Why Do People Buy Cheap Leads?
Why do people buy cheap leads? It’s a loaded question, but in the latest episode of the B2C Lead Generation Podcast we tried to answer it in a critical way. Databowl is synonymous with high quality lead generation so the idea of buying high volumes of low quality data - that is cheap leads - seems at odds with our philosophy. The question is, why do people buy cheap leads? And what is the alternative?
Below are some of the key ideas visited within the latest podcast, but be sure to check out the entire thing (links at bottom of the page).
Why do people or companies buy cheap leads?
It is firstly important to make the distinction between “leads” and “data” because oftentimes “cheap leads” can inaccurately be used to mean“data” of “contact information.” In this scenario it is wrong to even call this a lead because there is no intent behind it.
People buy this kind of data because it is cheap and they believe they are benefiting from quantity, simply accruing a higher volume of “leads” at a lower CPL, but the opportunity cost of this is always the quality of the data.
There are also companies - usually call centres - who make a lot of money from dialling a high number of very cheap records. This is based on a financial model they’ve chosen where the ROI on a high ticket items can be very high when lots of agents are calling high volumes of low quality data.
There is also the case of companies chasing MQLs and other lower intent records which they want to email over a period of time in the hope of nurturing and increasing intent, thereby acquiring at a lower CPL until the point they are ready to buy.
A Deeper Look at Call Centres and Cheap Leads
The buying of cheap leads for call centres works in two ways.
1 - A brand is buying cheap data and has its own sales function and internal agents calling this data
Where you would have a large call centre dialling cheap data, 9 times out of 10 this is for a non-emotive product where the brand protection and marketing teams are secondary to the sales (think PPI, Life Insurance).
2 - A brand outsources its sales function to an external call centre who is buying the data in
Where a brand has contracted a call centre to do the sales for them and as part of that process the call centre also does the data acquisition. In this scenario the call centre goes out to lead generators or data providers to buy leads in. Typically, these call centres have huge overheads and their primary motivation is to hit enough sales to make ROI.
In this scenario cheap data is being used as there is no marketing function alongside the sales function. This disconnect between marketing and sales - that is both functions operating in silo - creates a problem for the brand: the brand awareness and the perception of the brand to the people being called is massively at risk.
Why do brands allow this to happen?
The part of the brand that utilises and outsources a call centre is ultimately operating in a separate silo to the marketing. The marketing and sales teams are both working to different KPIs and targets and this disconnect is the reason this happens. It is also the reason a brand’s reputation and perception can be harmed.
If the lead buying was done internally within the brand and the sales and marketing were working together, rather than in silos, the marketing team would instantly step in and say “We’re top of the funnel, we’re doing the advertising, we’re generating the leads, and we will feed them into the sales team for closing.” Yet, when the marketing and lead buying is being outsourced that element is entirely missing.