The Complete Guide to Buying Leads

The first question is, Should You Even Buy Leads?

• Are you willing to follow up effectively?
• Do you have someone to make the calls?

The Different Types of Leads

There is no type of lead that is right for every salesperson and every organization.  Below is a brief description of the types of leads that tend to be available and when they may be appropriate.

• Real Time Leads - These leads are delivered within seconds of being generated.  They are typically the most expensive and require the most resources to respond to because in order to get the benefits of them being Real Time Leads, you need to respond within a few minutes, possibly ten minutes at the most.  This requires dedicated salespeople tasked with being able to respond on a moment's notice.  These are typically shared leads, making the response process a bit of a "horse race".  If there isn't enough staff to ensure that there will always be a person who is dedicated to only the task of responding to the leads, these are probably not a good fit.
• Exclusive leads - In theory, these leads are only sent to one company, in reality as soon as a prospect responds to an ad, they are immediately targeted aggressively by the ads of other companies, making a truly Exclusive Lead very rare.  Even when a lead is delivered exclusively to one company, many consumers continue researching online, request multiple estimates, and speak with several providers. As a result, the experience often feels less exclusive than Lead buyers expect.
• Exclusive Branded Leads - These almost always come from a business's own marketing efforts.  The prospects see your ad talking about your company providing your services.  These are almost always the most expensive and have the lowest potential volume from a given area, but require the least emotional effort to follow up on.   Salespeople like them because they require less emotional effort, but they are the riskiest type of lead because it is rare to be able to buy them for a fixed cost per lead in a useful volume.
• Exclusive Unbranded Leads - These leads are exclusively delivered to you, but the prospect doesn't know the name of your company until you follow up with them.  These are generally overpriced because you are paying the entire marketing cost to generate the leads, but you typically aren't going to close a higher percentage of the leads than you would if the leads were shared with two other companies because even in the same industry different companies will appeal to different prospects.  They are rarely True Exclusive Leads; they are usually a "Head Start" and the leads are sold again after 3+ days.  These are typically safer than Branded Exclusive Leads because you can typically get them for a fixed cost per lead.
• Shared Leads - These leads are typically shared with two to four other companies, at a reduced cost.  These typically provide a better Return On Investment than Exclusive Leads but can be more emotionally difficult to follow-up on than Exclusive Leads.  The close rates are typically close to the close rates on an Exclusive Unbranded Lead, unless all the companies are equally aggressive and they all share the same value proposition, which is rare.
• Aged - These are typically shared leads that are 3+ days old.  The best ROI typically comes from leads that are 30+ days old, and many sales teams will buy aged leads regardless of their age as the value of an Aged Lead is typically long lasting.  These leads are best for sales teams that are trying to maximize the return on their marketing budget.  Salespeople following up on Aged Leads should be aware that they will either need to use a dialer or they need to be prepared to work a little harder.
• Inbound - These are people who are calling you in response to an ad of some sort, usually online.  Often there will be two response options, fill out a form or call this number, with the different types of responses going to different businesses.  These are more expensive but emotionally these are more comfortable for most salespeople because the prospect is proactively calling them.  Sometimes with online inbounds the prospect will both fill out a form and then call the phone number, making the value of the inbound call less valuable.  For this reason, the highest quality of inbound lead will be from television ads but the high cost of television responses will typically make them have the lowest ROI.
• Outbound - This is typically a telemarketing lead.  This is by far the riskiest type of lead due to the potential for lawsuits and the wide variation in the quality of the leads.  Outbound leads can be profitable, but they come with substantial regulatory risk. Even organizations that make a good-faith effort to comply with applicable laws sometimes find themselves dealing with complaints, demands, or litigation. If you're uncomfortable with that possibility, outbound leads probably aren't the right fit for you.
• Transfer leads - These are typically the result of a telemarketing campaign.  They are usually better than Outbound Leads because you don't have to worry about getting them on the phone and there will often be a "buffer" of 60-120 seconds where if the call doesn't last that long you aren't billed for the call.  They also have the risks of Outbound Leads.
• Appointment leads - Some call centers will sell face to face appointments instead of or in addition to selling leads.  Some salespeople like these because they don't have to do the work of setting the appointment.  These can be emotionally challenging because there will always be a percentage of the appointments that are No Shows, and it's difficult to drive to an appointment that someone else set, not have the prospect be there, and not be discouraged and/or upset.  In general, appointment leads are several times more expensive than the cost of a fresh lead.

How Are Leads Generated?

• Google Ads - Google ads tend to produce the highest intent leads, typically at the highest cost.  The intent is highest because people made a special effort to go online to the search engine and research the thing they are looking for, often checking out several websites before they fill out a form on a website.  But because of the auction process, the company who bids the highest tends to rank the highest and get the most leads.  If a company wants more leads, they bid higher, sometimes creating a situation where the cost of the leads is too high to be profitable regardless of the high intent of the prospect.  Additionally, it takes 30-60 days for the campaign to "warm up" meaning there may be a period of weeks where the company is spending money before they get any results.
• Facebook ads - Facebook ads typically produce lower intent leads because people aren't going to Facebook to do research on a product, they are there to see what their friends and family are doing.  Additionally, the Facebook lead form will autofill with the information prospects put into Facebook when they signed up, years or even decades ago, resulting in a relatively high number of disconnected and incorrect phone numbers, and email addresses that are no longer monitored.  Facebook is best for companies that are doing business over a larger area, the cost of an exposure for a Facebook ad drops dramatically as the population size that can see the ad is expanded.  Companies do succeed with Facebook ads, but there is a learning curve.  Expect to devote considerable amounts of time creating and monitoring your campaign.  Additionally, while Google is tapping into a steady flow of prospects at the moment they are interested, Facebook ads can burn out a territory, and the volume of lead can suddenly drop.  The upside is that Facebook can often generate leads at a substantially lower cost than Google, making it attractive for businesses that have strong follow-up processes and can tolerate some imperfect contact information.
• SEO - The high intent of Google ads combined with free website traffic makes SEO the Holy Grail of Lead sources.  Much like seeking the original Holy Grail, the journey can be long and difficult.  After all, the search engines have literally millions of pages they can refer people to on nearly any subject.  It requires a number of variables to align perfectly for your website to be in the top twenty links that get all the traffic.  If you have the time to both learn about SEO and execute it well enough to rank in the top ten of your industry, it can be amazing.  For an individual business trying to compete nationally, keep in mind that you may be competing directly with a Fortune 500 company spending millions of dollars a year on their SEO. The good news is that there are often opportunities hiding in plain sight. If you can identify keywords with strong buying intent but search volumes too small to interest larger competitors, you may be able to carve out profitable niches of your own. Local businesses may have an even greater advantage. In some markets, local competitors simply aren't investing in SEO at all. A contractor, insurance agent, or home service company willing to consistently create useful content can sometimes dominate their local search results. SEO isn't the fastest way to generate leads.  It isn't the easiest way to generate leads.  But if you're willing to invest the time and effort, it can become one of the most profitable and defensible lead sources a business can build.
• Direct mail - Direct mail leads typically have the highest close rates because it produces very high-quality leads.  The available targeting options are very helpful, sending letters and postcards is expensive, so fewer companies are doing it, meaning there is less competition.  Direct mail is harder to respond to; you have to be interested enough to pull out your phone and hand key in the phone number or fill out the response card and drop it back in the mail.  The process is slow, by modern standards so it takes around six weeks to get most of the responses back making test marketing slow, and finally it takes a series of mailings to maximize response rates, and most organizations don't have that sort of attention span anymore.  On the down side, it's not rare to spend $600 or more on a mailing and get no leads, even if you had previously been successful.  If you can make direct mail work, you are more likely to have a long term, profitable lead program that other businesses can't easily copy.  IF you can make it work.
• Telemarketing - By telemarketing I'm referring to calling people at random who haven't previously indicated any interest in your product or service and trying to talk them into it on the phone.  When it comes to consumers, I'm tempted to just say don't do it.  Even with the best of intentions and while trying to comply with all the relevant laws, you still are at risk of lawsuits and the quality of the leads is variable, to put it politely. Could you build a successful consumer business this way? Some companies have.  Would I recommend it to most people? No.  For B2B, it has a place, I used to own one of the best outbound B2B call centers in the country and I regularly competed against multiple other call centers, and I can tell you most of my competitors were "slapping headsets on homeless people and telling them to just dial faster".  Done well, there's nothing faster and better for B2B.  For calling consumers, I'm afraid that ship sailed years ago.  When's the last time you had a productive call with a telemarketer?
• Referrals - Unpaid referrals are great.  When I run into someone who needs your service, I tell them your name and number, and maybe even do an introduction three-way call.  My intent is to help you both out and there is a good chance that you and the other person will return the favor, although it's not expected or required.  On occasion, one or both parties may even compensate me, particularly for a high value client but that wasn't why the referral happened.  Unfortunately, sometimes people try to build a business by monetizing that process, become a professional "Bird Dog" and that's where it can all go south.  Now people are more likely to try to talk someone into being interested in something that might not be a good fit and get disappointed or even upset if the referral doesn't become a client.  If you get referrals, that's great.  Say Thank You, maybe send them a gift basket.  But building a business around paid referrals is not going to be easy and it may end up unpleasant.  

Questions Every Buyer Should Ask

What information is included?
How old are the leads?
How many times were they sold?
How are they delivered?
What industries perform best?
Why do some clients fail?

Red Flags.

If the leads are too good to be true, it's probably not true.

I had a fellow try to sell me leads that were described as being nearly perfect, a few days old, had all the date/time stamps, all the fields supposedly filled in by the prospects, responding to ads about the subject, etc.  The price?  5 cents each.  The volume?  Tens of thousands per week.  Realistically, that doesn't happen.  There's no mechanism for that to happen, other than a stolen file from someone else's business and even then, there are very few situations where someone has access to tens of thousands of leads a week in a single vertical, at any price.  Calling a file like that is an excellent way to open yourself up to lawsuits, because there's no way they are real leads.  At best, you would be wasting your time and money calling them.

They don't have a phone number on their website, or they don't answer the phone/return your calls.

If they won't talk to you before you buy, they probably aren't going to talk to you if you have a problem.  If they don't want to answer the phone, you have to wonder why?

If they say something that sounds impossible or makes you feel uncomfortable.

"Nobody ever fails."
"You'll close 30%."
"These are completely exclusive."
"You need to buy 10,000 leads today."
"We can't tell you where they come from."

What Results Should You Expect?

Most disappointment comes from unrealistic expectations.  Different types of leads are going to produce different results.  

• Answer rates  -  15% on the first try is really good, with any type of lead, although real time leads can have an advantage here.   Of all the variables, answer rates will vary the least by lead type.  Your geography, the time of day you call, and your caller ID will usually make a bigger difference than the type of lead. 
• Appointment rates - At best, 50% of contacts, at worst 5% of contacts as long as your process is solid.
• Close rates - Again, this will vary, but in general your close rate is probably going to be in the range of 1-20% with direct mail at the top and an older lead at the bottom.  This can be greatly improved by continuing to work the leads over time using a solid process.  Close rates vary tremendously by industry, pricing, and follow-up process, but many organizations find themselves somewhere within this range.
• The importance of follow-up - It's not their job to buy from you, it's your job to contact them and, behave in a manner that demonstrates credibility and provide them with the benefits of doing business with you.  

Why ROI Matters More Than Lead Cost.

A $50 lead can be cheaper than a $2 lead.
A $2 lead can be cheaper than a $50 lead.
The only thing that matters is:
What is your cost per sale?

Your follow-up process matters more than the lead type. 

​You can set sales records with enough aged leads, and you can absolutely fail with the best leads out there.  

How To Test Leads.

How many should you buy?  

Realistically, there is going to be some sort of minimum order that sets the bottom amount you can test.  Statistically, there's probably not much additional value to testing more than three times the inverse of an acceptable close rate.  For example, if a 1% close rate is acceptable, then testing 3 X 100 = 300 leads is probably enough.  If a 2% close rate is acceptable than testing 3 X 50 = 150 leads is probably enough.  You are trying to strike a balance between spending more to test a new type of lead that may not fit with your sales process, and getting an accurate answer to your question which is; should I buy more leads of this type?  If you are following this formula and you don't make at least one sale on your test, it's highly likely that the lead type isn't a good fit for your follow up process.  If you make at least one sale, it's worth trying another order to see if you end up getting the close percentage that you need to be able to add that lead type to your marketing plan.

How many attempts to reach each lead?

Based on the results of thousands of campaigns to millions of prospects, I recommend a call a day for the first week, followed by a call every other day the second week, giving you a minimum of 8 attempts.  After the first two weeks, you can drop down to one attempt per week.  Try to spread the calls over times of the day and days of the week.

After the first attempt, send a text saying who you are, and why you are calling, including a benefit statement if possible.  Wait five minutes, if they don't return your call or respond to the text, try calling again.

After the first attempt, try texting after every third call, including a benefit/credibility statement.

Send a follow-up email once a week.

There's not much value to exceeding that outline.  If that schedule is too high of an emotional burden, then scale it back to something you can sustain or automate/outsource the follow-up.

How long should you test?

A minimum of 14 days, if you aren't seeing results within 30 days it's unlikely to improve, unless you happen to be experiencing a hurricane or something in which case that's not a good time to test new leads anyway.

What numbers should you track?  At a minimum track

• Contacts
• Positive responses of Leads and Call backs set for within two weeks
• Times of day and days of week that you had a positive response
• Not interested/Not now
• Do Not Call

When should you scale?

If you get an acceptable close rate on the first or second test, increase your lead volume to what you need to reach your current weekly or monthly sales goals.

When should you stop?

When you have confirmed the close rate is too low, or the emotional burden is too high.


Test different geographies if possible.

If you took 100 insurance agents and gave them all 100 leads in each of the 50 states, you would probably see the most sales in Ohio, Indiana and Louisiana.  Having said that, I have an insurance agent in New Jersey that won't buy leads in the state he lives in, while I have another agent who lives in Ohio and loves getting leads in New Jersey.  You aren't going to be equally successful in every geography, and you may not be as successful in the same state that another person in your industry has success in.  Different people and different processes work more or less effectively in different areas.


What To Do After You Buy Them.

• Contact them with a clean caller ID
• Speak with confidence
• Provide the benefits of doing business with you
• Reassure the prospect with credibility statements.
• Follow-up until you get a Yes, Not Now, or Do Not Call.
• Repeat the follow-up process every three to six months until you get a Yes or a Do Not Call.

There is no perfect lead source. There is only the lead source that fits your business, your people, your budget, and your willingness to do the work required to make it profitable.

The best advice I can give you is, regardless of the type of lead you have:

• Make the best impression you can today
• Make a continuous effort to improve how your prospects will perceive you.
• Get a Yes or a No from as many leads as possible within 14 days of getting the Leads.  
• Rinse and Repeat with every lead every six months until you get a Yes or a Do Not Call.