Cost Per Lead -- Why Stop There?

by Gary Kreissman, Thursday, February 8, 2007
NOT ALL leads are created equal. To illustrate this point, which lead generation program is more appealing? Would you prefer 1,000 anonymous email addresses where you eventually determine only ten to be good prospects? Or would you like one that delivers 100 leads, each of whom is an ideal prospect?

The answer is obvious, but the trick is how to find those 100 prospects without wasting time sorting through thousands of anonymous and irrelevant respondents.

Happily, a new approach to lead generation that focuses on quality, not quantity, is gaining traction among marketers. This approach, called cost per qualified lead, is the inevitable next phase of online marketing, which to date has evolved from cost per impression to cost per click to cost per lead. The benefits of cost- per-qualified-lead programs are significant, including stronger prospect relationships, shorter sales cycles, great sales efficiency and the virtual elimination of click fraud.

Best of all, while it sounds like this cost-per-qualified-lead process would be complicated, it is actually based on a very straightforward exchange of information between marketers and prospects. To find qualified prospects, marketers place ads, typically text-based, that offer high-quality, relevant incentives, such as webinars, white papers or books, that are tied closely to the marketer's business. In exchange for the opportunity to learn more about specific topics, prospects answer a very brief -- but highly focused -- set of qualifying questions at a landing page that is unique to each company, product, service or offer.

While the programs are straightforward, to get the most out of cost per qualified lead programs, marketers should be sure to keep in mind the following six recommendations:

1. Performance matters. As in direct marketing, marketers want to increase the efficiency of reaching and selling their best prospects. Unlike typical direct marketing -- or more generic Web-based marketing efforts -- advertisers should insist on paying only for prospects who match their ideal targeting criteria.

2. Less is more. Qualified lead generation is not about capturing a great number of leads for a one-way sales process. It is about determining the characteristics of those prospects that marketers most want to reach, finding out what information about a product or category motivates them to share information or details about themselves, and then providing them with what they want as the basis for a two-way relationship.

3. Use prospects' profiles in the pitch. How much better would an initial sales call or email be when the conversation starts with knowledge of the prospect's goals for using a product, his or her experience with similar products, budget expectations or overall attitudes to a marketer's brand? Qualified lead generation programs not only get the right prospects, they lay the building blocks for an initial conversation with them.

4. Education is the best incentive. Many marketers drive mass traffic with promotional offers that encourage consumers to respond, whether or not they are interested in the underlying product. Free iPod offers will attract lots of names because an iPod is valuable to everyone, but smart marketers offer what is valuable to their prospects alone. In most cases, this means education first.

5. Find a niche and scratch it. For marketers, perhaps the ultimate promise of the Web is the ability to reach and motivate small groups that can't be efficiently reached through mass media, and then pay only for people who are really interested in what they sell and have the money to pay for it. In fact, for many firms, cost-per-qualified-lead programs may be at their best when used for niche marketing.

6. Test, test and test again. Qualified lead-generation programs can be continually refined by testing the performance of each program element, such as audience targeting, incentives, copy and media outlet. Qualified leads programs become constantly more efficient based upon that experimentation. This laboratory approach puts the marketer and the qualified leads provider on the same page.

As mentioned earlier, it is inevitable that qualified lead generation programs will rapidly increase in popularity, as marketers become both more sophisticated at understanding what makes their prospects tick, and more eager to appeal to those specific motivators. When applied in the right way, incorporating the six elements above, the cost-per-qualified-lead approach will ensure stronger ROI by putting marketers where they have always wanted to be: in front of the right prospects, at the right time, with the right offer.