Introduction

There is an extremely wide scope of what “lead generation services” encompasses, which can be anything from an individual working Facebook ads on their own to a complete agency that runs multi-channel marketing campaigns with separate teams. Knowing exactly what you’re paying for before committing can save a lot of wasted money.

What Lead Generation Services Typically Include

Service combinations usually include one or more of:

• Strategy and channel selection: choosing the channels for paid advertising, SEO, outbound, and/or content marketing that make sense for your company
• Campaign creation and execution: designing and executing ad campaigns, email campaigns, or outreach programs
• Landing page and funnel development: developing the landing pages and offers to convert traffic into leads
• Lead filtering: filtering out leads before passing them to your sales team (in some service packages)

There is an enormous variation in service combination between different vendors and at different price levels, so it pays to get things in writing.

Common Service Models

Pay-Per-Lead

The cost you will incur is constant irrespective of the method used by the service provider in the generation of the leads. Although the provider will bear higher risks since they will be paid only if the leads have been delivered, lead quality remains variable and there are shared leads in this approach.

Key Characteristics

• Fixed cost per lead
• Provider bears higher risk
• Variable lead quality
• Shared leads common

Retainer-Based Management

Monthly fixed cost for having campaigns managed and executed by an agency for you, in addition to the cost of running ads. Allows for better visibility of strategy and process; however, it does not guarantee lead volume like pay per lead does.

Benefits

• Campaign management
• Strategic visibility
• Optimization
• Requires additional advertising expenditure

Performance/Hybrid Models

Others ask for a relatively low upfront fee along with a performance-based incentive (e.g., leads generated or even deals won), although this is not a widespread approach.

Advantages

• Performance-based incentives
• Reduced up-front costs
• Improved alignment between customer and vendor

What to Ask Before Hiring a Lead Generation Service

1. Are Leads Exclusive or Shared?

This makes a huge difference in pricing and anticipated conversion rate.

2. What’s the Lead Qualification Process?

A service that delivers all the leads regardless of suitability is just going to waste your salespeople’s time.

3. What Channels Are Actually Being Used?

Some suppliers use only one channel for lead generation despite general marketing terms and conditions.

4. Can You See Reporting in Real Time?

The supplier should not be the only one who is capable of measuring the cost per lead and the quality of leads.

5. What’s the Contract Length and Cancellation Policy?

Long-term commitment to a supplier that cannot guarantee success yet can result in losses.

6. Do They Have Experience in Your Specific Industry?

Consumer lead generation service may function completely differently in a B2B purchase process.

Industry-Specific Lead Generation Services

Industry-specific providers exist in each vertical as the communication channels and messaging vary considerably among them. An industry-specific provider will most likely perform better than a generalist provider, as they have developed a playbook for the particular vertical and, in some cases, a unique set of lead sources.

Red Flags to Watch For

• No information about the quality or competitiveness of your market in terms of lead numbers
• Not wanting to provide references or case studies from other businesses
• Inconsistent reporting or not being transparent about performance metrics
• Long-term contract without a trial period

How to Evaluate Results Properly

“Cost per lead” is simply not a useful metric in itself. What is truly meaningful is “cost per closed sale” or “cost per booked appointment” for a business-to-service company, because an expensive lead generator that closes at a high percentage can often be worth more than a cheap one that doesn’t.

A good way to go about this: test for 30-60 days, on a fixed budget, using your own CRM to measure the conversion rate, then comparing it to what you are doing now.

When to Build In-House Instead

At a certain point when lead quantity and budget increase, it becomes more profitable for some companies to create their own team than keep paying margin costs on top of advertisement expenditure and management. The moment when it becomes reasonable for a company to hire at least one person who knows the product really well is when there is enough volume.

Bottom Line

Lead generation can be one of the quickest ways to get your campaigns going by outsourcing them, but everything depends solely on the quality of the leads provided, as well as their suitability for your industry and transparency, not on sheer numbers of leads generated. Do your homework first, test out the leads before making any long-term commitments.