Should I Buy Leads?

As a member of several sales groups on Facebook and LinkedIn I have noticed that the question that is asked the most is "Where do I find clients?" When it comes to selling, this is the proverbial conundrum wrapped in an enigma inside a puzzle.

If you haven't read my book, one of the themes is that many companies are offering full commission sales jobs, which means that they can hire anyone and everyone at minimal risk because if these new recruits don't sell anything, the company doesn't have to pay anything. That puts a lot of the responsibility for finding prospects on the shoulders of the new hire. 

As I state in my book, my first real sales job was selling insurance door-to-door in rural North Carolina. In the hiring process we were told that we would pick up renewals from people who had the policy and "they will give you the names of people to see". The implication was that when I showed up to get a renewal check there would be several names on a silver platter waiting for me. Being young and naïve I believed it.

Of course nothing was farther from the truth. What I saw when riding with a manager was creepy conversations about photographs, like "Is this your son? Does he live around here?" Or asking about a neighbor, as in "Who lives in the house up the road?" This was how these guys got referrals.

The hardest part any sales job is finding a prospects. For many new sales people, the hiring company may promise leads, free and otherwise. That sure sounds awfully nice of them to do all of the heavy lifting and finding these people who are desperately awaiting a sales pro like you to come in and seal the deal. And if it all sounds too good to be true then it is. 

I know a guy who went to work for a life insurance agency and was told  they would sell him leads for around $35 each. The rub was that he was supposed to only sell these prospects the insurance products under the agency's umbrella. In other words, they would get the lead, sell it to the agent, who would close the deal and the agency would still get an override (small commission) off the sale. The poor agent, we found out later by crunching some numbers, had a commission structure which paid about 20 percentage points less than a normal contract because of the "leads advantage". 

Over the years I have worked with a few companies who offered leads and this is what I typically found:

• The leads were just names. Literally no one had filled out a lead form or asked for more information. It was like they just went through a phone book and found names of people.
• The leads were weak. As in the famous scene from "Glengarry Glen Ross", we were told that we were weak for not closing them. The fact that none of them had been vetted or prequalified was moot apparently.
• The leads were dead. Yes, dead people's names were given to us. Maybe they were alive when these names were first circulated but some had been gone for years.

I admit I am a bit jaded after all of these years in the business. My sources for clients are referrals (or preferably introductions) and organic leads, which I generate myself through my own marketing efforts. So when I hear someone offering leads I cringe a little bit. Try to find your own clients and you'll make more money (and profits) in the long run.

Chris Castanes is a professional speaker who helps sales people succeed through workshops and humorous presentations. He's also the author of "You're Going To Be Great At This!", a humorous look at sales. For booking information, click here. He's also the president of Surf Financial Brokers selling life and disability insurance in several states.