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Why Lead Generation Companies Get A Bad Rap – Lessons to Keep in Mind When Purchasing Leads

The lifeblood of any business is revenue, revenue is generated through sales, and sales are generated through interest. In today’s modern world, lead gen is an extremely valuable (and cost effective) way of generating interest.

Personally, the vast majority of my professional experiences have revolved around lead generation. I spent three years at HomeAdvisor selling lead generation to contractors, as well as generating leads by contacting homeowners in need of service professionals. You might be wondering how I transitioned from that to being Director of Sales for Radius Agent, where our team qualifies incoming leads for real estate agents. Though contracting and real estate are two extremely different professions, the complaints about lead gen are much the same. Read on and I’ll share actionable learnings you can put into practice this Q4.

Leads are NOT Guaranteed Sales

Make no mistake: Leads refer to anyone who inquired about your service. Leads are titled as such because the hope is they will “lead to a sale.” More often than not, the average lead is not legitimately interested in your service. Some leads are still shopping around, some are just collecting information, and some may never return your call. The list goes on.

Is it frustrating to pay for leads that don’t convert? Absolutely! Should it deter you from lead gen? Absolutely not. Get back on track by putting the following tips into practice: 

  1. Accept that you’re not going to close every lead.
  2. Shift your focus to the ROI you’re receiving for every lead you do have.
  3. Don’t get distracted by the amount of leads that aren’t converting. Say you’re paying about $100 per lead and a typical close is worth $10,000 to you. Say you are closing one out of ten leads. If you look at this scenario with a “glass half empty” lens, you’ll be discouraged by the menial 10% conversion rate. But, what if you take the “glass half full” approach? If you’re spending $100 per lead and you have a batch of ten, you may be out $1,000 but your close is worth $10,000. Would you spend $1,000 to make $10,000? I sure would. Focus on ratio of cost to close, as opposed to your close ratio with leads. If it makes sense for your market, spend more.

    Put Yourself in the Consumer’s Shoes

    I can not stress the importance of putting yourself in the consumer’s shoes enough! Take the time to understand how a lead arrived at your door. Did the lead fill out a contact form or did they simply click on an ad? These differentiators are key in determining the strength of the lead. On top of that, bear in mind that there are hundreds of lead generation companies out there. Understand what you’re up against. Below is a staggering finding:

Think about all of the new lead generation companies that have been created in the last ten years, especially in real estate. The above shows the amount of real estate transactions year over year. As you can see, real estate transactions have remained stagnant for well over 10 years. One can conclude from this graph that new lead generation hasn’t increased the amount of real estate transactions over time. Rather, leads only appear to have increased due to the number of lead generation companies out there selling the same leads again and again.

Let’s use real estate as an example. The buyer clicked on an ad on Facebook about home ownership…that’s one lead. After that, they went to their Zillow app and searched for properties in their area and found a home they were interested in and submitted their info…that’s two leads. Later that day, they googled that same property and also searched for it on realtor.com…creating an additional lead…that’s three. As you can see, the same lead gets recycled through multiple lead gen companies and as in this example, there are three agents competing for a single transaction. How can you stand out? Keep reading.

Treat Your Leads like Gold

“The Millionaire Real Estate Agent” by Gary Keller states: “Lead generation is the life blood of your business.” It’s 100% true. Since lead gen is the lifeblood of your business, it only makes sense that we treat our leads like gold. After all, you’re paying for these leads and they lead to your success.

I’m always surprised by how many people do not work their leads properly. So many make the mistake of not prioritizing new clients over their current workload. This is extremely dangerous for any business. After all, a healthy pipeline is the heartbeat of any successful business practice. Don’t be one of those people who buys leads and then fails to follow up with them. In the words of the great Glen Ross, “The leads aren’t weak. You’re weak!”
Understand the life cycle of the lead and invest in additional products to make sure your leads are taken care of. Two invaluable tools are a CRM that keeps you organized and helps you prioritize your follow-up. Also, an ISA lead scrubbing tool is highly recommended. Our Radius Assist product follows up with your leads with calls, texts, and emails within minutes, and setting up an appointment so you can take the client to close. Client’s want simplicity and efficiency. If you’re going to spend an arm and a leg on leads, make sure you’re getting the biggest bang for your buck.

In conclusion, the top of the funnel is crucial to any successful business. Focusing your time, effort and money at the top of the sales funnel is of utmost importance. It’s going to be a frustrating process, but lead generation companies aren’t to blame. Shift your focus, go into the process with open eyes, and fill your arsenal with top-notch tools to ensure you’re appropriately prioritizing your leads. To celebrate Cyber Monday, we’re giving you 15% off Radius Assist so you can see how our service can jumpstart your pipeline.