How Much Should You Pay For A Quality Lead?

By: Anita Burnett
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[ Posted On: 2008-09-16 ]

Most people in business understand that quality leads on a consistent basis are the lifeblood of their business. Because a steady stream of leads is so important, they often concentrate more on getting the leads than they do on calculating how much they should pay for those leads.

The purpose of this article is to help you, the business owner, determine how much they should be paying for their supply of quality leads.

Now, we all know that not all leads are created equal. And we also know that lead vendors are in the business to make money, not to give away their leads. This creates a conflict of interest between the lead vendor and the business owner.

Companies selling quality leads are constantly seeking ways to monetize their lists to the maximum extent possible. They want to get the most money they can for every lead they sell. They also know that some of their leads are not the best quality and will be unlikely to generate an income for you, their customer. So what do they do?

They do what is generally done in many businesses, including the mortgage industry. They package a large number of lousy leads with a couple of quality leads and sell you a “discounted” package at what appears to be a great price. Sure, somewhere in there could be some real gems…but the majority of the leads you buy are not worth the time it takes to fill out the purchase form on the website.

So, with this packaging system of good leads and bad leads, how does the business owner know what to pay?

The solution is simple to understand but sometimes less simple to implement.

To know how much to pay, you MUST know a number of pieces of information:-

• - how many unique leads you are receiving

• - how many responses you get from each “package” of leads

• - how many of those responses ultimately result in a sale, or a sign-up

• - how much money you make from each sale or sign-up

The calculation is quite simple. Suppose you buy 1000 leads for $150. You contact each of those leads and 25 people respond to your contact. This is a 2.5% response rate. Of these, 5% or 1 person, actually buys from you or signs up. It has therefore cost you $150 for 1 sale. If you make less than $150 profit on a sale, you are losing money.

After a couple of purchases from the same lead vendor you will start to see a pattern appear and will be able to predict with a certain degree of accuracy, how much the leads are worth. For instance if you profit only $100 per sale, in the above example, you should never pay more than $60 for a 1000 leads.

Tracking your leads, response rates, and conversions is the most important thing about purchasing leads. Quality leads that convert at higher rates may be worth more than low quality leads…but you may in fact find that the cost of low quality leads is so cheap that you can still make a profit (and sometimes even more than with better converting high quality leads). Without tracking your leads, you will never know.

Of course, it becomes a no-brainer if you are able to get a consistent supply of quality leads totally free….but few people know the secret to this yet so ask me nicely and I might just tell you!

Anita Burnett
Generating quality free leads daily.

Article Source: http://www.afroarticles.com/article-dashboard

About The Author: Anita Burnett, Life Style Mentor and Successful Entrepreneur, is helping many become the next success story. Whether you're looking to create an extra few thousand dollars per month, be an ex-corporate executive, or the next millionaire Mom, Anita can assist you to create a second stream of income and greater peace of mind. Visit : Success

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