I’m building a company called Credo. Credo is, essentially, a subscription lead generation platform for marketing agencies. Companies, primarily SMBs, that need digital marketing can come to Credo and choose from the available agencies and consultants, contacting them about their services.
About three times I week, I receive an email like this:
The leads industry is big money. There are many companies like this that generate “leads” from a variety of places, mostly their own sites, and then try to sell them to others. They try to get you in with this “we also return any leads that you don’t reach” line, which really means that you won’t get a refund at all.
I refuse to go down this route for Credo, even though it means slower growth. Here’s why I don’t buy these leads, and why I’m building my company the way that I am.
Before I go into why, let me explain what Credo is. When a business comes to Credo, they can do one of two things:
- Contact a few pros directly to discuss their project with them
- Submit their project and be contacted by up to four pros on the platform
Credo is completely transparent with businesses about what happens when their information is submitted, and it is never resold to other platforms.
Own, Don’t Rent
I recently read a blog post with the clickbaity title of “The One Thing Wealthy People Do That Others Don’t”, or something to that effect. That article, and many others I’ve read, talks about owning assets instead of renting them. While not everything should own a house or their own business, the people who have the most tend to do both of those things, or have other income-producing assets.
I think about buying leads like these the same as I think about building your business just on paid acquisition. While it can be helpful for testing things, at the end of the day you have not built your tribe and when you stop paying, you stop earning.
You’re at the whim of others.
Instead, I believe in building your brand and your own traffic on your own platform. While this means that my company may grow slower, it will also continue for a lot longer and cheaper.
Those Leads Don’t Close
The leads that these “marketing agencies” sell don’t close into real clients. These are basically email addresses that have been given somewhere online (who knows where) and are now being sold to someone that the owner of the email address never intended to have it.
It’s the epitome of a bait and switch and exactly why many people don’t want to give out their email address — because they never know whose hands it will end up in. Too often, it ends up in the hands of true spammers.
I refuse to have my business associated with that in any way. And I refuse to send my customers something that will not be of value to them.
Once again, my business may grow slower in the short term but it will last for the long term.
Acquisition Cost is Better with Inbound
Take a look at those lead prices again:
- $20 for 100–199 leads
- $18 for 200–299 leads
- $16 for 300+ leads
The minimum outlay of cash is $2000, for a list of 100 email addresses that have been sold who knows how many times. The best I could do with this list is throw it into a Facebook ads retargeting campaign and try to convert them from there. At the current conversion rate on Credo, that means I’d convert 3. So that’s almost $700 to generate a lead for pros, and I don’t directly monetize each lead.
That’s insane. $700 to generate one lead??
Instead, I can spend time generating my own traffic, which converts at that same level.
And the best part?
I get that traffic and business forever.
It’s a one time expenditure (of time mostly, and some money) to create the content and build the links and do the marketing that gets my business to this level and beyond.
When you amortize that spend over time, all of the sudden the business generated becomes very very cheap. And I have an asset that I continue to own and build upon.
Are You Against All Paid Acquisition?
This is a question I get asked when I talk about this topic with others, so I figured I’d address it here.
I am by no means against all paid acquisition. I learned the metaphor from my old boss Amy Bohutinsky of Zillow that paid acquisition is like gasoline.
When you pour gasoline on a fire that is already burning, your fire burns hotter and bigger. When you pour it on smoldering coals, you just put them out and run out of gas.
In fact, I recently started running my first AdWords campaign for Credo. I’m an unabashed organic digital marketer (not to be confused with an artisinal digital marketer), but I recently decided that I was self-limiting by not trying paid acquisition campaigns to test some new hypotheses.
I have also run Facebook and LinkedIn campaigns to varying degrees of success. I continue to trial these platforms, but for the foreseeable future they will not take significant time or monetary investment for Credo.
So this is why I don’t buy leads from others or sell the leads that Credo generates to others. It’s short term thinking. It’s bad for consumers. And it would harm the Credo brand.