There are lots of lead generation options available to marketers, but they vary greatly in terms of quality and results. Data acquisition in bulk can be done at a very low cost-per-lead, but valuable leads will be less frequent, thereby bumping up the real cost in terms of cost-per-acquisition (CPA). Paid and natural search can both generate good volumes of leads, but there is no control over who those potential customer leads are. Are they hot leads? Are they really interested? Were they going to buy anyway?
Online lead generation (OLG) works far more effectively when data on interested consumers is gathered to order. The web is so broad, and it brings together so many diverse interests, that there is no reason why every lead you acquire should not be interested in a specific, individual organization.
Cost per lead -- a misleading metric?
The cost of data acquisition is easily measured; it is a simple number-in-the-box indicator. However, the quality of the lead will dramatically affect how valuable that lead is. You get what you pay for and if the leads come cheaply, there's a reason for it.
The cost associated with processing a cold or irrelevant lead only bumps up the overall operational cost of a direct marketing campaign. It's a harder sell, apart from anything else. If one out of every three leads is a worthless one because the information is out of date or inaccurate, then suddenly you have added 50 percent onto your cost-per-lead before you've even made a call.
If a further one out of every two calls are made are to consumers with absolutely no interest in your product, you have further doubled your cost per lead, because those contacts cannot be classed as leads. The chances of achieving an acceptable CPA when your cost-per-lead has just tripled are very slim.
Here's an example: If you order 60,000 leads at a cost of $10,000, that's 16.6 cents per lead. Suddenly the situation described above occurs and the cost rises first to 25 cents per lead, then again to 50 cents per lead.
The cost per lead has more than tripled, and you have wasted a lot of your sales team's time to call 20,000 leads that had no interest whatsoever to start with. That has added a significant cost into your direct marketing campaign.
Working on less leads than you had planned
The greatest downside to this situation is that suddenly you find yourself working on 20,000 leads instead of 60,000, and you'll still only get a 2-percent conversion rate on this data.
If marketing departments plan their campaign on the basis of converting 2 percent of 60,000 leads, but only work with 20,000, they fall dramatically short of their targets. This can cause serious problems for a business that is trying to carefully plan and forecast its performance across the upcoming months and financial periods. If you believe you're getting 60,000 leads, you would like to actually receive that many.
Online lead generation: Targeted customer acquisition
Online lead generation can have a dramatic impact upon the way that a direct marketing campaign works. Data on potential customers can be gathered to order, based specifically on the demographics that you need. Not only that, but the opt-in process is set up so that potential leads are only forwarded to you if they request information from your organization.
The freshness of the lead makes it hot, but the fact that it has been collected specifically for your organization makes it even hotter. This means that you can order 60,000 leads and be confident in forecasting a conversion on that number, because each one will be an interested consumer.
The transparency associated with this form of online lead generation fully complements the freshness of the leads. Every marketing agency or department can see exactly what leads they have, where they have come from, and many organizations let you return leads if they do not fit the profile that you specified.
Not just online
Online lead generation collects leads through internet channels, including partner websites that attract a large footfall of consumers. However, this does not preclude any offline activity toward these leads once they have been gathered. While many organizations use leads generated in this way for email campaigns or to build their in-house lists, the leads are also suitable for other offline activity.
The detailed information that online lead generation gathers on consumers can even help drive advertising campaigns. If a company wants leads for its new product, those can be delivered from a wide range of demographics. It is then possible to break down those leads and re-enforce the demographics most appropriate for the product or service and direct advertising campaigns at those groups, for example.
Counting the cost
There are many significant cost benefits to the targeted approach of online lead generation. It can help directly boost the bottom line because it generates hot leads that are more likely to convert. Poor quality leads dent the conversion rates, but at a time when marketing budgets are under close scrutiny, they push up the financial impact of the whole marketing department.
Christopher Petix is president of Clash-Media US.
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