What are the pros and cons of commission only lead generation services?
Does anyone have experience with commission only lead generation services? I'm interested in hearing the pros and cons of this experience, as well as the efficacy and the integrity of the services offered. My client is a business (strategy) consultant and is considering this option. Thanks in advance for your consideration.
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Feb 17, 2015
Feb 17, 2015
How much commission is being requested? What are the parameters for the commission? Is it for the initial purchase, all purchases in a 12 month period or over the entire lifetime of the customer that was acquired? Is it a percentage of the 1st 12 months of revenue generated from the acquired or a flat fee per lead generated and converted? Define conversion.
Feb 16, 2015
Where to start...Just like others stated, it will depend on the product. I have worked with a coupon site, where the model was aggregation and earning a commission based on the leads. The problem with this is, you always have to provide a good performance, then you can get good commission rates and have the upper hand. Otherwise you might end up receiving less rates then before in the long run. Also there is taxation, receiving the earned commission in time etc.
If your client can set up a good contract before starting, it might work out. Defining a good performance indicator in the contract (up to this sales %x commission, later %y commission something like that) it will help both parts.
Feb 16, 2015
It matters who you appoint for this program and do a credibility check of his/her contacts.
The nature of product/service matters to help decide on the commissions for only lead generation services. For example, if its just a leading informing you about a possible lead, you may qualify it and pay a minimal amount. But, if the person helps close the deal you could give a higher commission.
Yes they may share the leads with competition as well, but no client would close the deal without talking to your competition, so that should not scare you.
Feb 12, 2015
If he is paying on a per lead basis it truly is a gamble because there are allot of companies out there that give bad leads. He can give them a test budget to see if they are any good and that will limit his exposure. We can get him increased visibility through SEO. He can see once we have done the optimization for himself the increased ranking he is getting. I would recommend this method rather the paying for leads. The optimization takes us a week. Also they should be able to show him exactly where the leads are coming from. If they wont then tell him not to even try them.
Feb 10, 2015
The following have to be noted
1. The Product /Services you sell
2. The Quality of the Lead Provider and what modes does he use to generate leads
3. Lead to Conversion ratio estimate
Pros :
Lead is a Lead and if it gets converted then great
You get Brand Visibility
Cons
Bad/Fake Leads
Lead getting shared among your competition
Feb 10, 2015
I think I could accept a certain percentage of bad/fake leads. Lead sharing with my competition less so. I also am intrigued with your insight that the mode of generating the lead matters. That is a great point. I don't know enough about this process. You have helped me though. Thanks to you I think I have a better set of questions to ask. Thank you! - PWD
Feb 12, 2015
Great insight Sunoop. Always an abundance of great information here.
Feb 17, 2015
Lead to Conversion ratio is tricky at best since the not everyone has the same ability to covert a lead into a sale or a customer. Most lead gen services are not involved in the conversion aspect of the buying cycle.
Feb 10, 2015
Depend on the complexity of the product or service and also what kind of marketing available.
Sometimes. whether pure commission or not is not important, the critical issue is whether you get the best person to get the leads for you. To me the correct leads generator (the company or the person) is very important in most cases.
Feb 9, 2015
I wish I knew. I'm a skeptic by nature, but I've thought of trying lead generation services as it might identify opportunities that I otherwise would miss. I haven't because there hasn't been evidence that it works. And those that have approached me offer no guarantees. Its like advertising. Purchase at your own risk. - PWD
Feb 10, 2015
Thanks Dr. John I have to admit I agree with you. The lack of compelling evidence and the concern for the uncertainty of the sellers integrity to give pause.
Thanks John I appreciate your suggestions. His site is well optimized by the way; he's just exploring an unknown world. It has been an education for me as well.