3 problems with outsourcing lead gen (and how to fix them)

I’ve read that stories resonate with the human brain more than anything, so let me start this post on potentially outsourcing lead gen with a quick story.

I knew a company in the travel industry a few years ago. They were kind of a middle man between providers (think like hotels, cruise lines, tour companies) and travel agents. They mostly hosted conferences so a hotel GM could get in front of travel agents to book his product. That was the basic business model.

In the course of all this, the company tried outsourcing lead gen to a third party. They were trying to drive referrals to one of the cruise companies. It was a total bomb. On the third week, the cruise company called up and said, “Hey, eight or 10 of these leads you sent us are dead.” They didn’t mean the leads didn’t work — they meant the people were literally dead.

There are a lot of issues with outsourcing lead gen. Let’s look at the three biggest.

Outsourcing lead gen issue: Ignoring the prerequisite intelligence and effort

Doing lead gen right is hard. GE Healthcare actually banned the term internally, in part because of the confusion it was causing among sales and marketing professionals. Even though it’s hard, sometimes we have a tendency to think it will be easy — and especially if we are outsourcing lead gen. The theory goes like this: “Just get us 10 qualified calls or meetings per week. We take care of the sales. How hard can that be?”

It can be very hard. First, you need to understand your ICP — ideal customer profile. If you, the main company, doesn’t understand that — then no one you end up outsourcing lead gen to will understand it either. Once you have a crystal clear idea of your ICP, other questions follow immediately:

  • How can you segment ICP into A, B, C, etc. for appropriate sales methods (inbound, inside sales, high touch outbound, etc.)?
  • What are the buyer personas here?
  • What’s the initial sales pitch and channel for each persona (phone, email, etc.)?
  • How do you source company names?
  • What about persona names?
  • Dou you have the right support materials (content, content, content) for all different buyer journey stages?

This list just begins the process. There are a lot of questions you need to ask, and none of them will have immediate answers. There’s a lot of pre-work on outsourcing lead gen — and this involves both your preparation and the lead gen partner company asking you the right questions. BTW: that is exactly the reason why we at BizXpand don’t offer stand alone leadGen as a service. We can’t produce quality leads that convert into successful business transactions when we don’t have answers and full understanding on ALL the above questions.


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Outsourcing lead gen issue: Business model works against quality

Here’s the dirty little secret of how this all tends to work. A lot of companies that offer outsourcing lead gen want to get rewarded on either “consulting hours” (no risk) or “number of calls/meetings per week” (low risk). Because potential partners sometimes think paying per hour is unpredictable or will become too expensive, they force the lead gen partners into a “pay per meeting” business model. This can actually benefit a savvy lead gen company.

Why? They are convincing you that “you only pay if we deliver,” and that seems good. But it’s not that good, really. Instead, what this lead gen partner is doing is now selling meetings to you. A qualified prospect who doesn’t result in an immediate meeting will be dismissed, because only getting the meetings gets you to pay out to your lead gen partner. You lose a ton of good prospects from your pipeline. Yes, they might be top-of-funnel but still, can you afford dismissing them?

Outsourcing lead gen issue: Complexity of holdover point

A lot of this is rooted in the definition of what makes someone a “sales-qualified lead.” Once that definition is agreed upon, how does the outsourcing lead gen company hand that lead over to your company? Depending on how the outsourcing company got paid, sometimes they won’t go into qualifications with your sales team. In order to fulfill the contract, they will subconsciously ignore problem areas from the lead. When they pass the lead over to you, they won’t explain all the background, context, and issues. Now your own sales guys kick the tires on this lead, and it’s going nowhere. They report back that the lead “wasn’t qualified.” Now you distrust the outsourced company. It’s a brutal cycle and happens a lot.

How do you resolve issues with outsourcing lead gen?

Simple. Do your homework. Get answers on the above questions and identify the areas you can outsource without losing the control. Maybe outsourcing the sourcing part and the email prospecting part would work best for you.

Outsourcing lead gen can be a powerful tool for your company, especially as you try to enter/scale within a new market — but too often, we get this wrong, hire the wrong partner, and then complain as it all crumbles around us. It can be done better.

Anything else you would add or have seen on outsourcing lead gen?


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