Three lead generation misconceptions

Best Advice

Despite the fact that hundreds of advisers are buying leads every day across the UK there are still a number of misconceptions about the industry.

Leads are not customers

The UK Internet Advertising Bureau (IAB) defines a lead as “a piece of information about a consumer who has stated they are interested in a product or service and given their express consent to be contacted about that product or service. This person has responded to some form of response-geared marketing because they are in the market for the advertiser’s product or service.”

While many lead buyers of all sizes convert a significant proportion of their leads into sales and therefore customers, the crucial point is that buying leads is only the beginning of the process. Many advisers arrive at lead generation with the wrong expectations which means they are left disappointed when they start receiving leads.

The key for lead buyers is to make sure that there is a defined process in place from taking each lead from contact to conversion. This involves everything from a contact management process for maximising the number of consumers that are contacted to preparing some simple objection handling techniques when talking to consumers.

Often the most successful lead buyers are the ones that have the best processes for turning leads into customers rather than the best source of leads.

Return on Investment is the only measure of lead generation success

One of the biggest mistakes made by lead buyers is that they look at the wrong indicators when judging the success of lead generation. Like any marketing activity, the ultimate metric of success is Return on Investment (ROI). Although there are other useful metrics such as contact rates and conversion rates to make sure you are on the right track, the only one that counts is ROI.

It is easy to think of a couple of scenarios to illustrate why lead buyers make these mistakes. If you buy 10 leads for £100, speak to eight consumers and convert three of these into sales, most lead buyers would judge this to be a success compared to a campaign where you only make contact with two consumers and convert one into a sale. However, it is not hard to think of a situation where you might generate far less revenue from the three sales in scenario one compared to the one sale in scenario two. In this instance, irrespective of the contact rate and conversion rate scenario two is the most successful outcome because the ROI is greater. 

One thing to remember though is to include external costs in your ROI calculations. For example, in the scenario where conversion rates are very low but the amount of revenue generated is far larger than the initial outlay, it is important to consider the amount of time spent trying to contact leads as this carries a very real cost. 

It is also important to use some kind of programme to record the outcome of your lead generation campaigns. If you can’t measure the revenue generated from each lead against how much you have spent then there is no way to make a real assessment of whether lead generation is working or not.

Luckily, there are plenty of Lead Management Systems available from just a few pounds a month that can give you this type of information at the touch of a button.

Buying 10 leads won’t give you any indication of lead performance

Any reputable lead provider should be able to give you an approximate idea of what to expect from lead performance but it is important to remember that these will only be rough indicators and will be across a range of hundreds of buyers and thousands of leads.

If on average lead buyers convert 20% of life insurance leads into sales this statistic is an average and should be treated as such. If you buy 100 leads and follow all best practice recommendations for processing the leads etc. then you should expect to be around this mark. However, it is important to note that in this example these two sales might come in the first 20 leads, the last 20 leads or evenly distributed throughout the 100. What this means is that the smaller your sample size the less likely you are to achieve the average and the more pure luck comes into play.

If you are only going to buy 10 leads for your first trial then you will be at the mercy of fate and won’t be able to draw any meaningful conclusions from your lead spend. Of course, lead providers shouldn’t expect a small adviser firm to spend thousands of pounds on their first trial but it is absolutely essential that lead buyers are prepared to invest in lead generation if they want to make it work and the reality is that 30 leads should be the minimum for a trial. Remember, that this can be spread out over weeks and months but success or failure should only be measured after 30 leads have been purchased.

For advisers new to lead generation looking for lead types which are more expensive such as remortgage leads which can cost £30+ it often makes more sense to trial cheaper lead types such as first-time buyer leads. While conversion rates are much lower for these lead types the prices are significantly lower (around £5) which gives lead buyers a chance to get refine their processes and ensure it doesn’t cost too much to do this.

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