7 Reasons to Stop Paying for Leads as a Service Professional

Editor’s Note: Jason Hall, the founder of the FiveChannels marketing agency, penned this fine post as a Leadpages Guest Blogger. Interested in writing for the Leadpages blog? Hit us with your best shot!In the marketing world, leads are the golden ticket to business growth, but not all leads are created equal. Of course, you need a steady stream of potential customers—people who have expressed an interest in what you have to offer and a potential to buy your products or services. But what happens when the scales tip and quantity wins out over quality? What happens when you cast too wide a net or try to cut corners in your lead generation to go for the easy win rather than the right one? Let's consider an example. Just imagine all the ways that you can generate leads for your small business. You can attend an in-person networking event, email everyone you know and ask for client referrals, launch a Facebook advertising campaign, connect with a community on social media, dig deep into content marketing, and so on. There are hundreds of potential paths to choose from, but none is quite so precarious as paying for leads through a third-party lead generation service. What, you can buy lists of potential client/ customer leads? Of course you can. But if you read this article through to the end, you'll understand exactly why you should never do it (aka resist the dark side). When you pay for leads, you are giving money to a third-party who will in-turn give you the contact information of someone who has, theoretically, displayed interest in your products or services. How this internet user displayed interest is, as you might have guessed, pretty dubious indeed. Because you simply don't know the details of how the lead's information was acquired and what exactly qualified them as a potential customer, you can't be confident you're getting your money's worth. On the surface, it may seem like this is an excellent way of finding a new customer or client, but it is not always the case. You might think you're getting 50,000 names of people interested in landscaping services in Minneapolis when really you've just purchased an outdated mailing list of potential homebuyers. Did they buy a home in the area? Do they have an interest in landscaping services? Who knows—you can only trust what the third-party tells you and—even more importantly—trust that the third party wants to sell you a list of names, whether or not they are right for your business. How's that for a confidence killer? No matter what business you're in, when you buy third-party leads you’re paying for quantity, not quality. Whether you purchase ten leads or 1,000, you will be fighting a losing battle, because even if the people were once interested in the type of service you provide, it doesn’t mean they were interested in you and it certainly doesn’t mean that they are likely to hire you. That’s the difference between a good lead and a bad one. A high-quality lead has expressed a direct interest in exactly what you do and is currently in the market to buy. They have a high likelihood to generate revenue for your business. Third-party leads will leave you with little more than a bill to pay. In this article, we'll explore seven things to consider before wasting money and paying for third-party leads that are vaguely interested in your industry, as opposed to doing generating leads that are genuinely interested in what you have to offer.

1 - Purchased Leads Provide Poor Return on Investment (ROI)

Most marketing experts and company owners, including myself, would agree that paying for leads is an excellent way to drain your time, energy, and finances.The kind of customer you get from a lead service is the kind of person who is shopping around to get the best deal. Of course, there’s nothing wrong with people shopping around, but if you’re paying for leads, you'd ideally focus on people who are close to making a purchase decision. In the case of home service or professional service professionals, I've found that third-party leads rarely convert into an initial consultation or meeting—that is, if you're even able to get a hold of the decision maker in the first place. Those you do contact tend to be passively comparing multiple service providers, which means that nurturing that lead to a buying decision and closing a sale, requires a high investment of time and little to no return. Let’s do some math. If you are paying $50 for a lead and it takes you ten leads to get a job, that’s $500 per job you are spending. Unless you make $500 on every job, you are losing money.

2 - Converting Purchased Leads into Paying Customers is Hard Work

Anyone using a lead generating service will soon learn that all of their leads are looking for the lowest price possible. Sure, it’s understandable that people want to save money, but you would expect some people to be impressed by other considerations, such as the quality of your work, your qualifications, and your experience.It is very difficult to turn one of these leads into a customer during an initial call or consultation, because he or she is focused on shopping around for the best-priced deal rather than the best overall service package.In my experience, the highest quality leads are the people who come to you as a result of word-of-mouth, referrals, and those that you’ve gathered yourself through content marketing and lead magnets. These leads are much more likely to trust you, to hire you, and to continuously refer you to their friends. That's the kind of relationship and reciprocity that you simply can't purchase anywhere else.

Leads from referrals are much less likely to shop around or make you slash prices or bid for the contract. They are much more likely to hire you and become repeat customers. They can then go on to tell their networks about your business.Focusing your effort, time, and money on referrals is much more rewarding and you’ll avoid wasting energy a long list of leads that never convert.

3 - Tire-Kickers Will Tempt You to Lower Your Prices (And Your Standards)

If you start to rely on income from third-party leads, you’re going to get desperate to turn these poor leads into customers and to make some unfortunate compromises along the way. Unfortunately, for many businesses, that means submitting to the overwhelming demand for lower prices. To compete work for a lower price, businesses cut corners. They might use cheaper materials, spend less time, or do a poorer job to make the contract worthwhile while coming in under budget. But when a company lets go of its quality, customer satisfaction takes a hit too. Very few clients appreciate sub-standard work, even if they were only willing to pay a sub-standard amount for it.And remember that when a customer is happy, they may tell someone about your work, but when they are dissatisfied, they will tell everyone. If you’ve been in business a while, doing poor work can ruin your reputation fast. If you’re just starting out, you need all the help you can get and upsetting your customers will do you no favors.For the longevity of your business, it’s critical to be able to demand a fair price for your work and deliver the kind of high-quality product/ service that will build a longterm brand.

4 - Working with Purchased Leads is Unpredictable

When you are generating your own leads thanks to high-quality work and reliability, you receive high-quality leads, some of which will continue to be some of your best marketing allies and will tell their networks about their experiences with you. You can expect that this customer will get in touch again if they need more work done in the future, widening your customer base as they go. If you manage to work with a customer that came from a lead generating service, however, you will be lucky if you ever see them in the future. Because of the nature of their connection to you, they are less likely to help you grow your referral business. Why? Because there is no prior connection or relationship between the two of you. Using a lead generating service can be good for getting your business off the ground initially, but it is certainly not a sustainable approach to lead generation for your business. Your referral business is how you will build up a reliable, stable flow of customers and high-quality lead generation—and there are simply no shortcuts.

5 - When It Goes Bad, You Can’t Expect a Refund

Buying leads can be expensive. So it’s very frustrating when you find that you can’t even get through to some leads on the phone. Many businesses call leads multiple times only to find that it is impossible to talk to the decision maker. What happens when a lead turns out to be a dead-end? Many businesses discover that not much happens at all. Some businesses have complained that they have not been able to get through to homeowners, that their calls have not been returned, or that their leads have not been interested in hiring. Lead generation directories don’t guarantee customers. They offer leads of indeterminate quality, and converting them is your responsibility.

6 - Your Leads are Not Your Leads

The leads you receive are not unique to you. Before you make contact with your leads, you may find that other contractors or service providers who have bought the same leads have beaten you to the punch. Even when a service claims that you and a potential client are a perfect match, that isn’t to say that the match is exclusive. This means that you will have to compete. You’ll have to spend hours trying to sell something to someone who might not even be interested in you to begin with or to someone that is now receiving multiple phone calls from your competitors that have purchased the same lead information.A better method would be to generate leads that are unique to you. They like what you are doing, they consumed your content, and now they not only need but want your services or products.

7 - This is Business; Not the Lottery

Yes—working with a lead generation service works for some businesses. But many businesses have lost the battle and will tell of visiting boarded up houses, fictional phone numbers, and cold leads. Isn’t it better to spend your valuable time working on building your business in a way that is sustainable and repeatable? Don’t you want to find people that are interested in what you and your company has to offer? There is a big difference between someone that wants something from your industry and someone who wants something from your company. The person who wants something from your industry is always going to look for the best price and they don’t care who does the work for them, as long as they get what they want. A person who is interested in your company likes exactly what you do and is much more likely to be a repeat customer. The best way to find this type of people is to find them yourself. Grow your social media networks, network in your community, increase your brand awareness, create lead generation campaigns and high-quality lead magnets. In short, let people see exactly who you are and what you bring. Let people fall in love with you and your company. Capture the leads and convert them yourself.

So, there you have it: stop paying for leads and start building a business (and marketing strategy) that lasts. Invest in inbound marketing, build your referral business, focus on the quality of your leads and build relationships with customers who truly care about the quality of your work.

Meet Jason Hall: Jason Hall and his agency, FiveChannels.com, specialize in creating brand awareness/traffic and lead generation/marketing funnels and social media campaigns while utilizing the appropriate marketing channels available within your industry. With diverse clients throughout the world, Jason's team is well connected within a diverse list of industries to assist or fully manage your marketing strategies. With no long-term contracts and various levels of service, FiveChannels.com will increase the quality of your online traffic, leads, and sales.