The True Price of A Lead

When it comes to tangible goods, buyers often have a fairly clear, innate understanding of value. When spending more, they expect to get more, and they generally have a framework for evaluating what constitutes "more." Take a computer, for example. Even the less tech-savvy buyer can explain some of the differences between lower-end models and higher-end ones. They know price often gets higher-quality materials, a faster machine, and more features, just as they know that sleeker computers cost more than bulky basic ones. This "get more when spending more" applies to so many things in our life, it's not surprising it applies to online advertising, too.

One place where the model still breaks down, though involves online leads. If you ask the majority of buyers, they will want high quality, but so many still struggle with the idea of a higher-priced lead being that much better than a lower-priced lead. Unlike a computer or car, where you can often cut costs and receive an equivalent product, that is a dangerous belief to carry into performance-based online advertising. Cheaper sounds better, but is it better? Or, could something cheaper even if it seems to have the same attributes turn out to cost significantly more? What about something that is not only cheaper but free? That something lower-priced could be cheap makes sense, but could something free cost money when no catch is involved?

Online lead buyers, especially those that are either a little smaller or newer in the space, focus so much on the dollar value that they don't see the forest through the trees, or the fish from the energy drink. To them, every dollar counts, so they hesitate to spend what seems like a lot per lead when they could spend much less. Let's take the unsexy field of debt settlement to illustrate not only why quality matters, but the true cost of low-quality.

If you as the buyer just received a lead, you don't have the luxury of trying to close the sale by email or simply signing prospects up for your newsletter in hopes of them one day transacting. You have to get on the phone and try to get them on the phone, which isn't easy, even though the user has given his permission and shown an interest in connecting.  

This is partly like trying to call into a radio station to win a prize. Imagine, though, that instead of there being a prize at the other end of the line, you are the salesperson at a company and closing leads is how you have to pay your bills. You can now see why the intent of the person filling out the form, a key quality metric, matters. Reaching someone who filled out a form for virtual currency makes for a different conversation than reaching someone who just performed a search on the topic. Not to mention that you have a better chance of speaking to the latter, too.

When we talk to companies that have call center agents or rely on them, we hear more and more the emotional tax. We like to think of call center agents -- or insurance broker or debt settlement agents -- calling leads as automatons, people who perform the same task equally well time and again. But they aren't, and they don't. When they can't reach buyers, or when they reach disinterested buyers, it doesn't just hurt them, it hurts the entire ecosystem, including the sellers. 

Getting closers is a skill, and it might sound like frou-frou 21st-century coddling to focus on the emotional state of those calling the leads, but how they perform is how the company performs. As the buyer, you have a cost if you want to replace them. Counterintuitive as it sounds, you really can grow slower by saving money. 

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1 comment about "The True Price of A Lead".
  1. Mark Aronoff , March 12, 2010 at 5:35 p.m.

    Jay, You're more than right about a lead only being worth what it converts. I know first hand selling Mortgage & Debt Settlement leads for 4 years at LowerMyBills. We spent so much time educating the buyers on closing tactics and best practices so that we could place higher value on certain leads versus others (usually filter driven).

    However, isn't the very nature of buying leads from aggregators a setback in quality to begin with? How could these leads which are most often shared or resold several times ever compete with an organic exclusive inbound generated by the advertiser themselves? Just think of the morale boost in these call centers when a call is placed to a lead familiar with the brand of the advertiser rather than the aggregator? In the majority of the meetings I had with lead buyers, their internal generated leads always had the highest quality, best conversion rate and lowest acquisition cost.

    I submit that if lead buyers want the best quality leads at the cheapest acquisition costs, they will have to learn to start generating themselves utilizing the same marketing channels aggegators use including: paid search, display, rich media and email remarketing. This is my particular area of expertise and would be more than happy to share my experience and knowledge on the subject with anyone interested in discussing further.

    Mark Aronoff
    maronoff@mediaplex.com