4 Reasons Why Pay-Per-Lead Pricing Doesn't Make Sense

Sales organizations often boast how great their pay-per-lead pricing is, or include some sort of money-back guarantee that ensures you get the right number of leads. 

Most of the conversations we get into here at Incept are with companies and organizations that have utilized similar services in the past and gotten burned. Here's why: 

They end up with too many leads 

After signing an agreement to pay $X.00 per lead, it usually becomes the goal of your lead generation partner to send you as many leads as they can. Sounds good, right?  

The question is are you ready for them? Chances are even if you include language about a maximum monthly budget, their goal is to send you as many leads as possible to reach that budget in as few hours as possible, in order to maximize their own profitability. So they race through your list and send you anything that doesn't sound like a hard, "No." 

Are you and your sales team ready to handle that quantity?  

They'll be bad 

As mentioned above, most pay-per-lead partners aren't as concerned about sending you high-quality leads as they are about sending you what are called 'billable' leads, meaning leads that fit into whatever broad definition of a 'lead' you agreed upon so that they can be included in your invoice. 

These leads will be less-qualified, less warm, and harder to convert to revenue. But you still end up paying for them! 

That gets old really quick… 

They distract from the ultimate goal 

When you get sick of paying for bad leads, it suddenly becomes a major priority to screen the leads you're receiving from your lead generation partner, in order to keep the money you already have in your pocket. 

Now you're distracted from your ultimate goal: putting more money in your pocket. That lead generation partner was supposed to help you do that and instead has become a distraction from that goal because they require too much oversight. 

You'll spend more in the long run

You'll spend more in the long run, combining the lead generation test with the overhead of hiring after it fails.

After you get fed up with managing this lead generation partner, you inevitably decide to do things internally. After all, if you have to manage someone, why not have them in your office where you can keep an eye on them 24/7? 

Now you're in the hole the money you were invoiced by the lead generation company, plus the overhead that goes into hiring and maintaining a new employee to do it internally, and you're kicking yourself for not just hiring internally for it in the first place. 

Then after 6 months of managing this new employee and covering the cost of their overhead, they may end up not working out, and you're back to where you started. It's really a brutal cycle. 

So what is the alternative to pay-per-lead pricing? Check out this post on fractional inside sales and learn why a dedicated sales representative makes the most sense.