As a company who got their start in lead generation, we know how the system works. With that said, we also have evolved into a full stack marketing agency. So why won’t the dinosaurs in that industry wake up?
In my humble opinion, lead generation is stuck in 2008. Actually, it’s worse than that because the ‘bad guys’ have made the industry completely untrustworthy and finding the ‘good’ is difficult, to say the least. The lead generation model hasn’t changed in years and I’m at a complete loss as to understanding why this is. The only reasons I can come up with are the following:
- People / brokers / companies do NOT like change – even if stagnating is detrimental to their bottom line.
- People / brokers / companies do not understand other options are available to them.
- They can only think in terms of CPL (Cost per Lead), CPA (Cost per Acquisition), etc. and won’t consider alternatives.
So here’s the current state of lead generation:
Example 1: Company A requires additional leads for whatever vertical they’re in – let’s use a financial services vertical called ‘Sales Floor’. So let’s say they need to get leads at less than $90 each because they know they have a CPA of $750 in order to be profitable and they know from prior experience in buying leads at this price that they can close roughly 20%. So this company looks for lead providers to provide said leads at this cost. Now, the lead provider has an AdWords campaign he can run on the Search network and he knows he can get these leads for about $65 each. But we can’t forget that he needs to make money too – so what does he do? He tells Company A he can get them debt leads that are highly qualified for $90 each and pockets the difference of $25 per lead. If he’s doing any kind of volume at all, this provider is doing pretty well for himself. Company A is also happy because they know these are good leads, they know they can close roughly 20% of all leads delivered and they’re staying below their CPA number. Everyone’s happy, right?
But let’s take the model and flip it around.
Example 2: Company B requires additional leads for their Sales Floor program. They’re currently receiving leads from providers of all sorts – those with Search campaigns, maybe some coreg leads (of course, no one ever admits to actually doing this), maybe some email leads, maybe some leads generated off some third party off-brand CPA network. They’ve been in the business for years so they have a pretty good idea of what leads cost and they know where they need to be on their CPA (still $750). They have their own in-house Search campaign, but it’s rocky – the search landscape keeps changing and their guy in charge can’t really keep up (not that anyone will actually admit this either). So the VP in charge of ‘Business Development’ (which we all know means ‘The Guy/Gal Who Gets Us Leads’) decides to do something drastic…he hires a company to manage his campaigns (let’s call this company MarketizeIt). Now, this is a drastic move, right? Um, actually, it just makes sense. Let’s run the numbers.
Company B has a daily budget of $500 in their current campaign. They’re getting conversions at roughly $115 each. MarketizeIt comes in to manage the campaign and immediately makes some drastic changes because…well, that’s what they do. Change, optimize, improve. So now Company B is getting conversions (ie, leads) at $65 each. They’re paying a modest monthly fee to MarketizeIt to get leads at this price – and guess what? It’s cheaper than getting leads from lead providers. Now they can take the money they were spending on all those other lead channels and put that money to proven use in their campaigns.
Let’s look at some real math:
Why isn’t everyone doing lead generation this way?
The only caveat a company could have to moving to this model is the uncertainty of the performance of the marketing company. To this, I say – call us. Let us give you some references from our clients. Talk to them about what we’ve done for them. Ask us about us building in some kind of guarantee for you. Call us today at 512-215-2542.