The Drawbacks of Paying Per Lead

In an AI world, where technology evolves so fast, more and more clients inquire about pay-per-lead pricing models whenever they set off on their telemarketing campaign. This approach may seem cost-effective and risk-free at first as a means to rein in new leads. Unfortunately, if you put this under the magnifying glass, you’ll find that there are some significant drawbacks to this approach.

In this post, we’re going to discuss these drawbacks as well as the risks that your lead acquisition is prone to. So, let’s tackle these, one by one headfirst.

Client-Agency Relationship Dip

As with everything in life, we always prefer quality over quantity. That being said, in the lead-per-pay scene, agencies are prone to the risk of either success or failure. You, the agency, are faced with the pressure of having to deliver a certain quantity of leads in order to make up for their costs. If the target is unattainable due to poor data, a complex value proposition, and lack of clarity about how your lead should be defined, the agency will most likely feel not rewarded properly for their time and effort. In turn, this can greatly cripple the trust you’ve built with your client. This will decrease motivation and lead to flat campaign results. Worse comes to worst, this breach in trust between you and your client can greatly damage their – and your- reputation.

Lead Quantity over Quality

As we’ve stated already, quantity is king in PPL. So when a client rewards their agency based solely on the number of leads they deliver, the agency will eventually get wired to deliver results based on this rather than quality. Quick wins immediately become the primary focus which will, in turn, increase the risk of handing all these leads to the sales team before they have been fully qualified. Instead of spending less, you actually end up expediting more expenses due to the sales team chasing down non-interested prospects who are not planning to buy from you.

Market Intelligence is Non-existent

Another catch with focusing more on delivering quantity is that you’re not investing in the quality of your market intelligence either. An integral part of lead generation is being able to establish a connection and relationship with your prospects in order to be able to also nurture them when they become one of your valued clients. Using PPL, however, is going to diminish your chances to even properly connect with prospects in time so that you’ll be able to collect enough valuable data for your campaign. Spend time connecting with your prospects so that you’re able to gain all the right insights as well as have a deep understanding of their pain points and challenges.

No Value Added

Pay-per-lead is a one-dimensional approach that very much only favors the lead count over every other positive outcome. After running a campaign, one of the many things you want to look forward to is a clean and profiled database that will help you target all the right people with the right messaging. Paying your agency for only the leads delivered, they won’t be able to afford any more time cleaning and profiling your data as well. By only using the PPL model, your agency won’t be able to gather more valuable value that will lead you to a true partnership approach.

Conclusion

While we discussed the drawbacks of having a Pay-per-lead approach, this isn’t to say that it doesn’t work at all. This approach may work in some exceptional cases such as in low deal size and short sales cycles. However, if you are a business that exhibits specific needs and are looking for greater value in return for your investments, having a package-based model is a better way to go about it.

Integrating a package-based approach enables your agency to properly strategize their approach in targeting and finding prospects with how they identify, engage, and nurture your prospects. It allows them to achieve a wide range of positive outcomes that are of greater value than when you go for quick wins.

If you have any more questions, our lines are always open and we’ll gladly discuss how this approach can help you further grow your business.