Thoughts on purchasing online marketing leads
I am positioning FirstExact more and more as a lead generation company rather than a marketing company. What I do isn’t about brand building, or spending money on pretty website and banner ads- it’s about working with companies to help them understand the value of a customer, to work out their conversion metrics, and by doing so to show them the value of their lead sources. Then we build a plan to produce leads, and to monitor lead flow/quality and most importantly ROI. The fact that I know PPC, or SEO, or web usability is pretty irrelevant- those are tools which enable me to help customers receive more leads at an acceptable cost, and to convert those leads into sales.
Recently I’ve experimented with online lead generation companies, to see what value these guys offer over and above other sources of leads. There are a few of these around- most notably buyguideonline and approved index. Having tried both and received a number of leads, I think I’m in a pretty good position to share my thoughts on them and the market in general.
The way these lead companies work is that they advertise through a mixture of pay per click and SEO, and offer the searcher the benefit of getting a number of quotes from companies without having to contact them individually. They then charge the supplier companies per lead. Note I say ‘companies’- the way they make their money is by selling the same lead out multiple times- usually between 4 and 6. Initially this looks like easy money for the lead company- all they have to do is bid on adwords to rank higher than the suppliers, take the lead, and then sell it out 6 times at £35 a lead. They will always be able to bid higher than the end suppliers as they are receiving 6x the lead cost back. And this money is taken regardless of whether any of the suppliers actually convert the lead.
In this way, it’s a competitor to good old cold calling, or other direct methods of lead generation, and I was really keen to find out how it all worked. I signed up first with Approved Index, and they sent me leads straight away, at a cost of £28 a time. The lead quality at the time seemed pretty high, though every time I called a prospect I was informed that many other companies had called already. However, I didn’t convert any prospects I paid for during my time with Approved Index, and I put this down to not having had a clear tactical plan for these leads, which do differ from average cold call leads or phone-ins. Having spoken to some of the prospects again later on, it seems as though some providers really have honed a great process to close these leads, and I realised that if I was to use Approved Index again I would have to work out how best to do this if I was to win any deals. As a footnote, I phoned all of the leads again a year later to see how things had gone for them- the majority of the companies had gone out of business, two still hadn’t made a decision, and only 0one was very happy with the deal they’d agreed (this was the guy who told me I had come second at the proposal stage- maddening!)
More recently I tried buyguideonline. These guys are the other big players in the market, and are quite organised in their own approach to getting suppliers on board, offering a free trial, a lead rejection guarantee for low quality leads, and sneakily sending through leads with the details blanked out in order to get you to sign up. The sign up process is complex and their admin system is out of the ark, which makes the whole setting up process pretty painful. They are adamant that for quality purposes you have to add at least a logo and a case study to their site. I was told my logo was in the wrong format, then the wrong size, and I started to lose interest pretty quickly. An email to my account manager telling him I was thinking of jumping ship and suddenly leads started to arrive without me having to do anything. Unfortunately their minimum lead flow per week was 10, and this was way over what I needed to test their system, so 5 or 6 leads in I asked them to pause the account. After a few more leads came through they did this, but then I was locked out of the account completely so couldn’t see the leads at all. Once I was allowed back in, and followed up the leads, I found them of very variable quality. The main problem was that for online marketing, their budget categories do not take into account ad spend vs management fees. What this meant was that I was receiving leads with a budget of £250-£500 a month, but when I phoned it was clear that this was their entire budget, it always tended to be at the £250 end rather than £500, and that there was little scope for any service charges, let alone any profit. And for this I was paying £35 a lead. After phoning the leads, it was clear that these leads were very low value, many were of no use at all, and almost all were disappointing. However, I did sign up one company on a £300 a month 3 month deal, the profit from which was enough (just) to cover the cost of the other leads. I also found out from this company and another I went to see that they had originally phoned up for telemarketing, and it was then I realised that not only were the lead company selling leads 4, 5, or 6x to different suppliers, but they were upselling and cross selling on the phone. What this meant was that a 6x sold lead could be sold 12x, and for the unfortunate company who was pitching for the secondary need, it was likely that a less warm welcome was assured. In fact when I went to visit a law firm in London who had come through as a lead, they hadn’t been motivated to want online marketing at all- they were after IT support, and had mentioned online marketing in passing- a fact I only found out after travelling to see them.
Eventually, I complained about the quality of the leads, and having heard nothing back, I emailed the MD of Buyguideonline. He called me back, and we had a long conversation, after which I received a credit for most of the leads. After having spoken to him I understand that the leads go through a rigorous process of validation, during which they are contacted personally and spoken to for some time- mostly to weed out competitors and no hopers. The MD seemed passionate about lead quality, but I couldn’t help thinking that his belief was quite being channeled in the actual phone calls made by the foot soldiers. I’d certainly like to be able to have listened in to some of the leads I was given.
Overall I think these lead companies suffer from not really understanding requirement from media companies where adspend is distinct from management and consultancy fees, and they should find this out early in the lead qualification process. If nothing else, buyguideonline would do well to have a category of leads with above £500 a month to spend (to be fair they do have a higher category but it’s way above this figure, and each lead costs a lot more). It’s a shame how it works now, because there are some real gems worth fighting for hidden among the no hopers, deat-beats, and people wanting something for nothing.