The Pros and Cons of Buying Leads for Your Small Business

January 23, 2024

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As a small business, every decision you make can significantly impact your ultimate success. And one of the biggest decisions you can make is whether to generate your own leads or buy them. But figuring out which strategy is right for your business isn’t always simple.

There are many advantages and disadvantages to buying leads, and while you might be tempted to go with the easier option, that may not be the best route. In this article, we’ll help you navigate the complex world of lead generation and weigh the pros and cons of buying leads for your small business.

What Are Leads?

Leads are essentially potential customers who have shown an interest in your product or service by signing up on a website, reaching out via social media, or responding to an advertisement. They’re also the lifeblood of many businesses because, without leads, your sales team has no one to sell to. And if your sales team has no one to sell to, your business can’t grow.

How Are Leads Generated?

There are a ton of ways to generate leads. Organic web traffic allows potential customers to find you through search engines. Social media platforms can increase your brand visibility and engage users, turning followers into potential leads. Direct mail and advertisements reach out to prospects directly, while commercials, radio, and TV extend your reach even further.

Approach Lead Generation Companies with Caution

Many lead generation companies rely on outdated marketing and sales tactics that have been around for decades but don’t work as well in the modern marketing era. So, it’s important to understand that when you’re thinking about buying leads from someone. When you’re talking to a lead generator, ask the following questions:

  • What methods did you use to generate the leads?
  • How old are the leads?
  • How many times have the leads been sold?
  • Can I see the lead generation opt-in form or script?
  • Can I get exclusive rights to the leads?
  • Are you a lead broker, or did you generate these leads yourself?

These questions will give you the information you need to decide whether you should buy the leads or not. And if you find someone giving you the run-around or telling you something that sounds too good to be true, do your due diligence. Don’t waste your precious marketing budget on tricky salesman with low-quality products.

Pros of Buying Leads for Your Small Business

Purchasing leads can offer several advantages to your small business. This strategy can immediately boost your sales efforts, providing a list of potential customers at your fingertips. Here are some pros of buying leads for your small business.

1. Low Effort Marketing

Buying leads takes the pressure off your marketing team. The responsibility of lead generation is shifted to a third party, freeing up your team to focus on nurturing and converting those leads into paying customers. This allows your team to be more efficient and effective in their roles.

Furthermore, this can potentially lead to a more consistent lead flow. Organic lead generation efforts can sometimes be inconsistent due to various factors, but buying leads can provide a steady stream of potential customers. That said, you should always approach any deal with a lead generation company with caution.

2. Quick and Easy

Purchasing leads can provide instant gratification. You don’t have to wait for your organic marketing efforts to bear fruit. Instead, with purchased leads, you can hit the ground running. This can be particularly beneficial for new businesses that need to build a customer base quickly.

3. Affordability

The cost of leads can vary depending on many different factors, but some leads can be relatively cheap. These cheaper leads might not be as likely to convert into customers, but they can still provide value, especially for businesses on a tight budget.

It’s also important to note that the saying “you get what you pay for” also applies to leads. So, while more expensive leads might put a strain on your budget, they’re also more likely to result in a sale.

4. Guaranteed Cost-Per-Lead

When you buy leads, you get a better idea of how much each potential customer will cost when they convert to a paying customer, otherwise known as cost per acquisition (CPA). Knowing this number can simplify budgeting and financial forecasting, allowing you to plan your marketing budget more accurately.

A guaranteed cost-per-lead also provides a clear goalpost for measuring your return on your investment. And by comparing the cost of the leads to the revenue they generate, you can accurately determine whether buying leads is a profitable strategy for your business.

Cons of Buying Leads for Your Small Business

While buying leads may sound like a simple and easy solution, it’s not without pitfalls. There are several disadvantages to consider, from quality concerns to legal issues. Here are some cons of buying leads for your small business. 

1. Legality

The sale of third-party generated leads, particularly aged leads, can sometimes be legally prohibited. This can vary greatly depending on your industry, location, and the type of information being sold. 

Government agencies are scrutinizing a broad set of business practices, from the representations made to consumers about products, services, and merchants they are being connected to, how their data is being used, and even whether the products or services ultimately sold to consumers comply with laws​​.

There are several broad sets of laws that regulate lead generation, including general advertising and marketing law principles that prohibit unfair or deceptive acts or practices and laws regulating certain marketing channels like the Telephone Consumer Protection Act (TCPA) and CAN-SPAM Act

The FTC has targeted lead publishers and networks that actively design and distribute allegedly deceptive ads​​. And they’re currently cracking down on spam calls and text message marketing, which could greatly impact more commonplace lead generation tactics. So, you should always be wary when entering the lead generation market and do as much research as possible before buying leads. 

2. Lead Quality

The quality of purchased leads can also be a major concern. If they’re obtained from third parties, there’s no quality guarantee, and they may not be a good fit for your business. We’ve seen companies invest every last penny into leads that never pan out.

Plus, purchased leads may not be exclusive to your business, meaning the same leads you buy could be sold to multiple companies simultaneously. As a result, your team could spend a significant amount of time following up on leads only to find that they’ve already been contacted by your competitors. That’s a waste of both time and money.

3. Lack of Control

When you buy leads, you’re essentially outsourcing part of your marketing process. This means you have less control over how the leads are generated and sold. You don’t know if the lead provider used ethical tactics to gather the leads, and you can’t tailor the lead generation process to fit your specific business needs.

In addition, you have little to no control over the data included with each lead. The information provided may be limited or not relevant to your business or sales strategy, limiting your ability to effectively target and convert them into paying customers.

4. Dependence on Third Party

Buying leads also creates a dependence on third-party vendors. This can leave your business vulnerable if the vendor decides to raise prices, go out of business, or if the lead quality drops. If you rely solely on purchased leads, any issues with your lead provider could significantly disrupt your sales process.

Moreover, this reliance on external sources can inhibit the growth of your own internal lead generation capabilities. Eventually, your business may become less adept at generating leads organically, which could be a disadvantage in the long run.

Start Generating Your Own Leads Today

Buying leads may offer quick and easy results, but there’s never a guarantee that the leads you buy are qualified and haven’t been contacted a hundred times by companies just like yours. That’s why we also recommend generating your own organic lead traffic. 

Here are a few tips for generating your organic lead traffic on your own:

  • SEO: Optimize your website for search engines. SEO increases the likelihood of potential customers finding you when they search for relevant keywords.
  • Content Marketing: Create valuable content that addresses your potential customers’ needs and interests. This could be blog posts, e-books, webinars, or how-to guides.
  • Social Media Marketing: Engage with your audience on social media. This can help raise brand awareness and attract potential leads.
  • Email Marketing: Send out regular newsletters or promotional emails. This can help keep your brand at the forefront of your customers’ minds.

The truth is, buying leads isn’t always the right answer, especially if you can create high-quality, organic traffic. So, what are you waiting for? Start generating organic traffic for your small business today! 

For more tips on generating your own leads, check out the following three articles: