Lead Generation Myths Explored
Contractors who serve home and commercial industries understand that to get jobs, you need leads. There is a lot of information out there about lead generation. Some is true, and some is misleading, or downright false. Worse, several lead generation firms use misinformation as scare tactics to lure customers into their programs. Even if not intentional, there are quite a few myths floating around about lead generation. This article highlights the most common myths about buying leads and gives pointers on how to identify a reputable, effective lead generating program.
Lead Generation Myth #1: I Don’t Need to Buy Leads- I Can Get My Own
You may be a skilled painter, carpet cleaner, plumber or electrician. You may get quite a few referrals from happy customers who have shared your information with a friend or neighbor. Other people may have called after seeing your lettered truck around town.
While it’s true that the most reliable leads with the highest close rates come from referrals, and while you probably do get calls from people who saw your truck, these methods alone are probably nowhere near enough to grow and sustain your business.
Lead Generation Myth #2: I Can’t Afford to Buy Leads
If you think leads are too expensive, you are not alone. We frequently hear from customers that they don’t have the money to buy leads. And it can certainly feel that way when you do not have a lot of revenue coming in and times are tight. However, investing in lead generation is a proven way to grow your business, and following this calculation will ensure a positive return on your investment:
Here is a simple way to figure out what how much you can afford to spend per lead. In general, the goal is to keep your cost of lead generation below 15%, and Ideally 10% of your revenue from each job. If your average job brings in $800, you should spend more than $120 on your marketing. To complete the calculation, you’ll also need to know your close rate. Most contractors close 1 or 2 of every four jobs they bid, or a 37.5% close rate.
So, here is the formula to figure out the maximum you should spend per lead:
Revenue (price of the job) X 15% (max % to for leads) X Close Rate (Average is 37.5%) = Max Lead Price
Using the Example Numbers Above: $800 X .15 X .375 = $45
So, if you generally close 1 or 2 jobs out of every 4 and the average job brings in $800, you can afford to spend a maximum of $45.00 for each lead. Imagine if you could get 20 good leads in a month. You would expect to close about 8 of them. For spending a maximum of $900 (20 leads X $45 each), you could expect to bring in $6,400. If you can get your leads for less, your profits will increase, of course!
Lead Generation Myth #3: I Shouldn’t Pay If I Don’t Win the Job
Unfortunately, just like all other forms of marketing and advertising, there is no guarantee that a lead, no matter how “hot”, will turn into a job. In fact, even the best sales reps close about one of every two to three leads.
This is just the cost of doing business. There are certainly methods you can use to increase your close rate, which will increase your return on investment of purchased leads. The biggest factor is knowing ahead of time what you will pay for your leads and to be certain that you will not be billed for unqualified leads. Finding a company that listens to the calls and only bills you for qualified leads is key.
Lead Generation Myth #4: I’m Going to Be Sent Old, or Recycled Leads
Quite a few contractors tell us that they are concerned about being sold “stale” leads. Many share stories of getting a lead and calling the number almost immediately, only to find that the person does not respond, or that they “no longer need the service”. How can this be if they were just sent the lead?
There are companies out there that use different channels to generate leads. Our experience is that producing live, exclusive leads is possible, is cost effective and is the right way to do business. There are a couple main ways to generate live leads, both through SEO efforts and PPC (pay per click with Google Ads). Although SEO lead generation takes time to generate consistently, PPC is a great way to get leads coming in quicker.
Lead Generation Myth #5: I’ll Get Shared Leads with Other Contractors
Here you will need to be careful because many lead generation companies sell their leads to multiple contractors. This situation can be disastrous if you are having to compete with businesses who do not play by the same rules. Businesses that cut corners by not being fully licensed and ensured and don’t pay employees reasonable wages quote low estimates for jobs that quality contractors can’t compete with.
There are still some of us who offer live and exclusive leads to contractors. Yes, customers may still have to call three contractors to present to a company owner or to review on their own, but when you answer your phone in a professional manner and make yourself available for a quick and fairly priced bid, your chances of winning the job are excellent.
Lead Generation Myth #6: I’ll Get Thrown Off of Google
Competitors frequently call our customers, trying to win them over by using this scare tactic. They tell the contractors they cannot have more than one website, and if they do, Google will penalize them or pull their site down. Really? Do you know how many Dunkin Donuts websites are out there? What about Lowes?
Companies that serve multiple locations frequently set up local advertising campaigns, including sites, listings such as Google My Business, Yelp and even Facebook Pages. All of these are techniques to drive local traffic to their business. You certainly can use more than one website for a business. However, you can’t have multiple listings at the same address for the same business. This is the best way to get into trouble with Google. You can work with a lead generation company who offers a second site for leads. Just be sure they know what they are doing, and do not give up ownership of your listings and citations – many companies are known for holding them hostage when you part ways.
Lead Generation Myth #7: Buying Leads Will Hurt My Branding
Although we market our customers by promoting them by name, most lead generation companies will market your services but not your name. Either route is ok if your main goal of the partnership is lead generation. If your phone is ringing, does it matter if the customers know exactly who you are?
You can work on establishing a relationship with them when you go out for the bid, shake their hand, and give out your branded business card. The purpose of buying leads is to get that inquiry for an estimate. The brand building happens when you perform excellent work and the customer calls you directly the next time around, leaves a great review on your Facebook page or refers a neighbor
How to Buy High Quality Leads for the Right Price
Hopefully, we have been able to demystify the myths behind buying lead generation services and have demonstrated the value in purchasing quality leads. There are a few companies out there that get it right and work to give you the biggest bang for your marketing bucks.
Here are the top things to look for in a lead generation company:
- Make sure they don’t charge a fixed monthly rate. Yes, you’ll always know what you will be billed each month, but many companies are happy to charge you $399 or more whether you receive 1 lead or 30. Fine a company that will bill you a fair price per lead.
- Find a Company that only bills for qualified leads. Getting billed for services you do not provide or from areas you don’t serve will rack up your expenses and offer no value. Be sure to set the parameters ahead of time and find out what their policy is for disputing leads.
- Beware of companies that sell shared leads. These are frequently cheaper, but the quality is lower, and you will have to come down quite a bit on your pricing to win the job. Be careful that you do not bid so low that you lose your profits, or worse, come out in the hole!
- Avoid any company that requires a long-term contract. Make them prove themselves to you month after month.
- Don’t allow companies to own your listings. Hundreds of customers have wound up with listings in a tangled-up mess, with outdated information that they no longer have access to. Reputable companies will keep you as the owner or will turn over the ownership to you should you part ways.
- Be patient! If you are working with a company that utilizes SEO-style lead generation, which tends to be the least expensive method, know that it takes months for the system to ramp up. In the meantime, consider working with them on a highly effective and pinpointed PPC campaign. These leads are a bit more expensive but can still produce leads within your max lead price point.
Have More Questions About Buying Leads?
If you still have questions about buying leads, the lead generation specialists at 99Calls.com are ready to help. You can call 800-717-4669 to speak with a representative or click here to schedule a call at a convenient time for you.