Is Lead Generation A Cost or A Profit Centre?

For many small business owners generating leads for their business can be at huge cost.

The costs for generating leads never seems to end … you have to pay for logo design, business cards, flyers, advertisments, joining networking groups, sponsoring associations of your target market, web site design, web site hosting, and on and on it goes, right?

Big problem with this is that if generating leads costs you money then you eventually get to a point where you run out of money.

Now this is okay if you see a direct return on the cost of this lead generation ie you directly achieve a new paying client from each lead generation initiative. The reality is, especially in a service based business, it rarely happens.

As a result many small business owners get stuck. The marketing process breaks down.

What if your lead generation could actually become a Profit Centre for your business?

How different would your business look if the process of generating leads actually created a profit? Then you could go on generating leads indefinitely. Making a profit on your lead generation campaign would also mean you could continue to scale upwards.

Is it possible to make a profit on lead generation?

Well some smart people in Network Marketing like Joe Schroeder, Mike Dillard and Dale Calvert have been advocating this approach for years.

This approach originated out of the direct response marketing world with people like Dan Kennedy and Jay Abraham being big advocates of what is known as Self Funded Marketing.

So how does it work? How do you make a profit on lead generation?

It is simple really … and with the Internet it is even easier. It amazes me that so few business owners know about it.

The process needs to be built right into the point where the lead is generated. You simply make an offer of a low cost priced product at the time the lead is created that is so compelling and irresistible that many people will take you up on it. Note: At this point they have not engaged your more expensive services, just accepted your offer of a low price, high perceived value product.

Let’s look at an example from the Profit Minute web site.

If you click here you will see that we are giving away a valuable FREE report and MP3 audio file on ‘7 Keys to Attracting New Clients’. Obviously this is the point where a lead is generated for our business. The report and MP3 attracts a lot of small business owners.

Then right after they enter their name and email to receive the report and mp3 … right on the thank you page, we offer them the Audio CD ‘Creating Raving Fans’ for just $47 instead of $97.

Note: This is made as a one time offer. This is the only opportunity they will have to get the Audio Cd and bonuses at just $47.

Let us say that only 3% of people who request the free report decide to purchase the Audio CD.

That means that for every 100 leads generated our revenue is $141.00. If the cost to produce and mail each CD is say $10 then we have $111.00 pure profit on the sale of these Audio Cd’s.

Now all we have to do is generate leads for a $1 each. So our cost to generate 100 leads is $100. This means for every 100 leads we generate we are creating a net profit of $11.

On this basis we could afford to generate leads for ever.

Note: We are not trying to build a business on the sales of Audio CD’s. We will then market our services to the 100 leads generated even if they do not purchase the Audio CD initially.

Every service provider should explore the idea of creating a self funded lead generation campaign. The key is to develop a low cost - high perceived value product that you can build right into the lead generation process.

In our Marketing Strategy Coaching program we work with small business owners to help them establish profitable lead generation campaigns.

Leave your thoughts, questions, or share your successful lead generation stories in the comments section.

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