Pay For Performance

Can a highly qualified lead EVER be worth $500?

The other day I received an invitation from a group moderator on LinkedIn to weigh in on a discussion in his group on the topic “Can a highly qualified lead EVER be worth $500?” It seems that they had conducted a group survey that showed 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.

He asked 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?”

My response went something like this:

It seems to me that some of the respondents to your question spoke to some of the metrics that matter such as closing ratios, acquisition cost and margins; others raised the issue of trust (also extremely important). I didn't see anyone address lifetime value of a new relationship or even ROI (perhaps I gave up reading too soon). In my view, those are more important issues (along with trust). But they are still beside the point.

The basic flaw in the question is why does the cost of a lead matter at all? Buying leads, no matter how qualified, is a bottom-feeding strategy doomed to failure.

The key to lasting business development success is in investing in building a systematic methodology for touching prospects proactively, profiling their interests and challenges (what keeps them up at night), raising their awareness of your brand and solutions and building their trust and nurturing a relationship by engaging them in ways in which they can address successfully those things that disturb their sleep and the areas in which they have expressed interest.

The objective should NOT be to buy prospects, not matter how qualified. It should be driven toward investing in a growing prospect pipeline that will feed and nurture your company for many years to come, and has the potential to retain those clients for the long term once they have been converted from prospect status to client. The argument is akin to the analogy of providing a hungry person with a fish rather than teaching them how to fish so they never have to ask you for food again.

In the final analysis, a thoughtful lead generation buyer (and seller) should move their focus away from cost per lead (or even acquisition cost, which is far more meaningful) to infrastructure investment. Move the focus from one-off outcomes to a built to last solution and you'll change the tenor of the dialogue significantly.

Real Time Web Analytics