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When you work with a Lead Generation agency, you pay twice

Strategy, Sales
Aug 10, 2022
Guy littlejohn interview
Guy Littlejohn
Founder at Facets
Honeypot

The lead gen model is both genius and flawed.

Lead Generation agencies solve a problem. They give their clients more opportunities to meet people.

The lead gen business model is genius and flawed at the same time.

- Genius because they only do part of the work
- Flawed because they only do part of the work

The genius comes with washing their hands when they get a response. Quite rightly as their job is done, over to the client. In feedback sessions they can stand strong and point fingers at the next stage in the process.

The flaw comes as there is so much time, effort, thinking space, desire, nurturing and next steps process needed when dealing with these leads. The client can turn around and say the leads aren’t the ICP for reasons they didn’t think about when they signed the deal (but the genius kicks back in because there is no way the lead gen agency can be blamed for this)

Lead Generation agencies only truly work when you have a skilled sales consultant team to manage the opportunities (a word used loosely). Lead Generation for SMEs is particularly riddled with challenges. It’s hard, really hard to make the most of the investment. Lead Gen for large businesses with sales, partnerships and marketing consultants? 100% that it should be a string to your bow.

The best way to work with lead gen agencies if you are an SME with a commercial team?

Pick one that provides a volume of leads your team can handle.

The best way to work with lead gen agencies if you don’t have a commercial (sales and/or marketing) team?

Don’t - you wont do a good job

When have we seen challenges with lead gen agencies?

The quality of the meetings is on a case by case basis and is only able to be confidently understood once the initial meeting has taken place.

What we have to do is understand the work that needs to go into these leads to make them worth the initial investment.

Let’s go into cost per sale

Say you’re paying £3,000 per month for 15 - 25 leads. Because the vague nature of the ‘capture interest at any cost’ honeypot the lead gen agency creates means there is a lot of work needed.

So you have a sales person in the business, who’s picking up the leads - £2,500 per month

You need a marketeer to nurture the leads, that person also needs to be a content creator - £3,500

So your commercial team is £9,000 per month. You sell your services/product at an average of £3,000 per month (for easy maths), you only need to close three to have it break even. Great news. Or is it?

If you take my advice and the investment has to be thought of in blocks of 6 months; £54,000 investment is likely to bring in £18,000 return. That’s if you close 1 after 3 months (£9000), 1 after 4 months (£6,000) and 1 after 5 months (£3,000)

Say you close 3 more bits of business, staggered in the next 3 months, that’s another £18,000 - you’re 9 months (if the clients continue with you) in and you would be £9000 down, even when turning the lead gen agency off.

You are in effect paying twice or three times. You’re paying for the lead and then for the closing of the business. Why not invest less money and really search for a person who can do both?

Hacks for successfully managing leads?

  1. Work in blocks. 3-6 months, pause, manage pipeline. Repeat

  2. Have a long term mentally and see it as a partnership to work effectively

  3. Work alongside marketing (content) to help nurture the ‘not for nows’ through the pipeline

  4. Alternate strategy (sales, partnerships, client development IE referrals)

When don’t you work with a lead gen agency as an SME?

  1. When you have a sales team that generates their own leads

  2. When you have a partnership strategy in place

  3. When your referral strategy is in place

  4. When you don’t have a marketing or nurture strategy

I don’t mean to be dour, but when you’re an SME the right way to develop your business is not through lead generation. You need all other channels (sales, partnerships, marketing and client development) firing before you action a lead gen agency.

When you have a commercial team, do it.

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