Bought leads vs Referral fee?

[SamLH]

Hi

We are looking to expand our business by paying for leads, we used to pay around £40 per lead when managing our advertising ourselves, due to increased work we did not have time anymore and so tried outsourcing to an agency but did not get the same results. We have tried several different agencies and lead generation methods but they just do not have the same quality. Some agencies just don't get the leads, some get the leads but they don't convert at all they just seem like spam or random people that aren't interested in our services at all.

Depending on the size of the project I can offer up to £100 per lead but this based on the 20-30% conversion rate we have when getting natural leads. Would I have better results in just offering a £100-£500 referral fee based on the size of the project rather than buying leads? How would I measure this verify it with the referrers?

Thanks for any advise.

 

[ChrisRM]

Hello Sam - Interesting situation, sounds like you had a good system in place to get leads. Could you hire someone to do sales and/or marketing?

What kind of business/industry are you looking for leads in?

In answer to your question, I suspect it depends on the risk appetite of the provider of the leads. Some will be happy to take a % provided the right systems are in place for transparency. Others will prefer a basic £ per lead.

 

[TotalWebSolutions]

Could you not contact potential referrers to see what would interest them? We offer a referral scheme which pays a flat fee and there is no contract or minimal requirement so it works well in the respect of a developer sending us the odd lead now and again as well as software partners sending them regularly.

 

[Deleted member 244558]

Sam - You can implement a decent inbound marketing strategy which pumps leads through to your sales guys to convert. This gives you full control over how you attract customers rather than relying on external lead generation which as you said often supply you with poorly qualified leads. With your budgets you would reap massive benefits by switching to inbound. Happy to answer further questions.

 

[yourmoneytree.co.uk]

I've worked in both PPC and affiliate referrals for a number of years and I can tell you that not all leads are created equal.

We've worked really hard to make our lead quality via PPC (that we control) really high, but even then we get a 15% conversion rate - which for an industry that operates around 4% conversion is great.

But affiliate referrals are a whole different ball game, for one thing because you don't control their lead source but for another because they all operate differently even if they call the leads referrals!

You tend to get:

• Referrals generated via mass emails - super spammy and don't convert
• Referrals generated by cold calls - only convert if you get the 1 in 100 call centres that knows what they are doing
• Referrals from businesses that act as brokers to new leads- usually convert around 2-3% if all they do is pass you the leads
• Referrals from businesses that act as brokers to new leads and sell your product for you - nailed on sales only, but you're never sure what the client has actually been told about you
• Referrals from businesses that act as brokers to their current clients - can convert up to 90% as they have a relationship built on trust.

Referrals then vary wildly - my advice would be, on anyone that wants to give you just leads, get them to sell for you or you might run round like a busy fool; or focus on people that can give you referrals from people they already have relationships with (e.g. current clients or similar companies that service another point in your clients chain).

 

[webgeek]

Why not just pay for conversions? £500 a pop.

Give your extended sales/marketing force something they can bundle as an incentive to track - like a promo code. By getting X bonus or discount on the service, signups are encouraged to use the promo code - after all it saves them money or gets them an extra this that or the other.

 

[Empower Dynamics Ltd]

This is where we differ. We do not perform SEO or Lead gen typical services, we go to market directly and arrange a face to face with a decision maker in the target company and progress this through to solid business.

 

[Empower Dynamics Ltd]

I've worked in both PPC and affiliate referrals for a number of years and I can tell you that not all leads are created equal.

We've worked really hard to make our lead quality via PPC (that we control) really high, but even then we get a 15% conversion rate - which for an industry that operates around 4% conversion is great.

But affiliate referrals are a whole different ball game, for one thing because you don't control their lead source but for another because they all operate differently even if they call the leads referrals!

You tend to get:

• Referrals generated via mass emails - super spammy and don't convert
• Referrals generated by cold calls - only convert if you get the 1 in 100 call centres that knows what they are doing
• Referrals from businesses that act as brokers to new leads- usually convert around 2-3% if all they do is pass you the leads
• Referrals from businesses that act as brokers to new leads and sell your product for you - nailed on sales only, but you're never sure what the client has actually been told about you
• Referrals from businesses that act as brokers to their current clients - can convert up to 90% as they have a relationship built on trust.

Referrals then vary wildly - my advice would be, on anyone that wants to give you just leads, get them to sell for you or you might run round like a busy fool; or focus on people that can give you referrals from people they already have relationships with (e.g. current clients or similar companies that service another point in your clients chain).

I totally agree with this. That is why Empower Dynamics was formed - to deliver successfully and suitably qualified connections to work with. We have bought in over £120K in extra business this year for one client. I would be happy to discuss what we do, and how we can assist anyone seeking increased business.

 

[SamLH]

Why not just pay for conversions? £500 a pop.

Thank you for replying

Hi, this is the idea that I was talking about but have 2 problems; £500 is the most we can offer. We sell custom projects, some we only want to give £100 for referral and I don't want to try to explain complex percentages, I'd rather have a flat fee, maybe I could do 3 rates - £100 for conversion of A, £250 for conversion B, £500 for conversion C.

But the 2nd problem is that usually referrals don't come from in-house and point of sale is always offline. Some leads we get from agencies, sometimes we ask current customers for referrals, at this point how can we prove to the lead generator whether the lead has converted or not?

 

[webgeek]

Promo Codes

You've got to give people an incentive to refer you - or for their referrals to take action then and there. The easiest way to do that is offer a promo code.

The promo code entitles the bearer to X% discount or a free copy of Y or a free hour of Z.

The promo code also gives your referrers a unique offer that no one else has like:
ACME10 - gets ACME Ltd readers a 10% discount (and lets you know ACME referred them)

That way you can also give ACME Ltd a 10% commission (if you're getting affiliate type referrals), or give them a thanks for sending business your way.

In the past, I've done the 20% total, with some companies doing a 10%/10% split, some 15%/5% or 5%/15% and even those offering a 20% discount and no affiliate commission - as a community service to their membership.

 

[Cynic]

Thank you for replying

Hi, this is the idea that I was talking about but have 2 problems; £500 is the most we can offer. We sell custom projects, some we only want to give £100 for referral and I don't want to try to explain complex percentages, I'd rather have a flat fee, maybe I could do 3 rates - £100 for conversion of A, £250 for conversion B, £500 for conversion C.

But the 2nd problem is that usually referrals don't come from in-house and point of sale is always offline. Some leads we get from agencies, sometimes we ask current customers for referrals, at this point how can we prove to the lead generator whether the lead has converted or not?

You give them a code or number to call that they can monitor.......

Really without stating what your service is ....it's difficult to assess it

 

[SamLH]

You give them a code or number to call that they can monitor.......

You're really missing the point. If they ask whether their referral has converted and it has whats to stop me saying it hasn't and not paying commission or the other way around, if it hasn't what's to stop the refer claiming it has and causing a negative rep for us.......

 

[webgeek]

They can easily capture the lead before passing it along then call/email to confirm and spot-check you.

 

[SamLH]

They can easily capture the lead before passing it along then call/email to confirm and spot-check you.

Hi, thank you for replying.

I didn't consider this before because our current plan is intended to be commission based on profit not revenue of a project, also I don't think companies would pass on how much they've spent on projects so the referrer wouldn't know how much the project cost anyway. Lastly, whats to stop the company selling the project under a different business name, so if the referrer does contact the lead it looks like it was another company that was given the project.

I was treating it as the referrer would give us a lead and then wait to see if it converts or not but I'm guessing now that they would need to be more involved?

 

[webgeek]

Generally they just get a report at end of month with promo code, amount spent, the client name/number or some similar - with a total due as commission.

You probably don't need much more than that - I wouldn't let them see too much private side of things.

One risk is that someone capturing leads is selling them on to multiple parties - hopefully not competing, but it is possible.

Really doesn't matter to the lead gen source - if the person referred buys from someone and they check on it, they're either going to want to be paid or they're gonna need an explanation on how this buyer bought something but you're not wanting to pay them.

Usually the promo code and discounted price is enough to clue them in. A buyer that used a code, got a discounted price consistent with your prices is about enough damning evidence for them to complain they should be paid.

 

[Cynic]

You're really missing the point. If they ask whether their referral has converted and it has whats to stop me saying it hasn't and not paying commission or the other way around, if it hasn't what's to stop the refer claiming it has and causing a negative rep for us.......

I'm not actually... if you give them a VOIP number where the calls are recorded
then they won't have to ask you anything because they'll have concrete proof

As for your doubts ...well ask for a sample upfront to trial the leads or favorable
payment terms after you've converted to review the lead quality.

Hopefully debt collection visits are enough of a detterent to stop you scamming
lead generators..

 

[Chris Needham]

I don't think you can expect the same conversion rate as from a natural lead as the customer has already decided to contact you. If those were the only two options, I would choose referral.