found that higher priced leads usually have appreciatively higher performance results.

Once you've gained a thorough understanding of the cost to value relationship of leads, you'll find that complementing your own marketing efforts with quality leads from a lead generation company can be a very cost-effective means of reaching your sales goals.

Share Tweet