Lead generation can take many different forms.
Buying lead lists, gating content, outbound sales, organic marketing, and content marketing are just a few examples. With each strategy behind lead generation comes several lead generation companies or agencies whose services aim to provide you with lead flow.
However, not all lead generation companies are created equal. There are vast differences in their lead generation pricing models and what they deliver.
We want to start this article with a warning: paying for leads can be dangerous. Buying leads from a shady provider and loading them into your lead nurturing software, like HubSpot, breaks the terms of service and can result in removal of your email functionality.
With that said, many lead generation companies are legitimate. So, we'll assume you will do your homework and only work ethically with companies that generate leads. Still, there's the question of how they will price their services and what you should expect to pay.
B2B Lead Generation Pricing Basics: What is a Lead?
You need to have a specific definition of "lead" when working with a B2B lead generation service. Here are three types of leads that we usually refer to in the marketing world:
- Lead: A lead is any contact in your database. We used to keep up with how many contacts we had in our database, but we soon realized that "leads" is a vanity metric. A lead could be a contact who doesn't fit your target customer profile and who hasn't shown an interest in your type of service. Those contacts are worthless.
- Marketing Qualified Lead (MQL): An MQL is a contact who matches your target customer profile and can buy from you. These are potential customers, but they haven't yet said they want to talk to you. They've engaged with your brand but are not yet ready to buy.
- Sales Qualified Lead (SQL): An SQL is a contact who matches your target customer profile and has shown a specific interest in your product or service. This usually means they've set up a phone call, consultation, demo, etc. to talk to a salesperson. These are the leads who have raised their hands and want to move forward.
Before hiring a lead generation service, you must define what leads you're willing to pay for.
Common B2B Lead Generation Pricing Models
There are many different ways for lead generation companies to charge for their services. You will typically be charged a monthly retainer or on a per-lead basis. Some agencies will use a combination of the two. Let's explore some common lead generation services and their pricing.
Buying a List of Cold Contacts
Contact lists can cost anywhere from $300-$600 per thousand contacts. These are generally purchased from brokers, data companies, or events and tradeshows. Typically lists purchased from events are more expensive as the list is more targeted to specific audiences.
Purchasing lists can seem like an appealing immediate fix if you're simply looking for volume of contacts, but it comes with negative implications. Purchasing lists and blasting emails can quickly get you reported and diminish your email service reputation. Additionally, these lists are often full of poor-fit, unqualified leads who will never buy.
Lead Generation Software
Lead generation software can be a useful tool when put in the hands of sales development representatives(SDRs). It mines data from a variety of sources to provide more detailed contact information. This can help your sales reps find better data on prospects and engage on a more personal level. Lead Generation Software like Apollo or ClearBit can help your reps find the right contacts and organizations. Knowing your ideal customer profile makes it easier to find those people at target organizations.
Pricing for software like this can start around $50 per user per month and increase based on your usage.
Cold Outreach to Generate Leads
Cold outreach, or outbound sales, can be a great way to generate new leads and net new business. Outbound sales agencies conduct research to identify the customers and organizations that fit your ideal customer profile and reach out to them via cold calls, emails, webinars, or direct mail.
If you have an established sales organization, and plenty of sales data to analyze, outbound sales can be a great strategy to implement.
Hiring an outsourced cold calling agency typically costs $20-50/per hour.
SEM Lead Generation
SEO lead generation agencies develop content to rank in search engines for valuable keywords your ICP will likely search. The content is designed to convert website visitors into leads through relevant offers.
Google Ads agencies set up and manage paid advertising campaigns to generate leads.
Google is an excellent channel for capturing demand and funneling visitors toward your lead-generation offers.
Social Media Lead Generation
Social media is another outlet to generate leads. Businesses that post valuable organic content regularly on the social media channels their ideal customers use most often can build an engaged audience and attract visitors to their offers. B2B companies should consider building a following on LinkedIn, Facebook, and/or Instagram.
Many organizations utilize paid social media advertising to reach potential consumers. This model is typically priced based on a cost-per-click basis, meaning you pay for every person who clicks on your advertisement, whether relevant or not.
Social media can be an effective channel for targeting specific personas and generating valuable leads. The cost-per-click can range from $0.50 to $5.00 per click.
Appointment Setting Lead Generation
Lead generation agencies with a cost-per-appointment pricing model can be the most expensive and effective. Appointment-setting agencies are like outsourced business development representatives. These agencies target your ideal customer profile and directly generate meetings with your sales team.
Agencies like Alleyoop.io or DemandInc charge $2,000 to $20,000 per month. They typically charge an additional cost per appointment, ranging from $50 to $200 per appointment. These agencies will take more time to ramp up, as they'll have to adjust messaging and positioning and create company and contact lists relevant to your ideal customer profile.
RELATED READING: Lead Generation Services: 3 Things to Know Before Signing a Contract
Should You Buy Leads? One Size Doesn't Fit All
The problem with lead generation companies, for the most part, is that they are temporary. You might get the leads, but you're not attracting the leads - the lead generation company is. When you stop paying, you stop getting leads.
Think of B2B lead generation as a pipeline. When you pay a lead generation company to deliver leads, you rent their pipeline and have them turn the faucet on. When you stop paying them, they turn the faucet off. In this case, the cash you shell out for these services is not a long-term asset. The benefits don't live on after the cash is expended.
What happens if the B2B lead generation company increases its prices? You have to either pay more or get less.
DO NOT PAY FOR "LEADS." A contact who can't be your customer or has no interest in becoming one is worthless to you, so don't pay for them.
Only pay for MQLs or SQLs.
The inbound marketing methodology that used to work ten years ago is broken.
It used to be possible to nurture a generic lead through a complicated buyer journey through the funnel. It worked because consumers wanted it to be that way. They wanted to do extensive research before talking to a salesperson.
But things have changed. Inbound marketers have flooded the internet with nearly identical content. Consumers don't have time to sift through it all to find a solution. They want you to solve their problem fast. They're much more willing to talk to a salesperson early if you can show them that you have the best solution to their problem quickly.
That shift is why we say don't pay for leads. If people are good prospects for your business, they'll indicate that much earlier than they used to. Your chances of nurturing a cold lead through a complicated buyer journey are too small to warrant the effort and expense.
RELATED READING: How To Align a Lead Generation Agency With Your Sales Team
A Lead Generation Model Designed for Long-Term Growth
Working with any sort of lead generation agency or service can be a great short-term solution to a lack of lead flow. This can help get sales pipelines going, and drive results while you begin to build or develop a long-term strategy.
Balancing a long-term strategy with an immediate fix is the key to successfully working with a lead generation agency.
The downside is that it takes a lot of work, and most companies are used to paying for leads and calling it a day. They don't have the infrastructure or human capital to build a lead generation engine.
That's why you should consider hiring a growth team to build it for you. But, just like lead generation companies, growth teams also have a wide range of pricing models.
At Lean Labs, we help organizations build long-term sustainable growth through organic marketing and growth strategies designed for success. We'll help generate reliable, sustainable, and scalable growth through traffic, increased conversions, and website optimization.
Lead generation doesn't stop once you get the initial influx of leads from whatever service you work with, and creating a long-term plan to execute will help take you the next step of the way.
Our Growth Playbook will give you the tips and guidance you need to build a growth strategy designed to win.