How Buying Leads Could Kill Your Business

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bad-message-350px It seems harmless enough and everybody does it. Here is one example of how buying leads could kill your business. If you're thinking that's hype, how well do you think your business would fare facing the inevitable multi-million dollar lawsuit? In case you missed it,

Recently, a direct mail campaign sent out by office max exposed one of many problems with:
  1. Buying or renting lists for prospecting from ANY source.
  2. Not properly adding people to their system.
  3. Not knowing your system

A Chicago father whose daughter was killed last year in a car accident, received a direct mail letter from Office Max addressed to:

Mike Seay
Daughter Killed In Car Crash
Or Current Business

Anyone of my clients or subscribers can tell you that there is another self-inflicted direct mail mistake that is far too common in that “addressed to” field. You can read more on that crippling mistake here.

For a corporation as big as office max, this can take a toll but will not likely end the business. A small business getting such negative publicity alone could be devastating. As I said earlier, combine that with the inevitable lawsuit and your business would have little hope of surviving this wholly avoidable mistake.

Even though this problem was exposed in a direct mail campaign, the lesson applies equally to email marketing and that's the lens we'll be looking through.

So what's wrong with buying or renting a list?

It's not likely that a corporation as large as office max would ever gather or add such information to their database. That would have happened at a much lower level and with another company where such information would be relevant like a lead broker for a funeral home, personal injury attorney, or insurance agent.    
It could have just as easily been some small business that wanted to keep information on customers to know where to tread lightly. In any case, that information was sold along with other people's data that could have included other issues. These are just land mines you, your in house staff, or the wrong marketing contractor have unknowingly planted in your database waiting for the most inopportune time to explode in your face.

The power of email marketing is having a list of people who WANT to hear from YOU. A list of people you bought will most assuredly have also been sold to others. Yours is just the latest in a long list of businesses the people on that list don't want to hear from.

In fact, being just one of many businesses they don't want to hear from puts your business at risk. People on purchased lists get pounded with so many offers that they are often downright pissed. So much so that they will mark your emails as spam and cause you grief with your service provider. Being tagged as a spammer means even the people who want to hear from you that you legitimately have on your list might not get your future emails. It's just not worth it.

Properly adding people to your list

The only way I endorse adding people to your list is when they specifically give you permission to contact them. They sign up at your location or an event, fill in a form online, or agree to the terms of your promotion. All are instances of them giving you permission to send them an email. Remember though, they can rescind that permission at any time if they don't like what you send. So you have to focus on them, their wants, and their needs if you want ongoing access to their inbox.

In no situation do I ever suggest or endorse a client's use of a rented or purchased list. Not even to start, “prime the pump,” or drum up new business. I constantly have clients challenging this policy with the exact same statement: “But my business is different…” NO particular or special situation makes it ok to buy or rent a list.

You need to know your system

Start with gathering the only relevant data you need for every person, a first name and a valid email address. If you have more, make sure that the field names coincide with the field names in your system. We can see from the Office Max example how some systems can just add a field that doesn't fit in the system after the rest.

Manually entering people into your system from physical sign up cards in your business or at an event should be as simple as possible. That is not the time or place to try to gather the maximum info from your prospects. Let your system do the work of learning about your prospects. Stick to just name and email.  

You'll find a whole lot less wasted time and frustration when someone gives you a bad email with all that other information. Whether they misspelled it by mistake or did it to pull your chain doesn't make a difference because you did the work of entering all that info for nothing in either case.

So what's the take away?

Buying a list of people to market to can have far greater losses than just poor conversion.

You need to build a list of people who want to hear from you.

Knowing how to use your system can save you tons of time and frustration.

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Rob Calhoun

Backend Specialist at R. Calhoun IE
+ Rob Calhoun Helps small to medium businesses succeed by building systems for them that help them get new customers, retain customers, and re-energize past customers. Rob helps clients and marketers maximize the return they get from their online marketing efforts.

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11 comments
Trevor says

That’s a horrible story and something someone at Office Max should have been doing some sort of quality control over. Building your own email listing is a valuable asset and something that will pay dividends over a lifetime. Using the tools mentioned above are all great ways to acquire email addresses. Always make sure to have email capture widgets on your content pages, people who enjoy the work you create will be much more likely to sign up for alerts and additional content you create. Also try using an email capture form to collect emails in exchange for eBooks, white papers, etc.

Reply
James Frost says

I never thought it can be harmful but after reading this post I will consider your opinions and try to keep myself away from such buyings.You’re always a guardian angel with your articles to save people from danger.

Reply
Pawan Kumar Kukarwal says

Hii Rob, I’ve worked earlier in a call center setup in India and most of their leads use to came from the email and phone number list they brought via different sources.
But after the story I read here I still wonder how much trouble manager must be experiencing. The result you shared are really horrible.

Reply
    Rob Calhoun says

    Pawan,

    There’s a difference between working the leads one-by-one on the phone and entering them into a CRM tool for automated contact. It is far less likely you will have this type of problem calling purchased leads.

    The trade off is you take time and slog through dozens or hundreds to find worthwhile prospects that might become customers. Automated Marketing can deliver ready to buy customers within minutes of sending your message.

    Problems like this make business owners scared of automation. When the real problem is you should not use automation with purchased leads.

    It’s my contention that purchased leads are not worth the potential cost when you can get far greater return on investment building your own list to generate sales from.
    Rob Calhoun recently posted..Business Could Take A Lesson From The Marine CorpsMy Profile

    Reply
Cam Green says

Rob,
Great Article
I couldn’t agree with you more. When I was first starting out I made the mistake of wasting my money buying “targeted” leads with zero ROI.
I soon learned that by providing value to people and giving information that will actually help them grow their business, you will attract the right people (customers) to you.
Many Marketers seem to forget that this business is about building relationships with people who are actually interested in what you have to offer. Sending your offer blindly, without first building rapport, usually always produce poor to zero results, in my opinion.

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Any experience with Email Campaigns? - Page 2 says

[…] open rate is usually zero point zero zero x, and it could even end up costing you your business. Here's a post on exactly how that could happen. If you want to use email marketing and use it effectively, you […]

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Patrick says

Hey Rob. I have a similar sentiment about buying leads. I don’t think there’s any way of paying for organic reach or paying for interested customers. These are things that are accomplished in a number of different ways, none of which involve purchasing peoples attention. As you have stated, you want an audience that WANTS to hear from you. Otherwise your audience and your business will both be built on a false foundation doomed to teeter or totter at some point!

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