Every once in a while you find an article or have a conversation that makes you realize that not everyone thinks the same way you do. Or at least approaches life with the same perspective. If you’re in marketing, there are certain assumption you make about products. Here’s a big one: a great product is only the first step to selling it successfully. Otherwise you wouldn’t be able to sell bottled water or Coca-Cola — people don’t buy things because they need them — they buy because they have an emotional connection with a brand. There was a time when we only bought things that we needed. Advertising changed that early in the 20th century and convinced us that we needed things that we really didn’t. Now it’s taken for granted that a great product needs a great advertising campaign, PR, and marketing.
In BtoB, however, there still exists a model of leads and sales. In this world, there are people who make fantastic products that fulfill very real needs in the marketplace. And here’s the shocker: many of these people don’t see a need for marketing. Afterall, if we make a product fulfills a need, they reason, why do we need to market it? If we do market it is only because our competition is.
Enter the idea of a lead exchange. Here’s an explanation from leadcritic.com:
The lead exchange model is different from the traditional lead model in that there is no marketing. The lead exchange is simply an efficient conduit between a lead buyer and a lead generator. They do not purchase the lead, or purchase marketing that generates a lead, mark it up for margin and re-sell it. They simply operate as the device that matches prospective lead buyers with lead generators whose leads fit the buyer’s filters. For revenue, they take a percentage of the price that the lead captures, typically in the 10%-20% range. For example, let’s say a lead is bought by 4 buyers for $20 each. That lead would be worth $80 ($20 x 4). The exchange would keep, (I am guessing based on information I have come to understand) about 20% of that, or $16 and the company that originated the lead would keep the other $64. So there you have it, the key flaw. Margins are too thin. With gross margins of approximately 15% there is not a tremendous amount of room for things like payroll, taxes, infrastructure, technology, etc. unless there is an exceptionally high volume of leads being passed through the machine.
OK, that’s a good summary and it points out some of the major issue, namely that this approach tends to commoditize products. There’s a very good discussion about the article here: Link
I know what you’re thinking, this is the point where I say that marketing can decommodify a product. Well, that’s true but that is a point that has already been made. That bigger miss in the lead purchase model is that it only looks at needs and not desire. We are all in business for reasons beyond money. What drives us is not just a need to put food on the table, but a desire for the next level of success for ourselves or families, maybe even our communities. This is the difference between “I need a new machine.” and “I’d really like to take my business global.” or “We have to cut costs, what’s your cheapest model?” and “I’d really like to grow the family business even though times are tough.”
Saying this is, of course, the easy part. Making that a selling strategy is much tougher. How do you tap into those desires? How do you even find people who want to have that conversation? If it were easy, then a model like the lead exchange would be all that you need. But you can start by basing advertising, marketing, and tradeshow strategies around business desires rather than product needs. Making that kind of a connection with a customer will put more focus on the less tangible aspects of your product such as service, quality, and long term efficiency.
ROI is, of course, important. But ROI should be measured against your own long term business success and goals. Then you can begin to answer your own desires in business rather than just fulfilling the needs.
