According to a 2017 survey of 350 companies, the average cost of a lead is $198.
First of all, that number varies drastically depending on the industry, company size, revenue, and lead quality.
Plus, there’s still the question of which method you should use and/or which company you should hire to help you generate leads.
In this guide, we’re going to explain the lead-gen business model, what you should expect to spend, and how to create your lead-gen budget. We’ll also share three of the top lead generation businesses to consider. And we’ll finish by explaining why building your own sales funnel is the best way to generate high-quality leads.
Or click the link below if you want to skip right to the good stuff.
What is lead generation?
In case you’re unfamiliar, here’s a quick definition.
Lead generation refers to the process of acquiring contact information (email address, phone number, name, etc.) for people within a company’s target market.
But to be clear, there are different types of leads.
Three main types, in particular…
- IQL (Information Qualified Lead) — These are leads that have just entered your business’ ecosystem via a lead magnet or some other low-level offer (maybe a webinar or a free email course). They are part of your target market, but it’s yet to be seen if they’re immediately interested in purchasing your products or services.
- MQL (Marketing Qualified Lead) — These leads are warm. They’ve been reading your emails and consuming your content for a little while now. They understand who you are and what you offer. They’ve got some degree of interest in your products or services.
- SQL (Sales Qualified Lead) — These are leads that have connected with your sales team and are ready to buy.
When you’re building a lead-gen strategy, it’s important to consider what types of leads you’ll be generating.
The farther those leads are down the marketing funnel, the more valuable they’ll be to your business — and the more you should be willing to spend to acquire them.
Conversely, you should spend less money for less qualified leads.
The B2B Lead Generation Business Model
At a high level, you have three main options when it comes to generating leads for your business.
- Hire a marketing agency
- Work with a lead-gen business
- Build your own lead-gen funnel
We recommend the third option and we’ll talk more about that near the end of this article.
The first option — hiring a marketing agency — can also be great if you have a big budget and can find a great agency (easier said than done).
What’s a lead-gen business?
Empire Flippers explains the business model like this:
“At its core, all a lead gen business does is generate leads for a specific business or company. These businesses may be anything from an international college or vocational school to your local chiropractor or dentist.
Your job in this business is to find your client business qualified leads that they can turn into customers.”
Another company already generates tons of traffic and leads for a specific industry or niche and, for a fee, you just plug your own business right into their exhaust pipe.
Here’s an example of a lead-gen business that’s in the insurance industry…
Assuming that you were wanting to generate leads for your insurance business, that might be a company that you would work for.
But how effective and cost-efficient is it to work with these lead-gen businesses?
You’ll definitely want to consider the following factors if you’re going to work with a lead-gen business…
- Pricing Model — How does the lead-gen business charge? Do they charge per lead? Per click? Per purchase? A flat monthly fee? Something else? You’ll need to understand this before making a commitment.
- Reputability — There are a lot of shady lead-gen businesses out there. So make sure you do your research. Ask for references, case studies, or referrals if you have to. And steer clear if you can’t find any online reviews.
- Relevance — Are the leads that the business will generate relevant to your business? There should be strong alignment. If there isn’t, then look for a different lead-gen company.
- Lead-Gen Method — How does the business generate leads and drive traffic? This is super important to understand because it will determine the quality of the leads that they’re passing onto your business.
- Your Follow-Up — Once you get new leads, how are you going to follow-up with them to make sure none of them fall through the cracks? They might be generating leads for you, but it’s equally important to ensure you have a process for making the most of the leads that they generate.
Below, we’ll offer three of our favorite general lead-gen businesses to consider.
But you’ll probably want to find a lead-gen business in your specific niche — that’ll make your efforts far more cost-efficient.
Next, let’s talk about the different pricing structures that these businesses use.
4 Most Common Lead-Gen Pricing Models
As mentioned above, you’ll want to know what type of pricing structure the lead-gen business uses before you make any sort of commitment.
Here are the most common pricing models…
- Retainer — This model is common with digital marketing agencies and you can expect to pay a pretty hefty monthly fee between $5,000 and $10,000. The good news is that that’ll usually include driving traffic, building your sales funnel, and monitoring results, as well as tweaking to make improvements. But make sure you hire an agency that actually knows what they’re doing!
- Cost Per Lead — This is the most common pricing model for lead-gen businesses. They’ll just charge you based on the number of leads that they provide for your business. Generally speaking, you can expect to spend around $40 to $200 per lead depending on the industry.
- Cost Per Appointment — Some lead-gen agencies also help you schedule appointments. And rather than charging a retainer or a fee per lead, they’ll just charge you for every appointment they make for your business. The price here will be higher, however, than the CPL pricing model because the leads are (allegedly) more qualified.
- Bulk Data Purchasing — This pricing model is pretty simple. You go to a lead-gen website and buy data in bulk. This is usually pretty cheap, but the lead quality is usually pretty low. And you’ll need to work hard to warm those leads up to your business. Be careful with this one.
Average Cost Per Lead by Channel
According to Detorres Group, here is the average cost per lead by channel…
- Search Engine Optimization: $30 – $175
- Pay Per Click: $40 – $150
- Content Creation: $80 – $300
- Display Advertising: $65 – $85
- Webinars: $50 – $110
- Video Marketing: $175 – $225
- Public Relations: $300 – $400
- LinkedIn: $75 – $125
Average Cost Per Lead by Industry
According to Marketing Charts, here is the average cost per lead by industry…
- IT & Services: $369.88
- Healthcare & Medical: $285.82
- Financial Services: $271.54
- Industrial & Manufacturing: $235.09
- Media & Publishing: $191.07
- Consumer Products: $182.37
- Marketing Agencies: $172.72
- Education: $65.69
- Nonprofit: $43.36
Average Cost Per Lead by Company Size
According to Marketing Charts, here is the average cost per lead by company size…
- 1,001+ employees: $348.93
- 201-1000 employees: $212.12
- 51-200 employees: $180.47
- 2-50 employees: $146.94
Average Cost Per Lead by Revenue
According to Marketing Charts, here is the average cost per lead by company revenue…
- $500+ million: $429.01
- $10-500 million: $179.48
- $1-10 million: $184.64
- <$1 million: $166.01
Creating Your Lead-Gen Budget
Hopefully, you now have a pretty good idea of how much you should expect to spend when generating leads for your specific business.
Generally speaking… the more valuable the leads, the more you should be willing to spend.
And that’s what you’ll want to consider when creating your lead gen budget.
Just work the math backward, starting with a reasonable cost per lead — for the following example, say $50 — and the number of leads you’re hoping to generate. Say 1,000 a month.
In that case…
Monthly Budget = $50 x 1,000
So I should expect to spend $50,000 per month on lead generation. Is that reasonable? If not, I can lower the number of leads I’m generating every month.
Or I can create my own sales funnel and generate leads for far less money (more on that shortly).
Set a reasonable budget, focus on lead quality above all else, and then give it a go.
3 Top Lead Generation Companies
Here are some of the most popular lead-gen companies to consider.
However, you’ll probably want to work with a lead-gen company that’s less general and more specific to your industry or niche. That’ll result in far more relevant and cost-effective leads.
“Our team has sourced leads for SaaS, IT services, and IOT vendors who cater enterprise software, location-based services, cybersecurity, cloud migration, backup products, search relevance, data annotation, e-commerce enablement, video analytics, consumer insights, sales performance management, cloud backup, fleet management, AI powered applications, and more.”
“We test, iterate and execute a comprehensive sales strategy that enables your business’ unique goals — Oh, and our clients love us!”
“Our team handles every aspect of a client’s top-of-the-sales-funnel needs, from building targeted sales leads lists to B2B appointment setting with qualified prospects.
The Belkins team is made up of experienced B2B sales development representatives (SDR’s), marketing gurus, and copywriters.
For us, it’s not just a job – it’s a lifestyle. And this lifestyle has led to some of the best work on the market. Don’t take our word for it! We’re proud of our many customer testimonials on Clutch, and rated 5 out 5 by dozens of clients.”
The Best Way To Generate Leads? Build Your Own Sales Funnel
I’ve mentioned multiple times through this article that the best way to generate leads is by building your own sales funnel and driving your own traffic.
That’s because you have 100% control over the client experience.
And you can build a sales funnel that works for you — one that generates leads for years to come without tons of additional effort (through organic channels).
Want to learn how to do that? Then click the link below and start with our two-page sales funnel that is proven to work. it’s only $7 and it can change the game.
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