Eight questions to ask when hiring a lead gen firm for the first time

By Maria WoodJuly 30, 2014

It’s easy to think lead generation is only for the big guys, the mega companies who can afford to outsource. But what about small businesses, such as a home improvement company, a local post-secondary training school, or an independent financial adviser working in a small community? Those enterprises can benefit greatly from hiring a lead generation firm. With those leads, such fledgling business can grow as well as expand their footprint into new markets.

Typically, at a small company it’s the business owner who makes the decision to hire a lead gen firm versus a bigger firm where a chief marketing officer or chief revenue officer has that task, says Daniel Matalon, chief strategy officer for SuperTargeter.com, a boutique lead gen agency that specializes in home services, IT, insurance and real estate. In general, his firm is on the lookout for companies with growth potential, whatever the size. “We make profits from helping them grow,” he says. “If they don’t make profits, we don’t make profits.”

Therefore, there is no reason smaller enterprises can’t be lucrative partners for lead generation companies. Yet making the decision to hire a lead gen firm is not an easy one for a buyer venturing into the space for the first time. Which firm should they hire? What questions should they ask when scouting for a lead gen partner? What’s the proper price? The choice hinges on the answers to those important questions. So in advance of LeadsCon 2014, where buyers and sellers meet to discuss the latest in lead generation, we spoke to the experts to get some pointers on what companies should ask when hiring a lead generation firm for the first time. And for a lead gen company, it’s vital to have ready answers to these questions.

1. What market does your firm specialize in?

If you’re in the home services business, you’d want a lead generation firm with a focus on that particular market. More than that, though, you’d want a lead gen company that understands your firm’s unique challenges at particular point in time. Matalon uses the example of a home improvement company looking to expand into another geographic market. In that instance, it’ll need leads to seed its new branch. “The first step is a company that understands their market generically,” he says. “And two, they need to take it even further and work with a company that takes the time to know their specific individual challenges.”

2. How long have you been in business?

Ben Wang, executive vice president of Target Direct Marketing, LLC, says his company generates leads as well as buys leads from other outfits. Their specialty is lead generation for post-secondary schools. While he says he wouldn’t outright dismiss a lead gen company in business only a short time, he prefers companies with a longer track record. “I’ll listen, but I’ve lost some of my excitement in working with that client versus someone who’s been around for 10-20 years,” he says.

3. How do you get your leads?

From a campaign standpoint, it’s important to know how the company generates their leads. In other words, what is the media mix? Is it through search engine marketing, email, SEO, display ads or call center marketing? The highest quality leads, according to Wang, are typically obtained through search engine marketing and SEO. A purely display ad-generated lead? Not so much, he says.

4. What technology do you use?

If a company has multiple lead verification tools embedded in its system that filter out low contact rates or false information like wrong addresses, it’s a keeper, Wang says. “Companies that have multiple layers of that technology, it makes them that much more attractive.”

5. What’s the cost?

This is the tricky part. Framing a deal on the basis of a low price per lead may be enticing but is wrongheaded, Matalon contends. Instead, companies should focus on the cost per customer acquisition. He recounts the story of a potential client who was paying $10 per lead and wanted to lower the cost because his company had so little success converting those leads into actual customers. Off the bat, Matalon replied that the price probably couldn’t get any cheaper. Then, he asked the potential client if he would rather purchase four leads at $300 each, for a total of $1,200, and have one of those leads actually close? The customer agreed that would be a better use of his money. “The economics have to be judged not on cost per lead, but on cost per actual customer acquisition,” Matalon says.

6. How many leads can you promise me?

Any promised number of leads must be viewed in the context of the campaign and marketplace, Wang says. For example, if a lead generation firm promises 1,000 leads for a small school with one to three campuses that offers only three programs, then he would be wary of that firm. “That’s highly unlikely,” he says. “A lot of these campus-based schools are looking to attract students within a 15-to-30 mile radius.” Therefore, 1,000 leads is an unrealistic number. Conversely, 1,000 leads for a major online university, such as the University of Phoenix, is realistic. “We would find that is the norm, because these schools have 30 different programs and they accept students nationwide so 1,000 leads isn’t that many leads in the big scheme of things,” Wang says.

7. Can we get this in writing?

An account executive can promise anything—over the phone. But signing a written document places an expectation of accountability on the lead generation firm, Wang explains. Within that document, all guidelines and terms must be specified. Those terms can range from conversion rates to any restrictions on leads. (For instance, Wang says his firm asks that any leads from job sites be excluded.) “Having them sign off on this gives a level of accountability for these vendors so they understand we take this stuff seriously,” Wang says. Even before a formal contract is signed, Wang’s firm asks vendors to fill out an extensive questionnaire detailing who they do business with, what types of programs are they good at and how they generate traffic.

8. Can we talk?

Once a contract is signed and the campaign goes live, Wang says it’s important for the vendor and client to keep in contact. In other words, the relationship doesn’t end when the deal is sealed. “We always have a pulse on our campaigns and our vendors,” he says. “If anything goes right or wrong we’d like to have those discussions. At the end of the day, it will make the vendors more accountable and it will hold us more accountable.”

For more on how buyers and sellers can form successful partnerships, participants can attend the LeadsCon 2014 panel, “Lead Gen, Part 1: Learning By Example—Best Practices for Lead Generation Today.” The event will take place at the Marriott Marquis in New York City Aug. 14-15.

This article is brought to you by LeadsCon New York.

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