The value of a lead depends on the lifetime value of one sale weighed against the cost of obtaining that sale. Generally, a lead is worth 20% of the net profit of one sale.
Whether you’re interested in lead flipping as an additional revenue stream or to replace your full-time job, understanding the ins and outs of selling leads is important.
Adding new customers to your sales funnel is crucial for sustainable growth. Therefore, you need to focus on the efforts which work to generate leads to avoid spending for nothing.
Business leads are a critical element for all companies to grow, but often they aren’t coming in the way they should.
And that’s because most businesses don’t know what a lead is worth to them.
You need to ask lots of questions as you’re getting started.
All lead generators have different strengths and opportunities, so a lead generation strategy that works for one business may not be as effective for another.
For a better overview of generating leads, start here.
Establish A Lead Definition
It’s imperative to ensure everyone is on the same page when discussing your cost per lead metrics.
What your salespeople consider a lead and what your marketing team reports as one may be materially different.
For example, your sales team might consider a lead a call or contact form submission from an individual who appears to be qualified to buy your products or services.
Conversely, your marketing agency might report all contact form submissions and phone calls as leads, ignoring whether they are qualified.
What Are Sales Leads?
Sales leads are the most common types of leads you can sell.
These can be categorized even further into cold, warm, and hot leads depending on the level of interest expressed by the contact.
Real Estate Leads
Web Design Leads
Web design leads are also in high demand because customers in this area tend to be one-off buyers.
Most businesses only need to build one website, so web designers and agencies are constantly on the hunt for fresh work.
Why Do Companies Buy Leads?
Many lead sellers resort to buying leads to supply or supplement their lead flow.
Unlike most startups, this is a business idea you can start today with no money. Once you buy the lead, you’ll sell it back to the buyer while taking a small profit from the initial lead price.
You can also sell leads to more than one buyer at once, helping you earn a higher overall profit.
Buying leads in real-time from another lead seller does not require you to maintain your marketing efforts, but instead allows you to use your network of buyers to find a service provider for each lead you purchase.
However, it is important to remember that if you are purchasing leads only to resell them, it is in everyone’s best interest that you provide additional value to the process.
Lack of Buy-In
Companies might meet you with some hesitation on behalf of the companies you are trying to purchase leads from.
Your ultimate goal in flipping leads is to make a profit – so others selling leads to you might be hesitant to sell.
After all, they could make more money selling their leads directly rather than allowing you to handle the transaction.
Because of this, it’s important to market your skills and buyer network here.
Sure, a company could sell its leads directly and skip the middleman (you) – but only you have the connections and expertise necessary to make the sale.
You need to provide additional value to the sale.
Customer Lifetime Value
What Is Lead Value?
How To Determine The Average Value of A Lead
Take your total revenue generated and divide the value by the number of leads in your database. This number will tell you what your lead worth is.
Suppose the average revenue generated per lead number is decreasing.
In that case, you need to look for ways to either increase the quality of your leads or improve the effectiveness of your marketing promotions to drive a higher conversion rate.
What Is A Conversion Rate?
If you get 100 phone calls, how many of those turn into paying customers?
Many businesses don’t track conversion rate, which means they are unaware of what is probably the easiest part of their sales process in which to measure improvement.
You might find that a sales team member isn’t performing, or an ad you’re running isn’t as effective as others.
What Is A Lead Broker?
Small businesses collect lots of customer information, including phone numbers and email addresses.
A lead broker collects revenue by buying those leads and mailing lists from small business owners or marketing departments.
As a lead broker, you’ll sit between the lead generator (the person selling you the leads, or the small business) and the end-service provider (the person or company you are selling).
Number of Leads To Break Even Profit
This is the number of leads you’d need to have the marketing product or service paid for, strictly from profit.
This means that your costs are completely covered, and if you can generate this many phone calls or emails (or sales) from the marketing piece, it’s a great investment!
Many smart companies break even or lose money on their initial lead generation. Why would they do this? Because of the opportunity to make money in other sales.
Similar to the old-fashioned but still active ‘loss leaders’ in a retail environment. Loss leaders are used to bringing in people, hoping they buy other things.
So with answers all over the solar system, you could either refine your question or possibly we have touched on an answer that suits.
What Is An Average Customer Retention Time?
How long does your average customer continue to buy from you? If it’s a contract, it’s easy to break this down.
Otherwise, take some time to see how long retention lasts, on average, and you may find opportunities to increase the length of the relationship.
Marketing Qualified Leads
Sales Qualified Leads
Lead Generation Tools
Remember that generating leads is all about a high return on investment of your customer acquisition.
The higher the ROI, the more costly a lead is, and the lower the ROI, the less likely you are to pay for obtaining leads.
On the other hand, the average cost per lead varies depending on your industry, lead generation channel, company size, and revenue.
Ensure you consider your marketing budget before making big purchases.
If you want to generate good leads for your business, then you have multiple ways to do that:
Social media channels
Pay per click ads
Ping post is a specific type of lead distribution technology that uses strategic automation to connect customers with businesses.
In it, you’ll generate leads from various channels, usually from prospects who have filled out a form. Then, the lead goes to a multi-tiered marketplace, or ping tree.
Based on preset criteria, potential buyers receive these leads. The buyers can purchase or pass them, but the pinging will continue.
Using the power of LinkedIn, SaaS company Kennected released a revolutionary way to build customer relationships via Cloud Kennect.
You can segment your target audience using a Boolean Search and send personalized messages through an automated system.
Cloud Kennect does all the work for you, so you can get back to doing what you love!
Cost Per Lead
How much you can afford to spend to acquire your customer depends on how much your products and services cost and the lifetime value of a customer.
For example, if you are selling a product that costs $500 and there are no additional opportunities to sell anything to that customer, you can’t afford to spend $100 per lead if one out of five leads turns into a sale.
In this case, you need to look for opportunities that may result in lower-cost leads.
In 2020, the average cost per lead was $198, but CPL differs widely depending on the industry, the profundity of your target audience, and the competition among your sector.
Why Is CPL Important?
The cost per lead is one of the two numbers you need to calculate your marketing cost of sale.
For example, if your cost per lead is $100, and you need five leads to make a sale, your cost per sale will be $100 x 5, or $500.
If your marketing team generated five leads, you would expect to make one sale.
How Do You Track Leads?
A problem sales staff run into is how to keep track of leads. With a website, it’s easy to track the leads coming in because the database stores them.
But even then, the source of the lead gets pretty tricky to track. With phone calls, it’s often difficult to figure out why the person is calling without directly asking them.
The value of one lead varies depending on the lifetime value of one sale weighed against the cost of obtaining that sale.
We usually say a lead is worth 20% of the net profit on one sale as a general rule. Using leads as a unit of measurement is the best way to track your marketing performance.
Establish Lead Distribution
Next, our how-to-sell leads guide requires you to select the lead distribution logic you will utilize.
The real-time lead distribution used to be fairly standardized. Still, today’s new distribution logic gives you several options that allow you to maximize your profits and optimize your lead flow.
The beauty of lead distribution software is that it automates the entire process for you, reducing response time and preventing leads from going stale.
Of course, the downside of this is that since the process isn’t as personal, you might miss out on quality leads that the software missed.
Marketing analytics software lets you bring all of your data together to identify lead sources, qualify leads, and calculate cost per lead all in one place.
With easy-to-read marketing reports, you can see at a glance where you’re overspending or getting the best ROI from your marketing efforts.
Where Can You Sell Leads?
Generating leads is a big ask in any business, but it’s great if you do it.
If you want to sell leads, you first have to target the best business where you have to sell and get more value.
There is no point in thinking as many businesses search for business.
Take Advantage of Google Maps' 3-Pack
This appears above the main organic search results for local keywords and reduces the competition you’ll face when generating leads for local keywords.
In addition to gathering local leads, you can create and sell a lead generation website. This is another great way to make money in lead flipping.
The Bottom Line For Generating Leads
Hop-On The Kennected Train To Generate Leads
According to HubSpot, 61% of companies name their top marketing challenge is generating traffic and leads.
If you’re part of that 61%, keep reading because what you’re about to discover could be a game-changer for you and your business (like it has for thousands of people before you).
So many business owners & sales professionals that come to us are struggling to get ahead because they’re stuck relying on referrals, lead lists, or manual prospecting.
This is taking up too much of their time and isn’t creating the consistent income they’re looking for to fund the lifestyle they want for themselves and their families.
Four years ago, the founders of Kennected had the same struggles. They found that lead generation was way too complicated, expensive, and time-consuming, knowing there had to be a better way.
So they developed a new way of getting qualified leads that turn into new customers on the #1 platform for B2B lead generation… LinkedIn.
In the four years since we developed this lead gen strategy, we’ve earned a spot on the Inc. 5,000 list of Fastest Growing Companies in America.
And more importantly, it helped over 17,000 businesses get new leads and sales for THEIR businesses.
Want to see how it works?
Click here to see how you can use Kennected to fill your sales pipeline with qualified leads in less than 10 minutes per day.