The Keys to New Business, for Sales Organizations Seeking Hyper-growth: Quality, Quantity, & Cost

By Sean Fenlon on May 26, 2008


I’m writing this because I have cracked the code. I know the formula that needs to be applied to measure the total effectiveness of any lead supply channel:

  • Quality
  • Quantity
  • Cost

These are three absolute pillars of the leads industry and when each is quantified individually, they collectively represent the true and total value of a lead supply channel.

Quality is defined by the total number of leads that will convert into a sale and make money instead of costing money.

Quantity is an indicator of whether or not a lead supply channel is capable of providing enough leads to support the business objectives.

Cost is simply the price paid per lead.

No assessment of any lead supply channel is complete without all three of these dimensions. Here are some examples where only two of the three pillars are favorable:

Example A:

  1. Quality – Extremely high-quality leads that (hypothetically) convert into a new sale 100% of the time
  2. Quantity – Virtually unlimited volume – thousands of leads available each day
  3. Cost – The price is $10,000 per lead

Example B:

  1. Cost – Extremely affordable leads – priced at just $1 per lead
  2. Quantity – Virtually unlimited volume – hundreds of thousands of leads available each day
  3. Quality – Extremely low quality – on average it will take buying and working through 1,000 leads on average in order to make one sale

Example C:

  1. Cost – Reasonably priced leads – priced at $30 per lead
  2. Quality – On average, one out of ten leads purchased will convert into a sale
  3. Quantity – Despite your desire for more, the max volume of these leads is 1 lead per week on average

As you can see from the examples above, it can be really easy to hit a home run with two of the three pillars, but ultimately end up with an unworkable situation on your hands as a result of a failed third pillar. The true lead buying optimization process requires a delicate balance of Quantity, Quality, and Cost, and it’s very difficult to adjust just one of these items without the adjustment directly affecting the other two.

Some direct marketers will make the mistake of focusing exclusively on the “Acquisition Cost” or Total-Cost-per-Sale/Start, and the lower the better. However this measure can be misleading in the grand scheme of things. Here is an extreme example to demonstrate this premise:

  • Company A purchases 10 leads @ $100 per lead and converts 1 out of every 10 leads on average into a sale, thus experience an average acquisition cost of $1,000 per sale.
  • Company B purchases 500 leads @ $1 per lead and converts 1 out of every 500, thus experiences an average of $500 per sale, half that of Company A.

So the leads purchased by Company B are a better deal right? Probably not, as the human time/cost of pounding through 500 leads in order to close one sale make the entire formula counter-productive. This human time/cost is your time as a sales professional and/or sales organization and is extremely valuable, thus it is not surprising that many originators that understand this formula always lean toward the highest Quality (and thus highest priced) leads as they are ultimately a better value and require less time to “sort through the noise.”

A new type of lead has emerged in the past few years that has gone farther and deeper into the lead quality spectrum than has ever been available in the past – LIVE Hot Transfer Lead of double-confirmed and double-verified consumers. In other words, instead of just paying for a lead that represents a single expression of interest by a potential borrower, the lead is contacted, qualified, and then transferred live to a sales professional. This is typically the highest priced, highest quality, and highest converting lead available on the market today, and sales professional often prefer this approach as they ultimately spending more time selling and less time chasing down consumers, leaving messages, scheduling call-backs, sending emails, etc.

Below is a chart of options that will help clarify the spectrum of Quality choices in lead buying in virtually any major lead-buying industry. In order to keep the chart simple and not three-dimensional, we will assume that all the choices below represent sufficient volume for your specific business needs.

chart

The chart re-affirms that referrals and networking will always be the preferred marketing strategy for sales organizations, but if buying leads are needed to supplement referrals while the referral channel is be developed and nurtured, finding the right balance of Quality, Quantity, and Cost are the keys to finding the right options for you or your organization.

If you are an individual sales representative for a company, we hope you will become an internal champion for LIVE Hot Transfers in your organization, but we cannot bring you on as a new customer as an individual. Owner/operators and marketing execs are always welcomed.

SPF


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