Monthly Archives: June 2013

Purchasing Email Lists – A Seriously Bad Idea

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emailA quick Internet search will show you that, yes, you can buy virtually anything online including email lists. In fact, you can buy a list containing thousands of email addresses of consumers in just about any demographic you’d like. Imagine having a huge list of email addresses that you can mail to right away. It’s tempting, isn’t? As attractive as it may sound, purchasing email lists is a seriously bad idea for several reasons. Let’s take a look.

As you likely know, there are three common ways to build an email list: generating a list on your own, buying a list of email addresses, or renting a list of leads. Each has its pitfalls. For example, it’s time-consuming to build your own list. It often means attending trade-shows, asking customers to sign up, or building an advertising campaign and opt-in incentive program. Renting lists requires working with a third party provider who owns the list and keeps the addresses hidden.

Buying lists is by far the fastest choice, but it also has the most pitfalls. List sellers often claim that their lists are filled with contacts who have opted-in to receive email messages. However, what’s unclear is how long ago and from whom? You can bet that they didn’t consciously agree to receive random email messages from marketers like you. Many people on purchased lists will be tempted to report your messages as spam – and many will because your messages arrive without their actual consent. Even if you are not concerned about the implications of the CAN-SPAM Act, you should be concerned about sending messages to people who are not interested, who did not request contact from you, and who are weary of having their contact information sold to one marketer after another.

Another problem with buying email lists is that most email marketing vendors such as Constant Contact, Mail Chimp, and Aweber strictly prohibit the use of purchased email lists. They WILL notice and they will not allow you to send email messages to these lists using their service. If you’re tempted to work around that by choosing a less picky vendor, be aware that email service providers that are not careful are often blacklisted by Internet service providers. A single spammer using such as service could affect the entire service. Thus, even legitimate messages sent through blacklisted providers will never arrive in recipients’ inboxes.

Even if your messages go through and land in your purchased targets’ inboxes and do not get marked as spam, you have another huge hurdle to overcome: these contacts don’t know you nor are they necessarily interested in your offer. They are cold and unqualified. For example, let’s say you’ve purchased a list of mortgage leads. These people may have expressed an interest in acquiring a new mortgage six months ago and opted into a list. Some will have refinanced between then and now and are no longer in the market. Others will have lost interest. Others will be sick of receiving an endless barrage of mortgage-related materials. How do you think your message, no matter how elegantly crafted, will be perceived?

Finally, your reputation could be seriously harmed if you buy email lists. Companies specialize in identifying spammy behaviors and spammers. Much of this is automated using software that identifies messages being sent to out-of-date mailboxes. If you’re identified as a spammer, not only will your messages not be delivered, your IP address could be blacklisted simply for sending a blast of emails to obsolete email accounts.

We know it’s tempting to take shortcuts, but buying an email list is a seriously bad idea. Don’t do it!

Marketing Metrics Makeover

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A few weeks ago we discussed marketing metrics that impress your boss: customer acquisition costs, the marketing percentage of customer acquisition costs, length of time to recoup those costs, customer lifetime value, number of customers marketing has acquired, and the number of customers nurtured by marketing. While presenting these metrics to your boss is sure to impress, what happens if the actual numbers are disappointing? Once you have benchmarks in place, give your marketing metrics a makeover by improving them. Here’s how to fix disappointing metrics.

      • Customer Acquisition Costs – Does it cost too much to acquire a new customer? Look at the sales cycle to see if you can shorten or streamline it. Work with the sales team to define the criteria for qualified leads, examine marketing campaigns to identify those that have the highest return on investment, and focus on using higher ROI campaigns to reach the most targeted, qualified prospects.
      • The Marketing Percentage of Customer Acquisition Costs – If the percentage of your marketing budget that goes toward customer acquisition costs has gone up, that’s a signal that it’s time to reevaluate your strategy. Again work with sales to ensure a cohesive approach. Examine conversion rates, look for areas of underperformance, and find ways to qualify leads more efficiently.
      • Length of Time Required to Recoup Customer Acquisition Costs – Does it take an excessive amount of time before customers become profitable? A three-pronged approach can shorten this timeframe. Start by revisiting your pricing structure, possibly requiring higher payments upfront in order to become profitable sooner. Next, maximize the value of each customer by identifying upselling and cross-selling opportunities. Finally, evaluate the nurturing and sales process to find ways to shorten it which reduces acquisition costs in the first place.
      • Customer Lifetime Value (CLV) – This is related to the above, but it also stands alone. Again, you will need to evaluate your sales cycle and acquisition costs in an effort to reduce those. Finding additional opportunities can also increase CLV. In addition, reducing “churn” should also be prioritized. Churn refers to customers who are dissatisfied and leave your business. Evaluate product quality, customer service, renewal processes, and other areas that affect churn and address areas that need improvement. By reducing turnover, you can increase the number of profitable customers and increase CLV as a whole for each segment of customers.
      • Number of Customers Directly Acquired by Marketing – If the number of customers directly acquired by marketing has gone down significantly, reevaluate your lead management process. Are leads being nurtured properly? Are they being given the right information at the right time in the sales and nurturing cycle? While it’s tempting to buy more leads, it’s not helpful if your lead management system isn’t working to move them through the funnel toward a favorable buying decision.
      • Number of Customers Nurtured by Marketing – This metric involves the number of customers that the marketing department has assisted. If this metric goes down, it means that marketing is becoming less involved in the process once a lead has been turned over to sales. It’s smart for sales and marketing to work together to nurture leads, not as separate entities. It may be time to realign sales and marketing to ensure that leads are both generated and nurtured efficiently.

As with most performance measures, these marketing metrics will fluctuate. When the metrics above change suddenly or dramatically, it could be a red flag that needs your attention. Even without dramatic changes, you may want to work on improving each of these metrics to ensure a shorter customer acquisition cycle and a faster time to become profitable.

Social Media Marketing Myths

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Social media platformsNo doubt, social media marketing is hot. It is also confusing thanks to multiple social media outlets, changing SEO strategies, and conflicting advice from dozens of self-proclaimed social media gurus. To help you break through the confusion, we’ve busted the following social media marketing myths:

  • You need a presence on ALL social media sites – BUSTED. There are far too many social networks to effectively leverage all of them. Plus, each social network serves a specific purpose, so some may not be appropriate for your business. Go where your best customers hang out, and start there. The big three are: Twitter, Facebook, and LinkedIn.
  • Email is obsolete – BUSTED. There’s a saying in the Internet marketing world, “decisions are made in the inbox.” Building a list should remain a top priority. Your prospects may hang out on, and generally prefer, Facebook or Twitter, but they still use email.
  • Automation is the key to success – BUSTED. In theory, automating all of your tweets and updates sounds smart and efficient. In reality, your followers will see right through your attempts and perceive you as robotic, fake, or uncaring. Remember, social media is social. Robots cannot converse nor can they fake sincere interactions. Some automation is helpful. For example, you can set up automatic updates whenever you publish a new blog posts; however, make sure to be interact as people comment and ask questions. While you’re at it, avoid the temptation to blast each post to every single social media site you’re on. Each platform has its content preferences – and your prospects may be following you on several sites.
  • Your prospects aren’t using social media – BUSTED. While recent research shows that the majority of adults spend time on social media. Whether your customers are teens or great-grandparents, chances are good that a large percent of them are using social media. In addition, people close to them such as parents or adult children are also influenced by companies on social media sites.
  • Social media is free – BUSTED. Watching TV using rabbit ear antennas is free too, but producing and broadcasting ads isn’t. Even if you don’t run ad campaigns on your social media sites, you or your employees will spend a great amount of time interacting with followers. In addition to the human resources costs, it often makes sense to invest in social media management software and analytical tools.
  • Social media for business should focus only on the business and its achievements – BUSTED. If your social media accounts are used strictly for patting yourself on the back and telling the world how wonderful your products and services are, none of your followers will stick around. Remember, people want to know, “What’s in it for me?” The more you can make your posts relevant to your customers’ problems, challenges, and concerns, the more engaging your social media efforts will be.
  • Create a profile and fans will flock to you – BUSTED. If you build it, they may or may not find it. Make sure to let your customers and prospects know where to find you. Whether you wrap all of your company cars with your Facebook info, use QR codes, hand out fliers, include social media buttons on your website, or purchase “get more likes” ads, you must let people know your social media sites exist. Take it even further and give them a compelling reason to like or follow your company.

Social media continues to evolve and is no longer considered “new.” Now that it’s been around for several years, myths are being challenged – and busted.

Lead Generation: Tips for Balancing Costs and Quality

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balance cost and value

 

Have you ever been excited to find a cheap source of leads only to be disappointed by low conversion rates? Have you ever paid more than you felt comfortable with for higher quality leads? Have you ever paid way too much for poor quality leads? When it comes to lead generation, lead quality is often closely related to cost. However, cost per lead is not the only part of the equation. It is essential to understand how your lead sources and lead generation efforts pay off. If you don’t look beyond cost per lead and examine your return on investment, you could find yourself making the same mistakes time and time again.

First, no matter where you source your leads, make sure to know your numbers. You should know:

  • Cost per lead
  • Conversion rate
  • Average profit per conversion
  • Profit per lead

For example, if you buy 100 leads for $100, your cost per lead is $1. If your conversion rate is 5 percent with an average profit per conversion of $50, 100 leads will generate $250. This would put your profit per lead at $2.50. Once you know your profit per lead, you can compare that to your cost per lead and decide if it makes sense to continue using this particular lead generation method. Before you abandon a lead source completely, consider if it’s possible to increase either the conversion rate or average profit per conversion.

In addition to looking at the numbers, consider how much a good lead is worth to you. If you sell expensive products such as real estate or industrial equipment, a single high quality lead could cost hundreds or thousands of dollars but the potential payoff could be well worth your money. In contrast, if you sell inexpensive products, it doesn’t make sense to spend more than a few pennies per lead.

Another factor to look at involves where your leads are in the sales cycle. Are they simply gathering information or are they ready to buy? It’s smart to look at the source of these leads as well. Where did they come from? For example, if your leads signed up to enter a chance to win a vacation to Hawaii at the local home and garden show, they’re not necessarily interested in buying a new hot tub, refinancing a loan, or having their kitchen remodeled. Thus, these leads will be less likely to convert than leads who filled in an online request form for a quote on a new hot tub, loan, or kitchen cabinets.

Finally, high quality leads tend to be highly targeted leads. Whether you are generating leads on your own website or buying them from a vendor, the better targeted your leads, the more successful you will be at converting them. This may require optimizing your landing page and advertisements to attract the right people or working with your lead vendor to filter your leads.

For example, if you are a mortgage broker who specializes in reverse mortgages in a particular city, ask your lead vendor to provide you only with leads who want a reverse mortgage in specific ZIP codes. This allows you to get more of the leads you want without increasing your costs.

Lead generation is an art form in its own right. Know your numbers and find ways to increase your chances for success. Take both an objective and subjective look at all of your lead sources and determine which sources deliver the most targeted leads and the best overall value.