A few months ago, I received an email asking for my point of view in a discussion about paying for highly-qualified leads.

Right now we are discussing the preliminary results of a group survey which shows that despite the fact over 55% of respondents said they get more than $10,000 in revenue from the average customer in a given year, only 8.8% of the survey participants felt that they would be willing to pay $500 for a super-duper qualified B2B lead.

A question then is prompted to me: “Why do you think so few companies are willing to pay $500 for a highly qualified lead? Have leads simply become passé? Do few companies even know what to do with good leads to begin with?”

In my reaction to the questions, I had several of my own that came to mind:

  1. Who actually still pays money for “leads,” let alone a whopping $500 per?
  2. How would one know that the aforementioned “lead” is super-duper qualified for that particular business?
  3. What parameters are factored in to ensure that the lead is qualified enough to entice a business to respond to?
  4. Why would a business pay for a lead like that when there are relatively low-cost alternatives to generate leads?

I really had to think through this for a very long time. In fact, it has taken me this long to really assess the question, ponder the underlying message, and weigh the value of what the question is really trying to say. Here’s my take on this. [I’m going to use digital marketing only for argument’s sake]

Who actually pays for these types of leads?

As a digital marketer, I analyzed this question into two sections. The first section is that companies are still paying this type of lead for their business. Meaning that there are still a select group that continues to practice this type of initiative, albeit however small or large the number may be. Second, only “fewer” companies are practicing this type of business, meaning that more companies are shifting to other methods/means to generate business leads.

In that analysis, I’ve hypothesized that the money spent on leads can mean using pay per click campaigns in the digital world. I think that’s more of an accurate portrayal of this type of transaction, as bigger markets like California and New York may tend to have higher cost-per-click or cost-per-conversion average than your lesser markets like Oklahoma and Missouri. This also depends on the type of business/industry/target reach that the paid search campaigns are running, which will raise or lower the cost-per-click on a national scale.

The hypothesis is that most businesses are lowering their cost-per-click or cost-per-conversion to a minimal in order to focus on other methods of marketing/business generation. Conversely, some companies have the means and funds necessary to elicit a higher cost per lead to get business.

It’s understandable to do paid search campaigns as part of generating business, but is it really necessary to spend that much for a “well-qualified” lead? Speaking of which…

How can one tell if that lead is “super-duper” qualified for business?

Continuing with the theory that paid search marketing is being used for this type of transaction, it’s feasible to note that if a user went through (or started down) the conversion funnel process — and assuming no metric analytics or behavioral marketing analysis has been conducted — then it’s safe to say that the campaign ads worked to at least some degree. But does that [conversion entry] really say much about the potential value of the customer? Does [the entry] show that the customer’s qualifications matched up to the company’s needs? Maybe. Maybe not. Without looking deeper into the analytics and behavior, it would be difficult to tell.

Digressing from the paid search campaign hypothesis for a second, let’s say that this potential lead stemmed from a word of mouth marketing campaign. Now, WOMM has more trust/relationship-oriented factor behind it, which makes it more viable source for lead generation. However, the question remains the same: does that lead really require a hefty price without knowing if the lead is THAT qualified for the business?

Why would you pay that price for a lead that you may be able to get for free?

Seriously… Why would you pay leads with a price that steep when leads can be aggregated for free or relatively lower cost? While paid search marketing has its advantages on getting leads at a cheaper price, there are other ways to generate leads that don’t necessarily require you to take out another loan. Social media marketing is continuing to provide numerous companies with leads and conversions at a minimal cost [save for time and energy, of course, but that’s across the board]. Organic search marketing is still prevalent in today’s lead generation business. But the Real McCoy in making lead generation work is more than just doing one thing. It’s creating a myriad of campaigns finely integrated together, and this is done through the use of inbound and content marketing.

Will I pay for a “Highly Qualified” Lead?

My short answer is no, simply because I know of better ways to get those leads without spending a dime. But that doesn’t mean I won’t use other marketing initiatives like PPC to get a lead. It just means I am judicious about how I spend my time and money to be effective on conducting my marketing campaigns.

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