Roast My Idea - Lead Generation Business

[theag]

You will have a very hard time making it profitable in that niche. Low value transactions, so low CPL.

Also, the lead gen part is easy. Selling the leads is the bottleneck. Lots of trouble for low margins.

 

[Andy Black]

Generate a lead.

Contact businesses who can fulfil the lead and ask them if they can deal with it.

Start a relationship with that business and see where it goes.

 

[Andy Black]

Andy, sooo many lead partners have proposed that they pay a percentage of closed sales. No wonder, right? I have always kept my distance from this model because tracking conversions to sales is very difficult, especially for an offline service.

Have you tried this model? How did you overcome this problem?

I forgot to come back to answer this.

I have tried % of sales value a few times. Maybe smarter people have made it work. I steer clear now.

It's not just the trust issues of them saying what revenue you drove, but also proving it came from your marketing efforts.

More importantly, I found the end business wasn't incentivised to close the sales. They had no skin in the game so could just let leads go cold while they did something else, or they quoted non-competitively just to see if they could get a nice high price. "Why not eh? We only pay if the lead converts."

I figure if they're paying up front for the leads (per lead or monthly fee or whatever), then they are much more incentivised to jump on a lead when it comes in, and to quote more competitively so they make a sale.

So the payment terms might actually affect the conversion rate.


Also, the client might suck at closing, or have a non-competitive offer, and I'd pay for the ad spend, plus my time, and have nothing to show for it.

 

[SmoothFranko]

Hey Guys,

So I've had the idea for a lead generation business for the PC service industry as a way of connecting IT professionals to clients and although I would be hoping to sell leads to businesses (B2B) the main traffic I would want would be people needing their PC fixed or tuned up (B2C). I have spent the better half of today reading any and all threads with the tag (lead generation) and am only about 10 pages out of 44 and I feel like I'm still not any closer to have the RIGHT questions to ask. So help me Fastlane Forums, Your my only hope.

What I understand I need so far:

• A Good Landing page
• Knowledge of SEO, advertising, direct marketing ect...
• Webpage (obviously)
• Information on the site to offer value (such as how to basic computer processes yourself)

What I'm not clear on:

• Lead generation as a business model
• Everything else

*EDIT I have been revueing other lead generation sites as the basis especially limos.com

 

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[Andy Black]

UPDATE** Thus far I have a semi-completed website (www.swiftreboot.com) and have complied a list of businesses that fit my critera, currently around 50 odd. Only a few of these businesses seem to have their prices listed on their sites and the going rate seems to confirm my inital speculation of being around 80 to 100 dollars an hr. In your guy's opinion do you think asking 100 bucks for 10 leads is unreasonably?

Thanks for all your helpful info thus far
-Shannon

EDIT** my reasoning for this is that 100 bucks for 10 (10 dollars a lead) they could turn around and make $1000 of these 10 leads if all the jobs take an hour

I'm maybe only 1 or 2 steps ahead, or arguably in the same place. So take my thoughts with a pinch of salt.



IMHO (In My Humble Opinion):

• You need to know if you can generate leads. (The best way to do so is to generate some.)
  
  
• You need to know how much it will cost you to generate leads. (Again, the best way is to generate some.)
  
  
• You could price the leads based on what your cost is to generate them. (You could be leaving money on the table of course.)
  
  
• It would be nice to find out the ticket value of the leads you're generating. (So you can price them based on their value to the merchants, rather than based on your cost.)
  
  
• Talk to the merchants. I think you should start by developing a very good relationship with at least one of them. If you can get to work with one very closely, you'll be able to determine the value of the leads. They will tell you what type of lead they want more of, and what they want less of. Ideally they will tell you how much they quote for each lead (that's definitely possible).
  
  
• Will there be a mixture of leads from corporate and consumers? What's the difference in average-order-value (AOV) and average life-time-value (LTV) between corporate and consumer? Which do they prefer (different merchants might have different preferences)?
  
  
• What you class as a lead (a call or a form fill), the merchant might just see as an enquiry. Maybe you're not selling leads per se. Go into it with an open mind.
  
  
• Getting a conversation with merchants is easier if you actually have a lead when you speak to them. I'm definitely finding it best to generate leads first and then talk to merchants.
  
  
• It looks like you're building a brand in the vertical. I like this. My learnings so far is that consumers will interact with that brand as if you're a player in the vertical, and so will merchants if you do it right. This has resulted in us interviewing the merchants, rather than them seeing us as a lead generation business, or marketing agency.

TL;DR

Just start. Generate leads. Talk to merchants. Build relationships. See where it takes you.

HTH

 

[wade1mil]

Whether or not this is a good idea and whether or not you can make it work, I respect that you're always looking to solve problems rather than let problems stop you. It's this sort of fearlessly optimistic mindset that runs circles around the "need to know everything before I take a baby step" sort of people. High five for you.

 

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[DaRK9]

Andy, sooo many lead partners have proposed that they pay a percentage of closed sales. No wonder, right? I have always kept my distance from this model because tracking conversions to sales is very difficult, especially for an offline service.

Have you tried this model? How did you overcome this problem?

Don't give up control over the sale. I sell online food ordering services locally. All control is in my hands, if someone F^$&s me off on an invoice, they no longer get orders.

I learned this the hard way on my second client. I installed all my software on their website. I was supposed to get a %. No monthly.

Every week was the same "Nope, no one has ordered."
Go to login to the admin, password is changed.
"My son is taking care of it now."
"No one has ordered."

Yet I had friends that ordered, and picked up their food.

Control. Sometimes you think you have it, but you don't.

Always hold the money first if you help it.

The subscription + lower commission model works as well. That is what I do now, and all software is hosted by me.

 

[DamienP]

I'm sorry I have very little marketing experience and just need something to fill the gaps it was the best I could come up with at the time. I am looking into getting a job at a marketing agency as well as reading books and websites till my eyes bleed.

What can be improved?
Where there are specific instances that illustrate the problem?
Why do you feel it needs improvement?
How you would suggest making the improvement?
Why you feel your recommended changes work better?

Dont apologize - its your business, not ours, and I'm choosing to help

Reading books and websites is all very well, but that in itself can become a dreamers lifestyle. Trust me, I did it.

Look, you're over-complicating this. You just asked me 5 questions, and they're all basically variations of the same question - what is going to work? I'm not going to answer 5 questions as I must get back to my own business, but consider this.......

Forget about the fact that you're not the one providing the end service. From the customers point of view, they just landed on a website that may or may not solve their problem. So treat these visitors as YOUR potential customers, not those of your lead buyer. Think about what matters to these customers. What will interest them enough to get them to complete your form? There are thousands of others offering the same service as you, and you need a hook to interest them. You will get nowhere offering the same as everyone else, because competitors with deep pockets and vast scale will eat you alive.

So what makes you unique?

• Can you specialise in a niche? For example law firms, ecommerce businesses or real estate agents?
• What about hardware? Can you sell your service as Mac-specific? PC-specific? Apple specific?
  
• Do you offer a guarantee? If so, make it punchy. Satisfaction Guaranteed is yesterdays news
• Can you offer a different buying format? One-off annual management fee? Easy monthly payments? Per hour on demand? How do customers want to pay, and can you convince your lead buyer to offer this?
• Can you compete on price? How much flexibility will your lead buyer give you in order to do this?
• What ONE selling point can you add to your front page to make customers say...... WOW?

 

[DamienP]

I've just started going through SinisterLex's '15 Day's to Freedom' thread were he deals with this. I've looked around at the local market and even nationally thus far I haven't found a competitor serving the computer repairs/service market, small IT businesses (less than 20 employees) make up the majority of the market in Australia and these businesses do little to no marketing themselves relying on repeat customers and word of mouth for clients.

The bullet points you brought up are thought provoking:

• I have a Niche, I'm am focusing on the computer repair market PC & Mac
• Guarantee's? I can offer them the world but if I can't deliver its meaningless.
• Sure I personally prefer paypal but businesses usually only take credit or cash.
• I don't know about the price as I haven't talked to a lead buyer yet. I just want to make sure I can generate leads first.
• Working on the selling point.

gotta love that GMT +10 timezone its midnight here and I finished work an hour ago

Your five points........

1. That's a market. It's not a niche. A niche is a market within that market, for example PC repairs for companies with less than 20 employees in the Brisbane area.

2. Not meaningless. Marketing is key to your business. I understand and agree with your logic, but you must have a big promise for marketing purposes, otherwise your offering is just noise.

3. All that matters is how your customers want to pay. Find out, then give it to them.

4. Fair comment, but your lead buyer is likely to lead you down the path to ruin if you leave costing up to them. Plus to be fair, they will have even less of a clue what a lead is worth than you do. Also be mindful that without managing their expectations, your lead partner might expect to convert 50% of them, which is completely unrealistic.

The pitch should be something like this:

Our leads cost $10 each. We expect that you will convert 1 in 4 leads, therefore your cost per acquired customer is likely to be around $40. Your service costs $200 on average, with a 75% profit margin. So you'll make $150 per customer, and we'll sell you those customers for $40 each. Sound like a fair deal Mr Lead Buyer?​

Like I said, you need a strong offer, and that includes to your lead buyers. Don't let them lead discussions.

5. See point 4

 

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[DamienP]

On my point 4 above, let me give you a real world example... this is my business and a real deal with one of my lead buyers:

Our leads cost $40 each. We expect that you will convert 1 in 12 leads, therefore your cost per acquired customer is likely to be around $480. Your service costs $8000 on average, with a 40% profit margin. So you'll make $3200 per customer, and we'll sell you those customers for $480 each. Sound like a fair deal Mr Lead Buyer?
​

There are some extremely experienced lead generation people on this forum (wink wink @Andy Black and @MJ DeMarco). Spend a bit of time here, learn all you can, but don't forget that decisive actions ultimately decide your fortune.

 

[Andy Black]

+1 on you not needing to get a job in a marketing company to learn how to generate leads.

The way to learn how to generate leads is to, er, generate leads.



What I'm doing:

1) Generate leads for a vertical.

2) Use the leads to contact businesses that can fulfil them (although you already have a friend with a business in this vertical so that's ideal).

3) Offer a free trial.

4) Take it from there.


Maybe they don't pay per lead. Maybe they pay commission, maybe they pay a flat monthly fee plus ad spend, maybe they pay flat monthly fee including ad spend, maybe they pay ad spend plus a min monthly fee or % of ad spend.

I'm making it up as I go along...


Where could it go? Maybe your first client sees the value in what you're doing for his business? Maybe he wonders if you can do this for other territories too? Maybe you decide to partner up and take down each territory, franchise style?



Just start though.

Try to create win-win situations and offer value up front.

Get your initial pricing wrong.

Learn the vertical with that first client.

 

[tafy]

Hey so depending on what industry your in, leads may be the thing of the past. Customers just want things taken care of, so why not take bookings instead of leads, take the money and get it all sorted.

Why mess around with leads that they have to close? Just give them them the business with no fuss.

 

[SmoothFranko]

I don't know why I didn't realise sooner but It only occured to me a few days ago that even though I'm not competing directly with IT businesses for services I am competing for web traffic. So today I launched an AdWord campaign.

I currently have 5 ad groups running (hopfully) following @Andy Black 's AdWord advice.
My Ad as it appears on Google.

 

[Scot]

Bump.

A few recent threads talking about lead gen. Some good input in this thread.

It's always interesting because when people read the book they go "MJ made his money from Lead Gen" and they start thinking about ways to lead gen.

There are so many great idea out there that don't factor in lead gen!

 

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[SmoothFranko]

Generate a lead.

Contact businesses who can fulfil the lead and ask them if they can deal with it.

Start a relationship with that business and see where it goes.

I had thought that it could possibly be as simple as that but I guess I was thinking of a more long term solution when I have many leads to give a way. I have decided to start this simple with the idea of helping a struggling mate with this mobile IT business. So I get some experience with using marketing and landing pages to generate leads for him to start with. So as to get a better handle on the lead process before attempting to sell them to already well establish businesses.

 

[SmoothFranko]

This looks like a good idea in principle, but I think your revenue model will be difficult to live with due to the low numbers involved. Low transaction value means a low cost per lead. Low cost per lead means less profit for you.

If computers are your poison, is there an area of the market you could target with higher transaction values?

I did have an untested idea to sell leads to businesses on a contractual basis offering to serve them a minimum amount of leads a month and then charge them for leads over that minimum so I get recurring monthly revenue.

As for yourself and Theag's comment about the low CPL I am well aware of this but the amount of money I make off this is trivial at the moment, If I made $1k off this its 1k I didn't have and experience gained which is invaluable. Who knows if I work at it constantly reapply myself and learn from issues that arise IT MAY JUST WORK OUT! The core of the matter is that I DID SOMETHING! As far as I can tell the idea fulfils Need, Entry, Control, Scale and hopefully Time.

It'd be so easy for me to just say "your right, the CPL is too low so its not worth it" but having said "its too hard" my whole life I'm determined to at least try. Who would I be if I didn't at least try.

 

[Andy Black]

Bump.

A few recent threads talking about lead gen. Some good input in this thread.

 

[Andy Black]

It's always interesting because when people read the book they go "MJ made his money from Lead Gen" and they start thinking about ways to lead gen.

There are so many great idea out there that don't factor in lead gen!

True. I also think we're all in the lead gen business, and that the internet is just one big lead generation machine...

 

[SmoothFranko]

Thanks to @Andy Black I now have a great understanding of generating leads using AdWords. So now I know what the question is that I need to ask.

My Goal: Create a business model were by using Andy's advice funnel people to a landing page who seek PC repairs / maintenance then get them to leave their details:

• Name
• Contact number
• Email address
• Nature of the fault

Then once I have that information I then wish to sell these leads onto local IT businesses there by generating new customers for them and creating value?

I under stand the marketing side now (thanks to Andy's most excellent advice) but the part I'm stuck on is once I have the clients details how would I then go about selling the information onto prospective businesses?

 

[SmoothFranko]

So I'm not sure if no one has any advice because my post is in the wrong place or because I'm talking out of my a$$ and have screwed up lead generation completely, SO I created this model to hopefully explain how I think the business would operate.

As you can see here Step 3 is what I am struggling with, as of yet I have not come up with a means of managing and distributing the leads to prospective businesses. Has anyone on this forum had experiance with SELLING leads? I'm not talking about making leads for a specific client I'm talking about a "Hey I have customers who need service! Who wants em? first is first served kinda thing?

 

[SmoothFranko]

Perfect. That's exactly how I started too.

See the quote from Mother Teresa in my signature.

Also read the third link in my signature if you haven't already.

Cheers Andy, Yeah I read the crap out of the Local leads page the other night. An excellent read and I'd recommend it to anyone thinking about how to do Lead Generation.

***EDIT I have contacted my mate i'm helping out and he is going to host my website for free as a favor in turn for a favor.

 

[DamienP]

I did have an untested idea to sell leads to businesses on a contractual basis offering to serve them a minimum amount of leads a month and then charge them for leads over that minimum so I get recurring monthly revenue.

As for yourself and Theag's comment about the low CPL I am well aware of this but the amount of money I make off this is trivial at the moment, If I made $1k off this its 1k I didn't have and experience gained which is invaluable. Who knows if I work at it constantly reapply myself and learn from issues that arise IT MAY JUST WORK OUT! The core of the matter is that I DID SOMETHING! As far as I can tell the idea fulfils Need, Entry, Control, Scale and hopefully Time.

It'd be so easy for me to just say "your right, the CPL is too low so its not worth it" but having said "its too hard" my whole life I'm determined to at least try. Who would I be if I didn't at least try.

I do agree with your comments - action is key, and should be admired. However, why not make your first venture a high profit venture? Honestly I don't believe the process is any easier or harder either way, so why not?

Contractual basis with a minimum number of leads per month - thats exactly what I do.

 

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[DamienP]

You're in a competitive market, and your USP's are nowhere near punchy enough. If you want to stand out, you need to find a reason why people should give a shit about what you have to offer.

Come on? What makes you GREAT? Why the hell should I choose YOU? Give me an awesome offer that grabs my attention.

 

[SmoothFranko]

Dont apologize - its your business, not ours, and I'm choosing to help

Reading books and websites is all very well, but that in itself can become a dreamers lifestyle. Trust me, I did it.

Look, you're over-complicating this. You just asked me 5 questions, and they're all basically variations of the same question - what is going to work? I'm not going to answer 5 questions as I must get back to my own business, but consider this.......

Forget about the fact that you're not the one providing the end service. From the customers point of view, they just landed on a website that may or may not solve their problem. So treat these visitors as YOUR potential customers, not those of your lead buyer. Think about what matters to these customers. What will interest them enough to get them to complete your form? There are thousands of others offering the same service as you, and you need a hook to interest them. You will get nowhere offering the same as everyone else, because competitors with deep pockets and vast scale will eat you alive.

So what makes you unique?

• Can you specialise in a niche? For example law firms, ecommerce businesses or real estate agents?
• What about hardware? Can you sell your service as Mac-specific? PC-specific? Apple specific?
  
• Do you offer a guarantee? If so, make it punchy. Satisfaction Guaranteed is yesterdays news
• Can you offer a different buying format? One-off annual management fee? Easy monthly payments? Per hour on demand? How do customers want to pay, and can you convince your lead buyer to offer this?
• Can you compete on price? How much flexibility will your lead buyer give you in order to do this?
• What ONE selling point can you add to your front page to make customers say...... WOW?

I've just started going through SinisterLex's '15 Day's to Freedom' thread were he deals with this. I've looked around at the local market and even nationally thus far I haven't found a competitor serving the computer repairs/service market, small IT businesses (less than 20 employees) make up the majority of the market in Australia and these businesses do little to no marketing themselves relying on repeat customers and word of mouth for clients.

The bullet points you brought up are thought provoking:

• I have a Niche, I'm am focusing on the computer repair market PC & Mac
• Guarantee's? I can offer them the world but if I can't deliver its meaningless.
• Sure I personally prefer paypal but businesses usually only take credit or cash.
• I don't know about the price as I haven't talked to a lead buyer yet. I just want to make sure I can generate leads first.
• Working on the selling point.

gotta love that GMT +10 timezone its midnight here and I finished work an hour ago

 

[DamienP]

I see your point in which case my currant target is Non-Franchised IT businesses within my state of Tasmania of which there is around 50 That fit my criteria.

Marketing wise I having a hard time thinking what else to do other than read and soak in info or get a job at a marketing firm which I mentioned I was trying to do.

As for lead prices the few business I've seen average about $100 an hour + extra for onsite callouts, as for conversion rates if I gave them 10 leads id guesstimate that at least half would convert as the traffic I would be driving to the site would be people already looking for a technician to fix their PC (using Andy's AdWords)

That's a niche

You don't need to get a job at a marketing firm to learn about lead generation. Unless a marketing firm is playing with their own money, not their clients money, they generally know jack shit about lead generation anyway.

Read this:
http://www.wordstream.com/blog/ws/2014/10/20/call-to-action-examples

And this:
http://blog.crazyegg.com/2013/07/24/call-to-action-examples/

OK, so you are potentially looking at a decent order value for your lead buyer. Now you need to guesstimate (without asking them) what their profit margins are. Others on this forum with more expertise in IT may be able to provide a clue.

Then, work out your lead price.

Trust me, 50% conversion is not going to happen. Manage your buyers expectations first and foremost. Tell them you think they'll convert 1 in 4, and if they do better than that, they'll be pleasantly surprised.

 

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[Five Star]

I have no experience in this, but I'm learning and around about the same stage as yourself.

Have you found competitors generating leads for similar IT services?

• You could use their site, as though you require IT services and see how they work.
• Have your friend call up as being potentially interested in their services to find out what they charge per lead etc. from the other side.

I've used 4 competitor websites this week to find out what the customer experience is like, and am creating a 'what they do well' and 'what they don't do well' table to work from. It'll give you some very interesting insights!

Hope this helps.

 

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[SmoothFranko]

Don't give up control over the sale. I sell online food ordering services locally. All control is in my hands, if someone F^$&s me off on an invoice, they no longer get orders.

I learned this the hard way on my second client. I installed all my software on their website. I was supposed to get a %. No monthly.

Every week was the same "Nope, no one has ordered."
Go to login to the admin, password is changed.
"My son is taking care of it now."
"No one has ordered."

Yet I had friends that ordered, and picked up their food.

Control. Sometimes you think you have it, but you don't.

Always hold the money first if you help it.

The subscription + lower commission model works as well. That is what I do now, and all software is hosted by me.

My current plans looks something like this

1. Finish up website (CTA, design ect..)
2. Begin an AdWords Campaign to drive traffic to the site.
3. Give any leads to my friend who runs a mobile IT service.
4. Get him to give me testimonials I can use.
5. Rinse and Repeat till I have have a good grasp of AdWords.
6. Look at other marketing methods.
7. Contact candidate IT businsesses for info and offer them leads.
8. Secure a Contract with at least one of them.
9. Continue generating leads and building business relationships.
10. Rinse and Repeat
11. Profit????

 

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[UncommonWay]

So I'm not sure if no one has any advice because my post is in the wrong place or because I'm talking out of my a$$ and have screwed up lead generation completely, SO I created this model to hopefully explain how I think the business would operate.

As you can see here Step 3 is what I am struggling with, as of yet I have not come up with a means of managing and distributing the leads to prospective businesses. Has anyone on this forum had experiance with SELLING leads? I'm not talking about making leads for a specific client I'm talking about a "Hey I have customers who need service! Who wants em? first is first served kinda thing?

There are several online "gurus" who teach about lead gen. One of them bases his model on routing all leads through a call-forwarding service. When somebody calls the phone number on the lead gen landing page, his system automatically does a "round-robin" call routing in which the phone call is forwarded to one of several companies.

Or, for faster service, his call tracking platform can ring several companies at the same time, and the one that picks up first gets the lead.

He tracks how many leads each company gets, and bills them on a per-lead basis as long as the phone call meets some criteria such as minimum call length.

If that model sounds like something you'd be interested in, I can post further details or you can PM me.

Note: I don't have a vested interest in the guru I'm talking about. I've bought his lead gen courses and they're informative, but I don't want to spam the forum with his name or the service he promotes...just trying to add value here.

 

[Andy Black]

I had thought that it could possibly be as simple as that but I guess I was thinking of a more long term solution when I have many leads to give a way. I have decided to start this simple with the idea of helping a struggling mate with this mobile IT business to get some experience with using marketing and landing pages to generate leads for him to start with to get a better handle on the lead process before attempting to sell them to already well establish businesses.

Perfect. That's exactly how I started too.

See the quote from Mother Teresa in my signature.

Also read the third link in my signature if you haven't already.


EDIT: Actually, both quotes in my signature are relevant.

 

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[DaRK9]

Use Zoho, they have web forms.
https://www.zoho.com/crm/web-forms.html
https://www.zoho.com/crm/help/web-forms/set-up-web-forms.html#Generating_Web_Forms

But if you are going to sell them in bulk just add them to a database using your forms, then just export a batch when you go to sell.

I have one local lead gen site. I started with the latter, then tested the former out.

 

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