Due Diligence Tips for Purchasing Leads

Understanding and researching the differences in purchased leads is critical. A lack of due diligence with lead sourcing will cost you time and money.

How to Implement Best Practices for Purchasing Leads

ClickPoint has a lot of experience helping customers purchase leads from lead providers. We work with many small, medium, and enterprise customers that buy internet leads, and we have the experience to understand which ones have value and how to spot the winners and losers.

Clients often ask if we can recommend lead providers for specific industries, and generally, we love to. Receiving a recommended lead provider is always better than selecting one at random, but there are also steps you can take now to prevent making a wrong choice and ending up with dead-end leads that frustrate your sales team.

Due diligence when researching and vetting lead providers will save you a lot of headaches.

Managing Expectations

Manage your expectations before purchasing leads from a provider. Understand the differences in leads that providers supply. Additionally, much like hiring an employee or making any significant decision for your business, do the work upfront so you don’t pay for it later. Lead provider research needs to be scientific, so you don’t fall for the allure of promises made and results never realized.
It is highly recommended that you take stock of the sales team's capabilities and skill set before purchasing leads. Are they hunters? Are they better suited for exclusive or live call transfers vs. semi-exclusive or aged leads requiring more tenacity and consistency to get a good result?

Main Types of Internet Generated Leads


High Value (Exclusive) – This lead type is sold only to your company. This type of lead has a premium and should result in higher close and win rates. Your sales team has no competition for exclusive leads and has a better shot at winning the business.


High Value (Live Call Transfers) – This lead type is also generally exclusive as the customer transfers via a phone call directly to your sales team. These leads carry a premium as the potential customer is on the phone and presumably ready to talk to a salesperson about a product or service.


(Semi-Exclusive) – This type of internet lead sells to multiple buyers that will compete to win the business. The problem with this type of internet lead is it is difficult to ensure how many people will be competing for the sale. Make sure you have something in writing stating how often each internet lead sells to competing businesses.


(Lead Lists or Aged Leads) – These leads are aged and not real-time, meaning they may have talked to multiple salespeople about a competing product or service, chose not to purchase at that time, and your sales team can find nuggets of gold at a meager cost. If your team is suitable for these types of leads and has a highly efficient dialing and multi-touch solution to reach these potential customers, it can work well.

Scientific Approach to Selecting a Lead Provider

1. Research the lead provider's website. Does the provider guarantee safeguards to ensure the leads you are purchasing are TCPA compliant and have opted-in to an offer for your services?
2. Ask the lead provider to show you the lead generation landing pages, verify that TCPA and Opt-In safeguards are in place.
3. Search for reviews – If you cannot find reviews via Google, TrustPilot, or something comparable, look at their BBB rating. Also, ask the company you are thinking about working with for a customer referral, someone you can talk to about the quality of their leads.

Questions to ask the referral

How long have you worked with the lead provider?
What is your contact rate?
How many leads are receptive to your offer out of every ten leads you contact?
Would you refer them to other companies like yours?
Do they have a “bad lead” return policy? What is returnable? How good are they about returns?
Are they able to send leads directly into your CRM, lead management, or sales solution?

Ask about the leads' price and if they are exclusive or semi-exclusive. If they are semi-exclusive, how many buyers do they sell them to and ensure they write it into your agreement. What is the cancellation policy if you cannot convert the leads?

Once you have asked these questions, you can build a prospective lead provider scoring matrix; here is an example:

Semi-Exclusive Sold Rate Key

2 Buyers = 10
3 Buyers = 7
4 Buyers = 5
5 Buyers = 3

1-10 Points

Reviews

Return Policy

Compliance

Semi-Sold Rate

Total Score

Lead Provider A

8

9

10

10

37

Lead Provider B

10

7

0

5

22

Lead Provider C

7

5

6

3

21



Once you start receiving leads, three KPIs matter most to determine if the lead provider is working out as expected.

1. Contact Rate – you should create a scoring matrix for contact rate that looks like this

  1. Excellent Provider – 70% or better contact rate
  2. Good Provider – 60% or better contact rate
  3. Poor Provider – Less than 60% contact rate

2. CPA (Cost Per Acquisition) – This is one of the most important KPIs, as you could have a lower contact rate, but the CPA is still within acceptable thresholds. The equation is the total dollar amount spent on leads divided by converted leads.

  1. If you purchase $5,000 worth of leads and close five deals, your CPA would be $1,000

3. ROI% – 50% to 100% target

  1. ROI% = (Profit From Sales Leads – Cost of Leads)/(Cost of Leads)
  2. If you spend $5,000 on leads and convert 20 leads at an average profit of $500 = $10,000 Profit-$5,000 Expense / $5,000 Expense = 100% ROI
  3. If you spend $5,000 on leads and convert 15 leads at an average profit of $500 = $7,500 - $5,000 / $5,000 = 50%

Understanding the right questions to ensure you pick a great lead provider is just the first step, you have to follow through with KPIs that will determine if your lead source is ROI positive. If the ROI is within your range, you might be willing to forgo an excellent return policy or a less than desirable lead contact rate.

These KPI metrics help determine which lead sources you should keep an eye on; if there is a low contact rate, high rate of return, that should be a red flag, but ultimately the success of any campaign will come down to ROI. Remember, this is not something to take lightly; the more you are dialed into the metrics, the better you can plan, pivot, and divert resources to lead sources that are ROI positive, and your sales team will thank you.

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