Lead Or Action?

phatm1ke

phatm1ke

New member
Jul 29, 2008
162
0
0
South Florida
I have a question for those of you who buy and sell leads (or maybe just sell them)..

I have an arrangement with a firm (not outing the niches) who wishes to buy leads from my organization. My question is this: Is it better to charge by the lead or by the action? If, for instance, I have sold the client 100 leads, and only 70 convert, should I charge for the 100 leads even though is team could not close the other 30? I know I have read before that it's better to sell the lead and do it in small intervals to keep the quality in check, but how receptive are clients to this idea? It seems to me that this person is expecting a lead that is as good as sold..

Which brings me to my next question.. If I were to sell per action, how would I know if he converted or not? Not that I don't trust these people, but I know how greed works. CPA is not very effective if you cannot track whether or not the lead has been converted into a sale, correct? I have an idea of how I can track it as a sale, but that will involve changing the way THEY do busines..

So I guess the question is this; Is it worth changing the way they do business (a little bit) to track the lead / conversion in order to sell by the action and not by lead. If I were selling by the action it would seem to me that affiliates pushing this offer would be able to make more off of it, right?

Sorry if I rambled it's still pretty fuckin early. I appreciate any and all input, even the flames to follow.
 


There are a few problems with charging by conversion instead of lead.

Firstly, you are at the mercy of the their sales team and if they're not very good then you could possibly be earning below market value per lead. This can get messy as you push for them to improve the quality of their sales team.

Secondly, as you mentioned, it is much tougher to track and so you end up with trust issues.

Thirdly and, most importantly, they are not incentivized to maximize the value of YOUR leads. They're effectively getting your leads for free, and therefore they will prioritize any other paid lead sources over yours (so their own Adwords, offline leads, other lead sellers, etc). This means that your leads are more likely to become stale as they wait, and it won't matter to the client as they can discard any unprocessed leads without paying for them. But you, of course, will have had to pay to generate them.

So basically, imo, it's a bad idea to go down the charge-by-conversion only route when working direct.

Having said that, the best solution can be a combination of both. Why not charge an initial lead generation fee (keep it high otherwise you will still end up being a victim of prioritization) and then a percentage of the conversion too?

Your client is happy as they're paying slightly less for the leads and therefore are less exposed to overpaying for crap leads, and they now understand that there is an incentive for you to deliver quality and not just quantity built into your agreement.

You're happy as your expenses are at least covered by the lead generation fee (with hopefully a bit of profit). This means that if their sales team is crap you don't end up out of pocket, you can afford to trust that they will report conversions honestly as you're not risking your own cash, you don't need to spend time and money installing a new tracking system and any conversions generate a tasty profit for you.
 
  • Like
Reactions: chatmasta
Thanks Kyle, I did think about a flat fee to start but I figured there would be more incentive in selling conversions, but like you said it all boils down to trust. I have the intentions of putting these offers on affiliate networks so I felt that to make the offers appeal to affiliates I needed to buy/sell per conversion. Paying per lead would mean a lower payout for the affiliate, correct?

Keeping in mind that these leads are essentially going to be submitted to a call center, you think a fee + % of conversion is the best way to go? If there is no conversion then there is no percentage charged? I do like it. Am I understanding you correctly?
Any other suggestions?

Thanks all.
 
If you have intentions of putting these offers on affiliate networks, you have to go by lead. Affiliates will want to know how their traffic is converting on a live basis. They're not going to want to wait a few days for batch reports of conversions to get loaded into the networks.
 
I know a few companies who have been successful at this and they have a revenue model that is different. What they do is charge a small setup of $20 just to receive leads from their service and then every lead has a price depending on where it came from and what it was for in that niche etc. One thing you want to also do is presell them such as they have to pay $20 setup + $3 a lead for 20 leads to start. I know a lot of people who started doing this and never got paid months end.
 
I sell leads in a certain vertical.
I handle lead sales 2 ways...

For some clients I do this ==> 1. Even though my leads are very high quality, I only charge them for 95% - 97% of what I deliver.

Ex. 100 leads at 50 bucks a lead = $5,000.
I only bill them for $4,750 - $4,850.

They feel like they are getting a deal.

Or...

For other clients I do this ==> 2. If a lead is bogus, I will replace it with a new valid one if you prove to me you never made contact and never got a chance to pitch them.
No refunds. Only a replacement lead. And only if you did not reach the contact. If your shitty salesman could not close the deal that's not my problem.

I can do this because my lead acquisition cost allows it to work and it keeps them happy and more importantly buying leads from me.

As far as getting a % on the sale, don't waste you time. Do you realize how much time and effort you have to spend trying track down your money? Do you want to be in the collection business or in the lead generation business?
Fuck that.
Deliver good leads, get your money and move on
 
  • Like
Reactions: chatmasta
You must log in or register to reply here.
Top Bottom