Before starting a business, we always calculate the risks and chances it can cost us. This business is no different. Lead generation business can be proven valuable to the businesses/companies with demand. In this business, you don’t have to build a new start, instead, you can use the tried and tested strategies and you don’t also need to re-invent any kit to see the results.
Lead Generation Business:
It buys leads and sells them to other businesses that want more client base with a pinch of profit.
Is Lead Generation Business fruitful?
Your ‘Lead Generation’ business can prove to be very profitable if you know how to do it right. If you can find a suitable margin between your cost to acquire leads and the price you sell the leads for then it can be profitable for you.
It is an ideal job for marketers and salespeople who can understand and serve the leads the companies need. It doesn’t require a product, only content, which if given visibility, can be a gold mine for leads.
How Much Does It Cost to Start a Lead Generation Business?
Starting a lead generation agency has a small cost barrier, but it’s far more accessible than many other business model types.
A lead generation agency can be started with a website and a couple of tools to help you reach out and engage with leads.
Labeling the ‘Target Audiences’ for your Lead Generation business:
The most important part of starting your lead generation agency is deciding who your customer is and to who you’re selling leads. This affects everything, from your branding to your sales tactics, to how you generate leads. There are two types of models:
This model is popular and you’ll target companies in a certain city or region. The important key is that your market is located in one easily defined area. It’ll make identifying potential customers easy, but there are some pros & cons to consider.
Local model examples; suppose you will need real estate agents in California or you will need plumbers in Arizona then your local leads will help you target audiences in specific areas.
Cons of Local based model:
- Harder to scale indefinitely
- The smaller total addressable market
- Smaller clients may have smaller budgets
Pros of Local based model:
- Less competition
- Easy to identify potential customers
- Access to local resources like your local business networks and chambers
- Easier to build relationships with local business owners
- Can use channels like Direct Mail
This method focuses your lead generation business on a particular industry. Here you’ll have a larger prospective market, and that can result in having more customers than if you were to only focus on businesses in a local area. National or international companies will have larger budgets and may understand the ROI of your services better than a small local company would.
Industry model examples; Here you might sell your leads to bigger companies like software companies, design agencies, or a financial firm.
Cons of the Industry-based model:
- Potentially harder to find great-fit leads
- More diluted messaging
Pros of the Industry-based model:
- Can still be highly specific
- Allows for scale into new countries and markets without changing messaging much
- All customers will have similar pain points
- You won’t run out of leads
How To Charge Clients? (Pay-Per-Lead)
This method is the most preferred and most profitable. In this method, you will agree to a price with a client on the cost per lead and you or your company will run the advertisement campaign for that client using your own resources, and then you will charge the client according to your expenses including your profit.
In this method, the client is asked to spend on the advertisement cost. Here you will do all the advertisement campaigns, and build a funnel for your client but the client will have access to the payment method or they can give you a budget and you have to do it within. You will generate leads for the client and you get paid when a prospect turns into a client/customer. You can even ask for a commission in this method which can be profitable in both ways. This method is a win-win situation for both parties.
In this method, we segment the leads. This method is totally funded by the ‘front-end’ method. Suppose, We have 10 leads coming into our funnel for client A who took our front-end method and we will sell that 10 leads to Client A but out of 10 leads, 5 leads suit Client B so we will sell those 5 leads from Client A’s list to Client B through the ‘back-end’ method and we can make profit from both the parties.
100% (if you’re smart!)
In this article, we have explained how you can start your ‘Lead Generation’ business and how you can reach out to your targeted audiences. If you go through this article then it would be easier for you to understand this business better and you can make a decision regarding whether to start the business or not.
We have also shown you how the profit margins work and mentioned the advantages and disadvantages of this whole procedure. We hope it will help you to start your ‘Lead Generation’ business and go forward with it.