Have your maps app taken you to a business or restaurant that is no longer open? I bet all of us have had one of those surprises. If a handful of outdated addresses can be annoying and time consuming, imagine when you buy a database of leads only to discover that more than half of it is worthless.
After studying multiple platforms, local directories and the offerings of several email list providers, I have come to realize that the information contained in a leads database is often only 10 to 30 percent valid. Closed businesses, changes of address, typos and duplicates are some of the most common causes of inaccuracy and value reduction.
If you were to run a campaign out of all the accurate and unique leads in a database you can expect conversion rates of 0.5 to 3 percent. That means the conversion rates from the original list are likely to be from 0.05 to 0.9 percent. And what’s worse, inaccuracy only grows over time as the info gets old and is subject to changes.
So, should we ever buy or rent one of those lists? Here are some thoughts about it.
Renting: I would never recommend renting a leads database, the initial cost of using a recently acquired list is too high due too inaccurate data that hasn't been identified, furthermore as you are renting you can not directly analyze the data and improve it, but only use it.
Buying: If you have the technical resources to deduplicate and clean the database and the overall cost of acquisition plus processing is low enough, by all means yes, it’s an alternative that you can use and reuse, reducing the cost of running campaigns over and over by tracking which addresses are good and those that are not.
Leads are only as good as their temperature and quality. Leads databases are collected over time and by the time they are bought and used, those leads are colder than a dead man. You need to add the fact that some of these records have their origin in subscriptions that are not related to your purposed usage.
If all of the above left you thinking if there is any real usage for a list, the answer is yes, if your user base or audience is not big enough, you can definitely start with a leads database, just remember this is like blind dating for marketing.
A better alternative can be using the power of social media. Influencer marketing is a very effective method of attracting hot and genuine leads. Influencers have generally a follower base at the north of 50,000 and their engagement rates are statistically in the range of 0.5 to 3 percent, on the other hand there are micro-influencers with audiences in the 500 to 10,000 range and engagement rates between 3 and 8 percent. Which one is right for you? It all depends on your budget and goals.
I'll be writing more on the subject and other strategies to grow your business. Stay tuned.