The Hidden Costs of Lead Fraud: Three Ways Your Profits are Being Eaten Alive

2014 and 2015 saw huge growth for the lead generation industry. According to a report by IAB, advertiser spend during 2014 hit £1.1billion, with an estimated return of £16.5billion – huge growth from the year before. The growth continued during 2015, and if this quarter’s figures are anything to go by, 2016 is set to be an even bigger year still for lead generators everywhere.

Despite all this, however, there is still one problem that hasn’t started to fade with the industry’s growing success: Lead Fraud. And unless you do something to stop fraudulent leads saturating your pool of great data, then it will cost you a pretty penny.

Here are the three biggest areas where fraudulent leads drain your profits.

1. Inflated Cost Per Lead

The first and most obvious way fraudulent leads hit your bank balance, is by inflating your overall Cost Per Lead (CPL). You are essentially paying for ‘dead’ leads – it’s like buying a packet of batteries where half of them don’t work. In other words, your lead generation budget becomes partially tied up in useless stock that will never convert.

If you’re buying data without any sort of automatic guard to protect against fraudulent leads, then you’re putting yourself at a huge disadvantage. It will slow down your growth, prevent you from being able to scale up quickly, and hinder your ability to take advantage of hot new trends.

2. Expensive Follow-Up

Your costs don’t stop at simply buying the lead. Once you’ve bought your leads, you then begin the process of converting them – a process requiring considerable time and money investment. You could easily be pumping your money into several techniques in a bid to convert your leads, such as:

• Telesales • Marketing Packs • Direct Mail Sequence

While ever fraudulent leads are being allowed to enter your data pool, you are not only investing into converting genuine leads, but you are wasting time and money engaging dead leads in pointless conversion processes.

It’s like trying to change the batteries in your remote control, knowing that only half of your batteries actually work, but not knowing which ones are which – you spend twice the amount of time doing what should be a fairly straightforward task.

3. Cost of Flying Blind

“Flying blind” is possibly the most expensive cost of all – although it is certainly not the most obvious. And when I say “flying blind”, I mean of course not knowing enough about your data and the places it is coming from.

If we look at a recent talk by Machine Mart CEO Gabe Leydon, we can see how important it is to have reporting and tracking transparency across all areas of our marketing funnel. And in terms of lead fraud, if you don’t have this transparency, then you will never be able to know which leads are fraudulent nor where they are coming from, and this seriously harms your ability to scale.

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Effective scaling requires you to know which sources are working (and therefore which ones you should increase your investment in), and which sources are holding you back (and therefore which ones you should cut back on). Without transparency at every stage, you’re playing a dangerous guessing game, and you run the risk of flying blindly into a brick wall.

How to Stop Lead Fraud Dead in its Tracks

Now that you know the three main areas where fraudulent leads can harm your profits, you need to know how to stop it.

Well, the best way to prevent lead fraud, is to invest in the right tools that will allow your business to identify fraudulent leads the moment they enter your funnel. This helps you save money in all three areas:

• Bring down the CPL
• Only try to convert real people
• Understand where your bad leads are coming from so you know where to cut back

Databowl is a tool unlike any other, which amongst many things, ensures complete transparency across all of your campaigns, and helps you to eliminate lead fraud completely from your entire marketing funnel.