How Purchasing Leads Harms Your Business And What To Do Instead

How Purchasing Leads Harms Your Business And What To Do Instead

There are no short cuts for getting quality leads in your business. Many business owners are tempted to buy leads lists but this can hurt your business. Here’s why and what you can do instead.

On March 17th, 2022, the FTC issued a complaint against HomeAdvisor for deceiving its members about the quality and source of its leads lists.

According to an ABC7 report, one contractor said, “…at one point, he was paying $3,000 a month in leads. But here’s the problem: While he did get some jobs through leads, he believes roughly half were bogus. ‘Either we could not reach anybody, even after calling immediately after receiving notification,’ or he says when a homeowner did answer, ‘They said that they never signed up for anything. They didn’t request any work done for any contractors.’”

The class action suit currently underway and is alleging HomeAdvisor committed fraud.

This may or may not be true, but there is one thing we know for sure: fraud aside, the practice of selling/buying lists of leads has many downsides including breaking a number of privacy laws, destroying businesses’ email lists, and overall harming a company’s reputation.

While it may be enticing to purchase leads from a company or service, don’t!

Here’s why you should never buy a leads list and what you should do instead.

Lead Generation is a Top Priority for Marketers and Businesses

Before we dive further into how purchasing leads lists can hurt your business, let’s take a brief look at why so many business owners are drawn to packaged leads lists.

As a business owner, you know that you need leads to stay in business. Leads turn into clients when properly nurtured and you rely on clients to pay the bills!

Meanwhile, 68% of businesses report struggling with lead generation.

And, with numerous ways to acquire leads available, and so many other priorities business owners need to focus on, it’s no wonder why businesses think that purchasing a leads list is a great way to fast track customer acquisition.

It makes sense!

Unfortunately, while unwitting business owners seek to grow their businesses when purchasing leads lists, they are actually harming their business and potential customers.

How Purchasing Leads Lists Hurts Your Business

If you’re wondering how the heck purchasing leads lists hurts your business, there are many ways. I’m going to cover three, but before I do, it’s important to mention that these leads lists are cold leads.

Think about it…

When you purchase a leads list, no matter what the person selling it to you says, there are so many unknowns!

  • Where do these leads come from?
  • How do I know they’re interested in my business?
  • Is this same list being sold to my competitors?
  • Have these leads given their explicit consent to be marketed to by my business?

These questions typically go unanswered.

You’re probably catching onto why it’s not a great idea to purchase these lists already, but let’s look at three specific reasons.

1. It Damages the Quality of Your Email List

Let’s look at some stats.

91% of email users have unsubscribed from a mailing list due to irrelevant content.

Any email marketer worth their salt knows the importance of segmentation. Segmentation allows marketers and business owners to ensure that the people on their email list are getting the content most relevant to them.

For instance, let’s pretend you own a painting business and you segment your mailing list into two segments: Prospective customers who came in through a consultation and previous customers who have already finished a project with you.

To your prospective customer list, you might serve them content on subjects like how to prepare for painting to be done, what to consider when selecting their colors, etc. Meanwhile, you’re pushing content to your previous customer list about how to maintain their finished project, what to do if moving furniture scratches the paint, what follow on services they may want for certain weather seasons, etc.

36.4% of consumers marked emails as spam because they didn’t purposefully subscribe to the list and 31.6% because they sent irrelevant content.

What happens if a prospective customer is served previous customer content such as a review request? It diminishes their trust in your business.

This diminished trust is ten fold for folks who never were interested in your service to begin with causing them to mark your emails as spam.

If enough people mark your emails as spam, email service providers like Outlook and Google flag your email account as spam and you stop making it in everyone’s inboxes – even those who do want to see your content.

Lastly, uploading purchased leads lists to your email service provider (if they’re reputable) goes against their guidelines and can get your account banned.

Bye-bye emails forever!

2. You may be in violation of several laws

In recent years, government entities have been creating laws and policies to protect consumers’ privacy. Purchasing leads lists often goes against these regulations and can lead to large fines.

Here are just a few examples of regulations and policies that can result in consequences if you’re found non-compliant:

CAN-SPAM

The CAN-SPAM Act is a federal law which requires businesses to include certain information in their emails as well as regulates the type of content allowed in transactional vs relational messages.

Under CAN-SPAM, multiple people can be held responsible for violations and penalties include being subject to $46,517 for each separate email in violation of this act. Aggravated violations can cost additional fines and even prison time.

CCPA

The California Consumer Privacy Act of 2018 (or CCPA) ensures certain privacy protections for California state residents. This act gives California residents the right:

  • To know about the personal information a business collects about them and how it is used and shared
  • To delete personal information collected from businesses
  • To opt-out of the sale of their personal information
  • To non-discrimination for exercising their CCPA rights

If there are California residents on your purchased leads list, you may be in violation of CCPA.

Violations are subject to penalties of $2,500 for each violation or $75,00 for each intentional violation after a 30 day opportunity to cure has been provided. It’s notable that the attorney general is critical of the notice to cure period.

GDPR

If you are located in Europe or have customers in Europe, GDPR is relevant to you – and is setting the standard for new privacy regulations worldwide.

GDPR states many of the same rights as CCPA, such as the right to delete, right to opt-out, etc., but it also requires the preventive measure of explicit consent.

This means you have to get explicit permission from EU residents to hold, use, and/or sell their data.

With purchased leads lists, the consumers on those lists have rarely explicitly consented to their data being used for sale to other businesses. It also requires their explicit consent for you to collect their data and use it for sales calls and marketing emails.

Violations of GDPR can acquire penalties of up to 20 million euros or 4% of worldwide turnover for the preceding financial year – whichever is higher.

There are many other privacy laws in place that you may be in violation of when purchasing consumer data and using that data for any communications, research, or other use.

3. It’s a Waste of Time and Money

Lastly, purchasing leads lists is simply a waste of time and money.

Marketers and sales representatives are well aware that cold leads have very low conversion rates. In fact, there are many studies showing that consumers require at least 6 touch points before they’re willing to even talk with a sales person.

This means, even if your purchased list complies with all relevant privacy policies and regulations, it’s still unlikely to yield results.

This is why every savvy industry is making a move toward inbound marketing.

Compared to traditional marketing techniques, inbound marketing generates about 3x as many hot leads.

What’s inbound marketing?

It’s a method of attracting interested leads to your business through content and experiences tailored to their interests and needs, and it’s what you should be doing instead of purchasing leads lists.

How to Successfully Attract Leads

Alright, so now you’ve been thoroughly warned about purchasing leads lists and introduced to this idea of inbound marketing.

So, how do you successfully execute inbound marketing?

It’s all about content and SEO (search engine optimization).

You are probably already aware of the vast marketing channels available to businesses today. From blogs, to social media, YouTube, podcasts, search engine optimization, and more there is so much to choose from!

The most important thing for you to do to set yourself up for success is to create an optimized home base that converts then strategically choose a few channels where you can be active with your community and increase your visibility.

This way, interested leads can easily find you, build trust with you, and contact you when they’re ready to make a buying decision.

If you’re just getting started with inbound marketing, here are the fundamental components you’ll want to master:

  1. Create a user-friendly, SEO optimized website that speaks to your customer pain points and desires and clearly defines your products and services
  2. Claim and optimize your Google Business Profile
  3. Choose a pillar content channel where you can publish content consistently (blog, YouTube, or podcast)
  4. Post regular updates to your Google Business Profile (ideally daily)
  5. Create a strategy to continuously collect customer reviews for your Google Business Profile
  6. Post regularly to your favorite social media channel

Want Help from Seasoned Experts?

Lead Revenue has been executing incredibly successful inbound marketing strategies for thousands of location-based clients in various industries.

If you’re a brick-and-mortar business or provide services to a specific area/region, we guarantee to double your leads in a matter of months with tried-and-true inbound marketing methods. Want to learn more about how we can help you succeed and never have to purchase leads again? Schedule a call with us here!