It’s fairly common practice for a B2B company to outsource demand generation, in part or in whole. About 61 percent of enterprises and 46 percent of small businesses use a combination of in-house and external sources for lead generation, according to a 2014 study by MarketingAdvocate:
But here’s the problem: purchased leads are an added expense from the beginning, which means one more piece of the marketing budget you have to justify. And as you well know, justifying expenses can be difficult: 80 percent of marketers struggle to demonstrate the business effectiveness of their marketing spend to top executives.
Lead generation is an investment. And similar to paid media, purchased leads are designed to stabilize your bottom line and fill in gaps where your own programs are weak. But if you’re buying bad leads, you aren’t going to see any return on investment (ROI), and you certainly aren’t going to do anything for your bottom line.
That’s why it’s important to be careful where you buy leads from and to be very specific about the kind of leads you want. It’s also important to set measurable campaign goals and have a system in place for tracking performance.
Let’s start there.
Defining Lead Generation ROI
Before you decide which lead generation company to partner with, make sure you have a framework in place for measuring ROI. If you’re like most marketing execs, you’re already focused on this: 52 percent of CMOs say their biggest priority for lead generation is “achieving or increasing measurable ROI.”
So what does that look like?
Well, it looks a lot like traditional ROI — just with different metrics. Traditional ROI is basically net gain over total cost. In a lead generation campaign (whether the leads are purchased or generated in-house), “gain” is represented by deals won. Kissmetrics provides this formula:
But in order to track ROI, you need to break it down into smaller components. MarketingSherpa suggests using three different levels of metrics:
- Creator-level metrics: not used to calculate ROI
- Manager-level metrics: number of leads generated, lead quality, cost-per-lead, and conversion rates (leads to opportunities, opportunities to deals).
- Director-level metrics: campaign revenue, campaign costs, customer lifetime value (particularly relevant for companies with service-based products)
That’s okay. It can be difficult to foresee how these metrics will play out and what kind of ROI to expect from lead buying, so let’s look at an example:
In the fall of 2014, Oracle partnered with TechnologyAdvice to generate MQLs (marketing qualified leads) for their Sales Cloud pipeline. They defined their requirements, we generated matching leads, and our client success managers trained Oracle reps on best practices for following up.
Over the course of two fiscal quarters, we sent over 400 MQLs to Oracle’s inside sales team. Based on Oracle’s net profits and campaign spend, our leads generated a 6,000 percent return on investment, with 10 opportunities still pending.
Six thousand percent may seem like an outlandish number, but that’s the nature of lead generation. If you successfully target high-value prospects with purchase intent, even a small handful of conversions can yield a lot of revenue. Which is exactly what you want.
How to Get the Most ROI
Now that you’ve defined your ROI goals, you need to set up a quality assurance process — a way to ensure that purchased leads are qualified, accurate, and ready for your sales team. Otherwise, why buy them in the first place?
In addition to choosing a reputable lead generation company, here are some best practices to get you started:
1) Define clear targeting requirements.
Targeting requirements should be the scaffolding of your outsourced campaign. They help your lead gen partner decide which channels, content, and tactics will be most effective. Not only that but they give your company a baseline for measuring performance. If any of the delivered leads don’t match your requirements, you should be able to return them (based on your original agreement).
Considering only 25 percent of B2B pipeline leads represent an immediate opportunity, it’s good to be choosy. There are a number of ways to define targeting requirements, depending on the kind of leads you want to buy. Most requirements fall into these three categories:
- Firmographics: Basic criteria such as industry, company size, job title, and geographic location
- BANT: Budget, authority, timeline, need; don’t expect every lead to match all four
- Intent: Level of interest or purchase intent (based on which stage of the buying process they’re in); can be deduced from web activity, downloads, engagement, and (sometimes) an explicit opt-in
In the Oracle example, their Customer Experience Applications Campaigns targeted sales managers at U.S. organizations with 250 or more employees who downloaded a whitepaper and specifically agreed to be contacted by Oracle.
2) Demand accurate data.
An estimated forty percent of all generated leads have “poor data quality,” which is marked by duplicate or invalid entries, failed email address or phone number validation, and blank form fields. If you’re trying to run inside sales campaigns from a dirty database, your ROI is guaranteed to disappoint.
At best, a sales call based on faulty lead intelligence will result in an awkward conversation. At worst, you may contact the same lead multiple times, dial inoperable phone numbers, or receive a payload of failed delivery notifications.
Make sure your lead provider has high standards for data accuracy, the resources to back them up, and a return policy to keep them accountable.
3) Diversify your lead sources.
There’s a lot of debate in the industry about the merits of inbound vs outbound demand generation, and research galore to support each side of the argument.
There is merit in this conversation, but don’t let the pundits distract you from the middle ground truth: marketing has always been about balance. If you focus all of your efforts on one side of distribution, you may miss out on an entire audience — or half the market — depending on how you think of it.
The best lead generation companies are the ones who use a variety of channels and tactics — SEO, email marketing, paid media, content syndication, event marketing, teleprospecting, and so on. This kind of variety gives you options: if your programs primarily target inbound traffic, you can ask for a teleprospecting leads, or vice versa.
4) Pay for quality.
You get what you pay for.
As in many other situations, the old adage is true for outsourced demand gen. Both the quality and the qualification of your leads will be strongly influenced by how much you pay. A lower cost per lead means you can afford a higher volume, but the leads themselves may be miles away from the decision stage . . . which means you’ll have to invest even further in nurturing, segmenting, and sales development activities.
A higher cost per lead may limit the volume you can afford, but the leads you do get will be lower in the funnel, actively pursuing products like yours and ready to make a decision. Even as sales leaders bemoan lead quality standards, most B2B companies are still allocating less than $20 per lead, which marks a crippling disconnect between what they want and what they’re willing to invest.
5) Mind the delivery method.
If you bought a birthday present on eBay, it’d be pretty outrageous if the seller asked you to drive two hours away to pick it up. In the same vein, you shouldn’t have to go out of your way to retrieve purchased leads. A circuitous data import wastes time, widens the margin of error, and creates kinks in the sales process. All of these are unnecessary expenses.
In a best case scenario, the lead provider will deliver leads directly to your CRM database. Salespeople can view profiles in their native system, run reports, pull leads into existing workflows, and everyone is happy. If you use a lesser-known CRM, you may need to import leads through an API. But again, this should be straightforward.
Even if you master all of these areas, it’s important to set realistic expectations. Getting the leads is only half the battle. As any sales rep knows, a hand-raiser is far from a closed deal. Once your leads are delivered, you’ll need to follow up and decide whether to pitch, discard, or remarket. But if you’ve put in the work on the front end, you’ll see better leads, higher conversion rates, and higher ROI on the back end.
At TechnologyAdvice, our demand generation programs produce qualified leads at every stage of the funnel. We maximize your ROI by guaranteeing lead accuracy, and by following your targeting requirements to the letter — so you can easily justify a budget for buying B2B leads.