We talk to companies every day who work with third party lead generators.
These conversations usually go something like…
Us : “How are the leads working for you?”
Company : “We only buy leads because we have to. We see lead generators as a necessary evil; we know we need them, but we don’t like using them”.
It’s the reason we set up hubgen; to help companies break free of this “necessary evil” and take back control of their business growth.
But why are companies so negative towards lead generators? Surely they could just stop using them?
It’s more complicated than that.
Here are the top 4 reasons as to why companies are starting to move away from lead generation companies:
“We should be better at generating our own leads”
This is the most common reason for resentment towards lead companies.
Lead buyers dislike paying tens of thousands of pounds to an external company each month in exchange for something that, on the face of it, seems so simple to do.
More often than not, these companies have tried to replicate what the lead generator does, but failed. This is usually because they lack the right experience and skill set internally to make it work.
It’s worth bearing in mind that these lead generation companies have spent hundreds of thousands of pounds perfecting their process. They are constantly testing new channels and new approaches, they have a clear strategy and KPIs and they have specialist marketing experts who manage campaigns day-in day-out.
“They could increase their prices at any time.”
Some lead gen companies will get you ‘hooked’ on their leads and then gradually increase their prices.
Don’t get me wrong, it can be necessary to do this occasionally due to the increasingly competitive nature of online advertising. However, sometimes it’s a commercial strategy which can often leave lead buyers with little choice but to accept the increase.
Another common experience is that lead generation companies will reduce lead volumes to the point that clients question why their leads have dried-up. They will then encourage you to pay more per lead in order to get a larger share of the overall volume.
This can leave marketing leaders with a constant level of anxiety. Particularly if margins are tight anyway.
“They’re not telling us something”
Has this ever happened to you:
You receive your weekly lead performance report and there’s a big drop in your conversion rates.
You immediately call your sales manager and ask whether anything has changed. She says no, nothing has changed, but she’s noticed some of her team complaining about lead quality recently.
Ah ha! Your lead provider is up to its old tricks.
You get on the phone and call your account manager.
“What has happened to the lead quality in the last week?”
“Oh, we haven’t heard of any other companies complaining. I’ve checked with marketing and nothing has changed from our side”.
Probing deeper, you’ll usually find out that some of the messaging used by the lead generator has changed. They may be using a call-to-action that doesn’t work for your service, or they may be emphasing that something is ‘free’, or they may even be incentivising people to enter their details in exchange for a prize.
“We can’t see a way to scale our business without something changing”
Buying leads isn’t cheap. The lead generator has to pay the advertising platforms, their staff, office space etc, and then add their profit margin on top.
By the time the lead has worked its way through your sales funnel, your margin is undoubtedly tight, or possibly even loss-making in some weeks.
In addition to this, most of the time when you increase your order with a supplier, you get some sort of discount in exchange for providing them with more business.
This isn’t usually the case in lead generation.
Typically, the more leads you want to buy, the more the price per lead goes up. This is because you are up against your competitors, who will also be purchasing leads from the same company. The lead generator needs to make it worth their while to divert more leads to you.
This all makes it very difficult to scale your business. You don’t know how many leads you’ll be getting from one month to the next, you don’t know how much they will cost, and you don’t know how well they will convert. Not ideal.
So what can you do?
It can be extremely daunting to start generating your own leads, but it is doable. It’s very likely that you can generate leads for 30-40% cheaper than you pay now, which is enough to cover a couple of digital marketing specialists. Once this is in place, you can then start to scale without adding any additional overhead.
With more than 15 years experience in scaling companies through lead generation, we’ve developed a framework that can be applied to most businesses.
It takes you from being wholly reliant on third parties, to generating 100% of your leads you need internally. You’ll benefit from better margins, better conversion rates, more controllable volumes, and more potential to grow.
If any of the above resonates with you, please drop us a line for a friendly, no-obligation chat. Or, alternatively, you can download our checklist for creating your own lead generation hub.