The pay per lead marketing model often attracts a lot of interest from businesses who think it may offer a cost-effective way to generate leads, but a word of caution. If you are looking for quality leads and to establish a marketing partnership that builds for the future, a pay per lead approach may prove limiting.
What is the pay per lead model?
Pay per lead is a marketing model, an arrangement that means businesses only pay a marketing agency for the leads they provide rather than, for example, the hours worked or a monthly retainer. A lead would be someone who has shown interest in the product or service you offer.
How does pay per lead marketing work?
The marketing agency and client will agree on the fee for each lead provided and how many leads should be provided over a specific period of time.
What qualifies as a lead can be different, depending on what is agreed between the marketing agency and their client. A website visitor who signs up for emails, for a trial or webinar, or who completes a contact form, all of which implying a real interest in your services or products, could be considered qualified leads.
The objective is to keep the sales funnel supplied with leads for the client to develop. And because these leads are already qualified, it means the sales team can focus on work with a greater potential for a return.
The challenges with the pay per lead model
While pay per lead may seem like a straightforward and cost-effective approach to lead generation there are some inherent problems that can affect the end results:
- Quantity over quality: Paying per lead has the potential to shift the focus from quality to quantity, so delivering quality leads may not be as easy to achieve with this approach, leaving your sales team chasing dead ends and wasting their time.
- Lack of customer insight: This approach doesn’t lend itself to the deeper exploration and understanding of what the ideal customer looks like and the market your business is competing in. Poor market intelligence can result in inferior quality of leads. This model doesn’t incentivise the marketing agency to fully connect with the customer to gain a deeper insight and understand what attracts them to your product or services.
- Losing focus: To ensure a return on their investment the marketing agency needs to deliver a set number of leads. If not provided with the right customer insights, targets prove too high or there’s disagreement over what qualifies as a good lead, the agency may become less focused on delivering for your business.
- Rapid use of data: When the focus is on generating as many leads as possible, customer data gets used very quickly and little, if any, time is spent on nurturing leads to put a sales team in a good position to convert quickly. Some leads will be lost altogether without an initial investment of time to nurture them, which can affect your reputation and limit where you go next when your available data has already been used.
- You get what you pay for: if you go for a cheap option, your marketing partner will only spend the time they are paid for to generate leads, with no guarantee on their quality.
- Limited product knowledge: Lead generating companies aren’t paid to spend the time to become as invested as you in your product, or building the depth of knowledge of you product and services that a marketing partner who offers a longer-term, more strategic approach will be.
- You still need to convert those leads: If you aren’t experienced at building on a lead or know how to respond to one, then lead generation will only take you so far, especially if no time has been dedicated to nurturing a lead into a sale.
Alternatives to the pay per lead marketing model
Leads are an essential part of any sales process, but quality shouldn’t be sacrificed for quantity. To build a supply of quality leads there are better ways to engage with a marketing agency.
Retaining a marketing agency, or paying them per hour, allows you to develop a partnership that can think more strategically about your marketing needs rather than focus on a single, limiting metric.
Generating quality leads requires a familiarity with your brand in order to build the ideal customer profile. It also requires the ability to foster longer term relationships with prospective customers to help develop a sales opportunity, which also enables you to build important insights into customers, the market and future marketing campaigns.
Retaining a marketing partner allows you to develop a broader scope to enable your business to identify and engage prospective customers better and ultimately to help you achieve your business goals with a greater ROI on your marketing investment.
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