Outsourcing Your Lead Generation

Relying on one source of business is risky

This week I read an article in Inman that really shone a light on this. The lead gen company mentioned in the article told EXP agents that it was no longer willing to work with them unless they switched companies. I was quite shocked that a supplier would take that position with clients, but what it meant for some EXP agents is that one of their main sources of leads dried up overnight. Think of the impact on their business. In the past, I have recommended different online lead gen companies to my students. They often worked well in the beginning, but over time the leads got watered down as companies tried to increase profits at the expense of the agents. The agents who got hooked on their service found their leads dwindling over time, as well as their income. Technology is always changing and what works well today might not work well tomorrow. Putting your financial health in the hands of a company that has no loyalty to you is a very risky business model. I have always taught students that they need 5-6 good lead generation methods to run a well-balanced business. My question to you is, do you have a consistent and diverse strategy for connecting with new opportunities? If not, you are running a risky business.

Buying leads erodes your profit

There are a few different business models out there when it comes to buying online leads. When online lead gen first started out, companies tended to charge anywhere from $500 – $1000 per month to send you leads. It was up to you to convert them. At first it was a good investment, but over time as companies started watering down leads, agents got upset paying so much money for leads that didn’t convert. Then came the next business model where companies started charging a 30-35% referral fee only on leads that closed. Agents often preferred this model as they only paid when they were successful. But here is my question – and think long and hard before answering – can you run a profitable business when you are paying out a 30% referral fees on your leads? After your company split and all your business expenses, you are likely working for $20/hour with no job security and no benefits.

Short-term gain for long-term pain

Being in business is always about building a future. Purchasing online leads will create NOW opportunities and a paycheck, but it is an opportunistic business model. Let me explain. When you outsource this critical component of your business, you’re are giving up your tomorrows for today. A long-term, sustainable business requires you to build a reputation in a specific target market through your prospecting and marketing efforts. If you rely strictly on buying leads, you are not investing in building your brand. The result is that you live Day 1 of your career repeatedly. If you only plan to be in business for a couple of years, then purchasing online leads is an easy way to avoid doing some of the tough stuff. If you plan to be in business for the long haul, you need to put your time and effort into prospecting and marketing yourself to create a brand that homeowners trust. As time goes on, your business will get easier.