Have you ever found yourself thinking or even saying “we just need more leads”, “let’s play the volume game”, or even “where can we get cheaper leads”?
It wouldn’t surprise me, as I frequently hear this from prospects and sometimes even our clients.
As business & sales leaders we can often be seduced by low cost leads in an attempt to increase sales by keeping our sales teams “busy”…
But far too often we neglect to think about the downsides.
Then one day we wake up and wonder why our sales team is burnt out (or turning over at high rates) and the organisation’s conversion rates are in the toilet.
More leads is not always better… and there is a hidden cost to cheap leads.
How To Generate Cheap Leads (aka What You Shouldn’t Do)
To understand why more low cost leads is not better, it’s worthwhile exploring how these type of leads are generated.
Digital and lead generation agencies have a number of levers that they can pull to lower the cost of leads.
So, if you forced us at gun point to generate low cost leads (without ever thinking about quality and conversion) we’d do the following:
Remove Form Fields
The more questions you ask a lead to answer, the fewer leads are generated. To generate a lower cost lead remove all form questions except the essentials, maybe name and phone number.
Your leads would be lower cost as more people will now complete your form.
Removal of these extra form fields will mean you will now receive the leads that would have been otherwise too lazy, or not interested enough, to complete a longer qualifying form that provides the information you might need (address, power bill, specifics of their home, etc).
Remove Qualifying Criteria
Asking leads to meet qualifying criteria lowers volume and increases costs.
If you have certain qualification criteria like sms-verification, homeowner status, minimum bill sizes, or postcode coverage areas then removing them will instantly lower your lead costs.
Of course you will now receive unqualified leads that don’t meet your basic criteria; but hey, you’re playing the volume game now.
Use Lower-Cost, Unproven Platforms
Google Search consistently drives high-intent leads that turn into sales… but it’s pricey.
To lower lead costs you would pursue lower-cost advertising and lead generation platforms that don’t have proven quality and conversion rates. For example, co-registration, TikTok, Reddit, Taboola, and many more emerging platforms.
Using these platforms gives you access to lower costs leads, but means you will miss out on the leads that have a proven track record of turning into sales for our clients.
Use Compelling, Non-Compliant Messaging & Offers
To generate more leads you would use the most compelling messaging you can think of, regardless of its compliance.
Examples could include over-inflating rebate amounts, exaggerated product savings claims, or even suggestions that products/services are free… even when they are not.
Our competitors consistently use ‘no-cost’ messaging which I’m sure drives a huge volume of low-cost, low-quality leads.
Why Cheap Leads Will Destroy Your Business
If you pursue a ‘volume’ model of a high volume of low-cost leads, you can anticipate:
Reduced Sales Team Efficiency Via Conversion Rate Collapses
Any leads that you generate require a significant time investment in lead management.
This is discussed in our Lead Management Client Guide and is evidenced by our Sales Resource Calculator.
When your pursue a low-cost lead model, valuable sales team member time is spent following up high volumes of low-quality leads.
You will see this in the metrics at every step in your sales process – lower lead contact rates, more contact attempts per successful contact, lower contact to appointments conversion, lower appointment show up rate, and lower appointment close rates.
This inefficiency will represent a high cost to most companies.
The savings you make on lead costs will often be swallowed whole by increased sales team head hours that are necessary to make a sale.
Frustratingly, it also reduces the time available to your best sales team members for high-value activities directed at qualified prospects deeper in the conversion process.
That is more time dialling wrong numbers and unresponsive leads and less time closing deals.
Sales Team Burnout & Turnover
Sales teams want to win. Appointment setters want to book qualified appointments. Consultants want to sell solar.
When lead performance and conversion rates start to drop, your sales team starts losing motivation. We’ve seen it happen dozens of times.
One Brisbane prospect told us: “My guys were making 200 calls to book 5 appointments. Today, they’ve made 80 dials and have booked 12 appointments.”
Better leads = higher morale = better performance = compounding returns.
More “Wrong Fit” Conversations, More Attack Vectors
Pursuing a high volume, low-cost model means your company will come into contact with more people every day. Unfortunately, this also means more disinterested, unqualified people.
Accordingly, your team will be disqualifying more leads based on their lack of fit for what you do.
This strategy increases the opportunities for somebody to have a negative experience with your company… and maybe even leave a bad review.
We’ve seen this vary from the benign (think: “Too big/small/expensive”) to the potentially damaging (think: “Stay away from this company at all cost!“, “will not stop calling me!”).
Stop Optimising for the Wrong Metrics
Here’s the brutal truth: most agencies optimise their campaigns for the lowest possible cost per lead… because it’s easier to report on and is easily displayed in a dashboard.
Making campaign decisions, optimisations, and innovations that preserve or even improve lead quality (sometimes in the face of rising lead costs) can be an arduous task.
Keeping an eye on cost per sale whilst protecting clients from short-term thinking with long-term losses is also often a thankless job.
But it’s the work we love.