By Alex Winter
Sep 30, 2024
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Why are Lead Costs Rising? How to Stay Ahead in a Changing Market [Endless Customers Podcast Ep. 67]
By Alex Winter
Sep 30, 2024
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This transcript has been generated by AI and not checked for accuracy.
Connor DeLaney
0:00:00
Alex, the cost of leads are going up for businesses across every industry, and there's some macro trends that are driving that. But for a lot of businesses, they're ignoring just a couple of smaller and maybe not so small things that they could be doing a whole lot better. Join us for Impact Live 2024 in Hartford, Connecticut, this October 14th through the 16th. Over three days, business owners, CEOs, and marketing and sales leaders will learn proven strategies to drive business growth. Attend expert-led sessions on marketing, sales, leadership, and AI, and get a chance to network with industry pros just like yourself.
Alex Winter
0:00:46
Discover how companies like yours are dominating their markets. Secure your spot at impactplus.com backslash impact-5. And for all of our Endless Customers listeners, we have an exclusive discount code that'll save you a hundred bucks. So when you're on the checkout page,
Alex Winter
0:01:03
just enter the code ECPOD100 in all caps for $100 off. We'll see you there at Impact Live 2024 up in Hartford, October 14th through the 16th. Welcome back to Endless Customers, the show that teaches you how to earn trust and win more business in the age of AI.
Alex Winter
0:01:20
I'm your host, Alex Winter, and today we're joined by Connor Delaney. He's a lead sales consultant here at Impact.
Alex Winter
0:01:26
Connor, welcome back to the show, bro.
Connor DeLaney
0:01:27
It's always a blast. Thanks for having me, Alex. I love having you on the show. Your episodes, whenever you're on the show, I feel like engagement pops up, we have great conversations,
Connor DeLaney
0:01:35
it sparks a lot of conversation in the community, so I think today's no exception to that. I hope so, man. Yeah, you're making me blush right from the start, so pressure's on. We'll make it happen. We're going to make it happen. So I've heard you mention that the cost of leads has an overall trend of becoming more expensive as time goes on, as we move into Q4 of 24 and into 25 and beyond. So what's a good place to start with leads and how much they're going to
Connor DeLaney
0:01:59
cost and what business owners need to be thinking about so that they can get a return on their investment. Yeah, this has been a trend across different industries, but also it's been something we've been hearing about for a while, that cost of leads are changing. And I would say that it's happening for different reasons. Like, obviously there's been this technology boom
Connor DeLaney
0:02:17
of the last, let's call it like 24 months or so, of AI has really come in and things are changing. The way that people search and find information is changing. The way that customers get in touch with businesses is changing. You know, an easy example that comes to mind is a lot of companies in like the home improvement
Connor DeLaney
0:02:34
space used lead aggregators or they, you know, it functioned differently. And the leads are becoming more expensive because the big players are spending more to win on the ways they've won in the past. And that usually means things like paid ads. It means how do we get our face in as many places as possible and so the cost of leads, it's going up for everyone but the bigger players can benefit from that
Connor DeLaney
0:02:59
because they have the budget potential to just out pay for everybody. Now, does every customer want that? No, but as I think about why that's happening, I guess that's the bigger part of this conversation is if the big players are just trying to outbid and if the way things are changing is influencing every business, why is that happening? Yes, AI is a big piece of it.
Connor DeLaney
0:03:23
Buying preferences is also a big piece, and this is what I've been hearing at past events that I've been speaking at or that I've been attending, is people are catching up to the way that customer, and I say people, businesses are catching up to the way that customers are interacting with them now. I'm not going to say we were
Connor DeLaney
0:03:41
ahead, but I've had a number of businesses say, there just aren't as many people when we reach out cold that are actually engaging with us. And I had a fun conversation at a recent event. It was with a owner of a like SMS messaging company where they do like the automated messages you might get from, I'm a big runner, so I get automated messages from Brooks or you might get them from your local,
Connor DeLaney
0:04:08
if you had a job done on your house,
Alex Winter
0:04:10
that you might get. I'm a guitar guy, I get them from Fender
Connor DeLaney
0:04:12
and from Gibson all the time. Right, yeah, so they're a company that does that for the home improvement space. And they said in the past, one of their customers who does like bathroom remodels, said that we used to be able to send out those texts
Connor DeLaney
0:04:24
and they'd probably get, let's say they send it out to a thousand people, we'll keep it easy now. Sure. They send text out to a thousand people and then they might get, let's call it ten to thirty jobs in a given month that comes back from that. That was, let's call it five, ten years ago.
Connor DeLaney
0:04:40
Now they're getting one to three and so immediately you're saying that's not working as well. But the big thing is when you think about how buying preferences have changed and why that cost of you're probably going to have to hit them more or you're going to have to drive it home. People don't just sit around and say, I hope someone reaches out and says, you want to demo your bathroom or you want a new toilet? Like, that's just not how buyers buy anymore. They're way more, they're way further ahead. They're way more calculated. It's not this instant purchase.
Connor DeLaney
0:05:08
And that goes across any industry. I use that because it's a fun example and it's one that happened recently. But, yeah, it makes sense. Buyers don't go out and just say, oh, I got this text from someone that said, why don't you redefine what a great bathroom looks like in your home. Yeah, I'm going to just fork up $20,000. It's not how it works anymore.
Connor DeLaney
0:05:29
Buyers are taking more time to educate themselves and they're taking more time just to learn about what it is going to take to make that buying decision. Call it a more informed buyer, but I would say just the buyer expectation has changed, which is causing it to be more expensive because that then translates into
Connor DeLaney
0:05:47
businesses want better quality because they can't just go out to people and just hammer them with offers and deals and get your first month off or whatever thing. Buyers aren't, not to say falling for that because that sounds negative, but it is in a sense,
Connor DeLaney
0:06:02
if you throw all these incentives at them, they're buying for the incentive, they're probably not buying because they absolutely needed it at that moment. Yeah.
Alex Winter
0:06:11
Sometime to happen. Buyers are also smart, I don't think we always give buyers enough credit as business owners.
Connor DeLaney
0:06:14
They're becoming smarter too. And that's it, is like the evolution of technology and as generations start to shift a little bit, like people are leveraging these tools way more than they ever have in the past, and they're getting smarter as time goes on,
Connor DeLaney
0:06:25
and starting to figure out some of these tricks and ploys and re-targeting. Yeah, they don't get caught by it as often. That's a really good point. And again, that happens across every industry. We use home improvement because it's like an easy one and almost anyone that either has a home, an apartment, and like something breaks, you have to go pay for it. A lot of us have a wish list, but it happens the same deal with
Connor DeLaney
0:06:43
SaaS, same thing with IT. Business owners are also less likely to just make snap decisions than maybe they were in the past. But that comes back to what I think is the biggest reason that the cost of leads is going up is because customers are more educated, they're more not to say like hesitant about buying, but they're only gonna buy when they need to
Connor DeLaney
0:07:07
and that lack of urgency can happen so businesses are realizing we can't just hit volume anymore. Volume used to be the name of the game across every industry. I'm in sales. It used to be if you're hitting X number of people, you should get X number of results that come out of it. That's starting to shift. So now we're focusing on the smaller pool of quality leads who actually have buying intent, that are actually interested in buying. Now we're all competing against this smaller pool. We don't
Connor DeLaney
0:07:37
want to just hammer everyone because it's more expensive than ever to go and do that. Instead, we're all honing in on this small quality buyer that's showing intent to buy and we need to win those. And so the big players are spending more on ads, trying to make it more top of mind. And again, that works for the big players. You think of, why do I see a bajillion car commercials in the world? Their job is to just be top of mind so that as soon as you say, I want to buy a car, they say, I loved that Toyota commercial
Connor DeLaney
0:08:04
or I have a Subaru. I saw the new Subaru and I said, man, like that's what I need now. They want to be top of mind. The medium and smaller players aren't going to help bid the Toyotas.
Alex Winter
0:08:15
Toyota's of the world?
Connor DeLaney
0:08:16
Yeah, they're just not going to have that. So we're trying to find different ways to get in front of those quality buyers that are actually willing and ready to buy. That's why cost of leads is going up as well. So it sounds like buyers' preferences are changing too, and they want to do more before being contacted, and we have this technology at our fingertips. I do it.
Connor DeLaney
0:08:36
I'll just speak for me, I won't speak for other people. When I'm shopping and I'm buying things, I do a ton of research, and I love going on Google and going on Bing and I go on all these different, sometimes Incognito. I try to do all these tricks to really see the best price or the best deal or get the best information that I can. And it plays into my buying decision
Connor DeLaney
0:08:55
and my purchasing decision. So those preferences are changing, but can we talk a little bit of like an example from like your conversation with SMS Mail?
Alex Winter
0:09:04
I don't know if I'm saying this right.
Connor DeLaney
0:09:05
Sorry, yeah, I just used that as an example. But the company is called Marla Mar. Okay. What kind of example can I share with you, Alex? Just more about where that came from and what happened. Yeah, I'd like to hear a little background, because I feel like you walked us through
Connor DeLaney
0:09:18
the high-level principle of it, and it makes total sense to me, and I think everyone can relate to what you're talking about. I'd love a real-world example or something. I'm looking in the notes here, and you have Mylamar, so I'd love to just hear a little
Alex Winter
0:09:27
bit about what happened with them.
Connor DeLaney
0:09:29
Yeah, so they were a team that I met at an event. It was, like I said, it was an event called the Pinnacle Experience, which is all home development, home redesign, like they do big and small projects, anything from large remodels to smaller like fixer-uppers. And this team came to me and he said, hey, I'm having this company that we're working with who is struggling, they're using our software but I'm fearing that they're just
Connor DeLaney
0:09:58
hammering their customers over and over and over again. And he said like, they're hitting them three to four times a week. And it was like, whoa, like that is, imagine getting three to four texts a week from this brand about your bathroom, like, that's a lot. Let's slow it down there. And he said, I'm just having a hard time understanding how do we get them to realize that they're probably losing out on business there. But the biggest thing that he said to me, and I think this is what really resonated, I think this is where a lot of businesses
Connor DeLaney
0:10:26
probably are today, is we've been doing this for a long time, and it's what we know has worked in the past, and so when we're not seeing all the results, we have a choice. You can either double down on what you've done before, or you can do something differently.
Connor DeLaney
0:10:40
And in our conversation, what came out of it was, this team only knows that this has worked in the past. They don't really know what an alternative looks like. Like they haven't tried really. They haven't tried anything, because they haven't had to.
Alex Winter
0:10:52
Right.
Connor DeLaney
0:10:52
Business has been fine and now that it's not, you know, they're realizing there's a lack of diversification. That's where a lot of businesses struggle is they have this idea of what works in their industry and they stick to it. And instead, what's happening now is you have to be thinking differently because for some businesses, they're going to
Connor DeLaney
0:11:10
feel this cost of leads or you can use like CAC as a really popular metric of customer acquisition cost, however you measure it, it's probably going up. It's probably requiring more time, more energy, more resources to get that lead to go from I'm curious to I'm interested in buying to I have intent and I have the willingness to buy to I become a customer with you. And again, that goes across every industry that we've worked in. So as I think about that example in particular, the key was they are spending a lot of time and energy and resources on the things that they know have worked in the past, but they're not getting
Connor DeLaney
0:11:52
better results out of it. So instead what's happening is they're just spending more and more and more and not getting better and better and better. Instead of saying, I need to find different ways to generate leads, not just hammer them over and over. Yeah, that's a good point. It makes me wonder too, at what point as a business owner or as a marketing leader, even if it's been working,
Connor DeLaney
0:12:11
and then maybe you're not getting quite the same results and it's slowly starting to go on that downward trend, right, I would do the same thing. It's like, let's just throw some more dollars at it. Let's double down and see if we can shift the tide. But when do you have to make the decision,
Connor DeLaney
0:12:24
like, okay, we put dollars at this, more than we had before, it was working, it's still not working, like when do you rip the band-aid off or like really make the decision like, okay, now we need to experiment and try something else?
Connor DeLaney
0:12:34
Yeah, I'll actually share an example that I think explains this well, and it's with a team that I've been, excuse me, that I've been talking with over the last couple of weeks, and they've been in contact with Impact for the last several months.
Connor DeLaney
0:12:45
So this team, they're located in Texas, they do courts. Like in your, imagine like an upper scale backyard, they might have like a tennis court or a basketball court, like mostly residential, but they do it for like a certain income bracket,
Connor DeLaney
0:13:00
you can imagine. Sure.
Alex Winter
0:13:01
You don't have a tennis court? Not yet, man.
Connor DeLaney
0:13:04
I'm working on it, but not yet.
Alex Winter
0:13:04
You and me both.
Alex Winter
0:13:05
You and me, bro.
Connor DeLaney
0:13:07
One day, but probably not. But the biggest thing for them is they've actually been doing really well. And you know, you think of the emergence of pickleball and other sports, and COVID was a huge factor in this too, of people are home more.
Connor DeLaney
0:13:21
They're more willing to invest in the home that they're at because maybe they can't go to the sports recreation center down the road. So they started investing in how can I do this at my home? And if you can afford it, that's amazing. That's really cool.
Connor DeLaney
0:13:32
And for them, they're doing really well because the macro trend of it all is trending upwards for them. The market in the entire country is going up and to the right for Pickleball. There's a demand for it.
Connor DeLaney
0:13:44
Yes, there is. And in our conversations, there's been this conversation of like, is there urgency to make a change? And for them, they said, we've already projected it out. Next like two, three, four years, this is gonna go from up and to the right
Connor DeLaney
0:13:57
to slowly plateauing to likely going back down a little bit. Now is it going to die out? No. But when I think about what we're talking about here today, the telltale signs that they're seeing is they've been in business for let's call it like 40, 50 years. They've been doing this for a long time. Sports are going to shift and evolve and change. For them, they could sit back and say that they're feeling fat and happy. Instead, they're saying, how do we get ahead so that as soon as that plateau starts to happen, we're not reacting.
Connor DeLaney
0:14:31
We're already in place to be doing that. That's where a lot of businesses get stuck is to the example with Marlamar and the client that they're working with. Again, Marlamar is a really cool tool. I've met them. They're really great guys.
Connor DeLaney
0:14:43
Andrew runs the team. I'll shout him out briefly because he's a good friend of mine. Andrew. Yeah. But the big piece that they're realizing is they didn't have a backup plan and not even a backup plan like they didn't have alternative strategies that they could be leveraging and
Connor DeLaney
0:14:59
trying and they didn't diversify their lead flow. For a lot of businesses they don't because the things that are working they just double down on it and triple down on it. And that's where I think a lot of businesses can win today is if you begin to diversify and that's not saying have 10 different levers you're pulling. That's saying find 3 to 4, maybe 5 and that includes things like referrals, word of mouth, those are, let's
Connor DeLaney
0:15:23
call it 2 different ones and then there's the conversation of do we have outbound resources we're doing, things like billboards, things like paid ads, do we have more inbound focus things of, do we have downloadable resources. The more that you can have different avenues for people, the more you can monitor trends and make shifts. So you don't have to shut something off and do something drastic. Instead it's saying, here's what we found over the last quarter.
Connor DeLaney
0:15:49
More and more people are purchasing on the digital side than they used to. Let's put more effort and time into that. It's kind of like the don't put all your eggs in one basket. It's like diversifying. It's like the old trader adage, like don't put all your eggs in one basket,
Alex Winter
0:16:02
try to have a nice diversified portfolio.
Connor DeLaney
0:16:04
Right, and that's not owning 50 different stocks, it's more owning, let's call it, five to 10 that you really like. And in this, let's call it the lead world, we're talking about three to four. And again, we don't want you to turn off things
Connor DeLaney
0:16:19
that are working, but as soon as you realize they're not, you may wanna shift to a new strategy. And that's where these conversations come in. But with this sports courts example, for them, they're looking at how do we get ahead, how do we build this lever so that
Connor DeLaney
0:16:35
when things start to shift, we have an example and a proven process. Because for them, they've gotta have customers that are flowing in their off seasons. It's hard to, I mean, Texas, maybe it's a little bit different,
Connor DeLaney
0:16:46
but I think about in Connecticut, like where I am, you're going to have winter seasons where that's not going to get any use. And so they might have less of a limited time to sell and to service, but they just want to get ahead. And they want to be more proactive. Seasonality plays into it for sure. And it even reminds me a little bit too of the Peloton model.
Connor DeLaney
0:17:05
I know it's a famous example, but Peloton during COVID exploded because same thing. That's a really good example.
Alex Winter
0:17:11
Everybody was home.
Connor DeLaney
0:17:11
Everyone's kind of...
Alex Winter
0:17:12
Yeah.
Alex Winter
0:17:13
And Peloton still...
Connor DeLaney
0:17:13
I have a Peloton too. Well hey, they're great and I love them and they clearly make great products but they had a huge influx, a huge spike for a year or two there and then it tapered off now that people can go back outside and life is back to normal. It's not to say that they still don't have decent sales but I'm sure they had to experience some of this too.
Connor DeLaney
0:17:31
So my question right is like there are dips depending on like COVID or natural disasters. We're also in an election year this year. What other types of factors play into what we're talking about with leads and how should you start to think about and approach that as a business owner?
Connor DeLaney
0:17:45
Yeah, as a business owner, I'd break it down into two buckets. There's the macro bucket, which is more of what you're talking about. There's pandemics, craziness. There's election seasons, craziness potentially.
Connor DeLaney
0:17:58
And a lot of business owners I'm talking to almost have this fight or flight, but then there's the freeze of, most of them are freezing and saying, I don't know what's gonna happen till the end of the year. There's volatility to it,
Alex Winter
0:18:10
the unknowns, there's a lot of question marks.
Connor DeLaney
0:18:11
Right, and there's things like there's, political unrest, there's global trade, there's resources and supply chain, there's things that are- Labor costs, stuff like that.
Alex Winter
0:18:21
Yeah, labor costs, yeah, there's things that are bigger
Connor DeLaney
0:18:23
than just your business. There's things that influence everybody. Then there's the more what we'll call micro trends, which is more things about your buyers and your consumers. Because again, macro is more how does it influence your business' ability to execute the work. Micro is more about how does it influence your customer's ability to make buying decisions. Now some of these are going to blend together. I would say things
Connor DeLaney
0:18:48
Things like economic climate, politics, might influence buying behavior. But a lot of it comes back to, there's things like buyer fatigue, where customers have so many options and they're getting hammered with so many things
Connor DeLaney
0:19:01
that they maybe just don't make a decision at all. And maybe it's buyer indecision, maybe it's buyer fatigue. Sometimes research can bite you in the butt if they feel like they've done so much work, and this is actually a good example. I was talking with a pool company that we work with,
Connor DeLaney
0:19:17
not River Pools and Spas if you're a Marcus fan, different pool company. And they said that a lot of their customers that talk to them, talk with five or six different pool builders. And by the end of it,
Connor DeLaney
0:19:30
there's a good chunk, maybe 20, 30% who don't buy a pool at all. And they say, I just had so many different people pitch me different things and bash each other that they ended up just not buying anything and they said, we can just wait. There's a lot of that happening in the market too.
Connor DeLaney
0:19:46
And a lot of that comes back to are they educated enough to make their own decision or are they hearing it from five or six or seven different people? Because when you hear six different stories, everything changes a little bit. You think about like banana phone. When you're hearing the same message from six or seven people. By the time you get to the end of that line,
Connor DeLaney
0:20:03
the story sounds a little bit different. And maybe it sounds less enticing because now you don't know who to trust. You don't know who's right or who's wrong. And you end up having to go back and maybe sit in front of your computer
Connor DeLaney
0:20:15
and try to make a better decision through that. I don't like that idea for buyers. I would rather give more to a buying audience and say, when you're ready, I want you to make your decision. That's obviously what Impact believes in,
Connor DeLaney
0:20:29
and that's what we help coach and train on. So it's a slight bias. I'll raise my hand and say that. But at the same time, I think about the alternative there. If buyers have to spend so much time having six or seven people in their home, or if they have to have calls with a
Connor DeLaney
0:20:43
bunch of people, they're really just expecting pitches. And that's going to lead to you're spending more time and energy talking to these people, it's probably not going to be that. You know, go in, they're really excited about working with you, they're probably looking for, here's the lay of the land, I've got seven pieces of paper on my desk, which ones do I want to look at and which ones do I want to put away? As soon as that starts happening, that's when you just become another number
Connor DeLaney
0:21:08
and that's not a good position to be in as a business because usually that's where things like price gouging comes into play. That's where, and maybe this is like a personal thing, but I hate the idea of bashing other businesses to win the business. I do too. I just think it's not a sustainable strategy and I think a lot of buyers, whether you intend it that way or not, read into that and say, well if you're willing to do that, I just get a weird sense from you that that's how you're going to, that's how you look at the market. I'd rather grow and have the best man win
Connor DeLaney
0:21:40
than be the person that says, well, they're pretty crap. Unless the results speak for that, but that's true.
Alex Winter
0:21:46
That's true. And there is a line, like I get what you're saying, where if someone's looking out for me and is like, hey, you really don't want to go with these people because of x, y, and z, and it's true, that's different than they're basically just trash talking because they
Alex Winter
0:21:57
want to win your business.
Connor DeLaney
0:21:58
And they'll say whatever they have to say to get you to sign.
Alex Winter
0:22:01
Right.
Connor DeLaney
0:22:01
That gets into the grimy category for me. Also for an end user, if I'm the buyer, I'm listening to you tell the story. If I'm the person that's looking at six or seven different companies and they have all this stuff, I'm already getting anxiety thinking about
Connor DeLaney
0:22:14
just that situation. So that's uncomfortable. Yeah, think about the amount of decisions. If I was gonna break down how these micro trends influence the way that we buy, think about the number of decisions a buyer has to make.
Connor DeLaney
0:22:27
And to actually make a buying decision, how to become a customer with you. The more you can do to simplify those buying decisions, you don't have to get rid of them. But if I was gonna break it down, I'm trying to think of like an easy example.
Connor DeLaney
0:22:41
Maybe it's things like, maybe we use that sports courts example, because I think that it's an interesting company and it's top of mind. Yeah, I want a basketball court, let's go. Yeah, let's use a basketball court example.
Connor DeLaney
0:22:51
So you start with, I like basketball, what are the things that I need to know? They need to decide, do I have the budget to build a basketball court? Do I have the time to use it? These are all decisions that are to happen.
Connor DeLaney
0:23:06
That's all, and again, there's a lot more. Budget, time to use it, longevity to use it, do I have the right space to use it?
Alex Winter
0:23:13
You're gonna say, where do we put it?
Connor DeLaney
0:23:14
Yeah, where do I put it? What do I need? What materials do I need? There's so many things that they have to decide on, and usually there's options for things like this. Then they get into, okay, I have a want or a need or a desire to do this, and building
Connor DeLaney
0:23:27
a basketball court, I'm going to say there isn't a need of, if I don't have this, my life's going to be ruined. People that are building basketball courts, it's going to be a different story. It's mostly for pleasure, I'm guessing. Yeah, right, right. But then it goes, okay, so I have all these things,
Connor DeLaney
0:23:40
I can check these boxes, I've got the space. Now I've gotta decide who is gonna do it, which takes a lot of effort. How long is it gonna take to build it? How much is it gonna cost from these different people? And when can we get started?
Connor DeLaney
0:23:55
There's all these different buying decisions that a customer is making, and again, it's like, that's one example, but every business is gonna have that. It's like, what else could I, so this would be a great one, like what are the alternatives?
Connor DeLaney
0:24:05
Maybe I want a pickleball court instead of a basketball court. Can I do that? Maybe, what if I could make that a pool instead of a basketball court? Then you're starting to evaluate alternatives. The decisions are being made.
Connor DeLaney
0:24:18
There's constantly different decisions being made in the sales process. Then they start, then they reach out to you. And then you're having to have, OK, do I like these guys? Do I have another person I want to talk to? You start going through all these different decisions
Connor DeLaney
0:24:31
and let's say my job in that sales process is to just try and alleviate all the stress that's building up on you because you're about to make a significant buying decision. It's the same deal with a car. Maybe cars would have been a better example
Connor DeLaney
0:24:44
now that I think of it, but it's like, there's all these different brands, there's all these different makes and models and does it have all-wheel drive? Yeah, there's all these different packages. Like, there's so many buying decisions
Connor DeLaney
0:24:54
and your job in the sales process and your job as a business is to simplify that by giving them the information they need to make those initial buying decisions where then when they want to contact someone, they're saying, I want to contact Alex.
Connor DeLaney
0:25:07
I don't want to contact Alex, Connor, Sam, Austin, and Mike because I don't need five options when I really I want to find a way to work with Alex. I think that's the difference there. And again, that comes down to trust, that comes down to education,
Connor DeLaney
0:25:22
and that comes down to eliminating buyer fatigue, which I think is what's causing a lot of cost of leads issues too, is buyers just taking longer to make decisions because they're more hesitant to buy than ever. If you can get them excited about it
Connor DeLaney
0:25:37
and seeing the potential, they're not gonna wanna talk to other people
Alex Winter
0:25:40
because they're just gonna wanna talk to them. Right, well and that goes back to what you were saying earlier about the old spray and pray where you just throw a bunch of money and see who's gonna come in because then ultimately your sales team and your business is gonna have to work harder to go through a lot of
Alex Winter
0:25:52
potential customers that are doing exactly what we just talked about, that aren't sure, that are indecisive, they're not ready to buy. It causes a whole ripple effect, right?
Connor DeLaney
0:25:59
Yeah, it can. So for bigger companies that are spending a lot on ads Does it make it harder for smaller businesses because it sounds like you're saying like there's less There's only so much real estate in the market and then once people are buying up all this ad space What's what's left for the little guy? So what does that look like and what can small businesses do to still have a stake in the game? Yeah
Connor DeLaney
0:26:16
Obviously, it feels like for the companies that were using paid ads in the past It can feel more daunting than ever because now it feels like we're spending more and more and more. But I'll share an example because I think that paid ads is the easy one to point a finger at and say it's more expensive. There's a roofing company that I'm speaking with and they came to us and they said, we're spending somewhere between $80,000 and $100,000 a month on paid ads. And I asked them like, so take me through why we're investing so much
Connor DeLaney
0:26:49
in paid ads. And he called it the necessary evil, which I think is really fascinating. But what I had him do next was, okay, go to Google and show me how, if you searched, and I'll use a very,
Connor DeLaney
0:27:03
like they ask, you answer, impact-y example. Like, how much does a roof repair cost? I had him go search that.
Alex Winter
0:27:08
So a big five type of question.
Connor DeLaney
0:27:09
Yeah, a big five kind of question. And I said, go to Google, and then show me the result you'd click on. And the first thing he did, he scrolled right past all the ads on the top. He scrolled past the AI tool, which again,
Connor DeLaney
0:27:22
I actually really like the AI example, but I always cross-check anything that it puts in there. For sure, me too. Which I think a lot of people are doing. And he went straight to the first organic result, and he said, I hate that I don't show up on the first page,
Connor DeLaney
0:27:35
let alone the second page. We found some piece of content that was on the third page for them. Wow. But what it showed for him and for me, frankly, was he didn't even blink at looking at the paid ads area. He didn't even look at it. And so for a lot of these businesses, they're
Connor DeLaney
0:27:50
pumping a ton of money in there. I was going to say, they're spending 80 to 100 grand a month and he's skipping right on by. Didn't even look at it. And I think about what that means, you can put all the money in the world into it, and there's probably a good section of buyers that are going to see it says, sponsored ad, and just scroll right by it.
Connor DeLaney
0:28:13
So, for the small to medium businesses, how do we win the organic game? Now, Google and search engines are making that more complicated, because there's things like the community-led search, where you see Reddit more often, or Quora and other things. There also are bigger players that will show up in certain queries. When I think about how local or let�s call it, I use small to medium sized businesses but I think the easiest example is if you service a certain area, this is the first one that I would give. Focus heavily on local
Connor DeLaney
0:28:45
in the sense that how do you make sure that you�re showing up as the brand that helps, and I live in Mystic, Connecticut, so let's call it the brand that helps, what is that, Southeastern Connecticut kind of area? Right, am I doing the math right? Yeah, Southeastern, you're right.
Connor DeLaney
0:29:00
Am I looking at a map right? You're mathing. So I think about like, if I was gonna go search for, let's even call it like lawn care professionals in Southeastern Connecticut. I'm gonna look for something that's more specific to me,
Connor DeLaney
0:29:12
and you think about the near me searches or the around me searches.
Alex Winter
0:29:18
That's like an everyday occurrence for me.
Connor DeLaney
0:29:20
You're looking for different things. You know, restaurants is an easy one. It's like new restaurants near me and they go and pull all these different lists and examples.
Alex Winter
0:29:26
Gas near me, bank near me.
Connor DeLaney
0:29:27
Yeah, you wanna win on that local level where you are hyper-focused on your service area to start. And again, this is just for local, but it's one of the key examples i see a lot of businesses spending too much time and money on is trying to win these
Connor DeLaney
0:29:43
really short tail high like high-cost keywords if you're spending time trying to win that you're gonna lose to the big bidders that can just buy that keyword and you can even come to close them. But if you become more hyper focused on
Connor DeLaney
0:29:59
local and again that's local ads, that's local content, that's making your Google My Business local, that's a really good point. But that would be what I would do from a, like if you have a service area, that would be the thing I focus on. Now when it comes to other ways that you can win, and make sure that I'm answering the right question that you asked, right?
Connor DeLaney
0:30:16
No, you're doing great. Okay. When it comes to like, maybe you're a national brand that can service different things, if you want to win in organic, you've got to focus on conversion focused keywords. Things like, if you...
Alex Winter
0:30:32
I was going to say, what is that? Yeah. Let's break that down for our audience.
Connor DeLaney
0:30:35
So, when I think about organic search, and again, this is rapidly changing, so even by the time you hear it, this could be slightly different than the way that I look at it. But I would rather look at, so let's think of a fun example. Maybe we go back to the, maybe we go back to the cars one, but that one's kind of not as fun. Any examples that come to mind for you? Any like where we'd be talking about like a national industry
Connor DeLaney
0:31:00
that you can be servicing?
Alex Winter
0:31:01
Would hotels work?
Connor DeLaney
0:31:04
Yeah.
Connor DeLaney
0:31:04
We could play with hotels. Let's see where it goes.
Alex Winter
0:31:07
Hospitality industry?
Connor DeLaney
0:31:07
Yeah, let's see where hospitality goes. Because that tends to be something that I am very indecisive on. There's too many apps and things and ads and all sorts of stuff where like budget is a factor, but obviously I tend to spend more time
Connor DeLaney
0:31:18
than I'd like looking for a hotel when I do travel or when I'm going somewhere. So let's see if I can paint this picture and if it starts going off base, you can pull me back in. I'll really, yeah. So there's the national brands like a TripAdvisor
Connor DeLaney
0:31:31
or an Expedia that are probably going to outbid you for anything that comes in there. So when I think about how do we show up organically for that, let's say I'm this local travel agency that works just in the New England area, maybe even just in Connecticut. So as I'm thinking about how do I win there, I'm going to want to focus on things like, there's probably some seasonality that I'd want to focus on. So what are the best Connecticut
Connor DeLaney
0:31:57
towns to go hiking in in the fall? You want to win at hyper-specific, but also, so that's maybe not a business thing, but that would be like a hyper specific example. When I think about what's a business case for my little boutique travel agency, I'm probably thinking about how to plan your ultimate fall destination or who to work with. I don't have a great example, so I'm gonna just stick with it, but you get the idea of like, you want to get hyper-focused on organic keywords that show actual intent. Like if I just said, Connecticut hiking trails, I'm gonna, that's really like, let's, and
Connor DeLaney
0:32:39
again, this is, it's a funky example, but you can tie it in. Every state has hiking trails, so it's like, what's the differentiating? Yeah, think about it from your business's perspective. There's probably the Connecticut hiking trails keyword for you. And as I think about other bits, it'd be like in-ground swimming pools. Or another keyword might be ERP systems, like super top of the funnel, like really introductory. Maybe they're just searching for something out there. But then there's best hiking trails to see the beauty of Connecticut in the fall.
Connor DeLaney
0:33:14
You can really start narrowing it in. There's probably not gonna be nearly as much search traffic for that. Maybe Connecticut's gorgeous in the fall, so everyone just come visit, the leaves are starting to change, it's gorgeous.
Connor DeLaney
0:33:24
But that's where I think more businesses can start to win, is when they focus more on those small, organic, maybe you get 50 searches a month on that instead of the 500,000 you might get for Connecticut. Right, but the 500,000 you might get 1% that actually reach out to you. That even find you because you've got all those national players.
Connor DeLaney
0:33:41
But if you can narrow it in and again stick with the example as best as you can. You can think about your industry and say if there were five people that ever searched for this, they would be the five people that would all buy from us. There's actually, there's an example from our friends over at Industrial Packaging. I haven't spoken about them in a while and they were a team that we worked with for a while. They do like the bubble wrap,
Connor DeLaney
0:34:05
they do like the industrial B2B manufacturing for packaging materials. And their content manager at the time, his name is Nate, had shown me this article that got, I think it was like over a quarter of a million dollars in attributed revenue in a quarter.
Connor DeLaney
0:34:24
It had three views on it, and two people became customers out of those three views. It was some crazy number like that. But it was so hyper-focused that the one customer that bought from them, I swear, it was something like a $200,000 order. I'm sure Nate's going to come in the comments because he listens and he's going to be like,
Connor DeLaney
0:34:41
it was actually this.
Alex Winter
0:34:42
I'm going to watch.
Connor DeLaney
0:34:43
Yeah, Nate, you're going to tell us what actually happened.
Connor DeLaney
0:34:44
But I love the example only because if you say to your boss, we only got three potential leads from this article, that doesn't sound very good. But if those three leads all made a purchase thing or two out of the three did. Well, and what he came back to and the story, like where the story comes from is he said, I only got a handful of views on this article in a given month, but it generate all this revenue.
Connor DeLaney
0:35:03
And he said, word for word, a customer told him, you are the only person that even showed up when I searched for this keyword. Like, there was no one else there. And he said, just the simple fact that you were even talking about it told me you guys actually understood what we would need.
Connor DeLaney
0:35:21
And it was like some kind of comparison article about, I don't know, bubble wrap packaging versus another kind of packaging. It was something like that. But it was mind blowing to me, because it was like, imagine if we could find
Connor DeLaney
0:35:31
all of those hyper-focused organic keywords within that. I know I've rambled a little bit, but I do have one other thing that I think a lot of businesses are running into when it comes to like how do we decrease the cost of leads? Because it comes back to how do we execute all this stuff we just talked about. That's where I was going to go with this too, so that's a perfect segue. Because a lot of companies, when we think of like, let's call it paid ads or lead aggregators
Connor DeLaney
0:35:54
or just like buying, like list buying. Yeah, because it doesn't always have to be paid. That's a good example, but it's not always about pay. Yeah, and there's other things. I mean, there's even like a lot of businesses I've been talking to lately,
Connor DeLaney
0:36:07
who said like, we're investing more in SEO. And it's like, what the heck does that mean? Because SEO is as broad a stroke of a term as anyone's ever heard. But the last piece that comes to mind for me is you have to be able to own some of this in-house.
Connor DeLaney
0:36:22
Because it comes back to like, when we said diversifying your lead flow, and how do we build that out, if you don't have the ability to quickly make changes and decisions, you're probably going to just keep running into the brick wall that you can't break through. Because if you have, let's say you've outsourced it, and I'm not saying you have to go exactly
Connor DeLaney
0:36:42
down the they ask you answer route, which obviously it's like we talk about a lot, we have certain hires we recommend. But I think just having a marketing team in-house that can actually make changes to your website, that can update email copy, that can even sometimes manage your page strategy and be able to make shifts, if you can't do that in-house, the outsource partner you're working with is probably not going to work fast enough.
Connor DeLaney
0:37:06
Now there are a handful that I've heard personal stories of that do great work and are really good at that. But a lot of them take a lot of time.
Alex Winter
0:37:15
Typically, that's not the case.
Connor DeLaney
0:37:16
Yeah, and it's slow moving or you're committed to a contract that you have to run this way because they believe it's going to work for six months. You know, there's a team that I was speaking to recently that they do the little envelopes for, you know, speaking of hotels and like you check into your hotel, you get the two like key cards for your room and you get the little envelope. Yeah, it comes with the little folder thing.
Connor DeLaney
0:37:37
So they make those envelopes. And the team came to us, and they said, we redid our website, and now I'm sitting here, and nothing's really changed. We redid the site, and I thought everyone would just come and convert, but we haven't seen anything
Connor DeLaney
0:37:50
in six months. And the partner that we're working with recommended that we spend more, and that we just pump money into paid ads to get more people to the website. And unfortunately, we hear that a lot, and every once in a while it works,
Connor DeLaney
0:38:05
but the big thing that came to mind is, he had no intention or way to do that himself. And so he was coming to different partners and saying, partners as in agencies and other groups, marketing firms, saying, how do I actually make something happen?
Connor DeLaney
0:38:22
And when you're focused on outsourcing this and trying to solve the problem outside of your business, you're typically just grabbing for straws and hoping something sticks to your hand, like that you can hold onto it. Rather than having the ability to say, let's try this,
Connor DeLaney
0:38:39
there's not a lot of partners that you're gonna work with that are gonna say, okay, let's try it. And because when you're outsourcing, everyone's got the solution and they may not have a framework for it, they may not have a way to show it.
Connor DeLaney
0:38:49
I would rather say, I'm gonna hire one or two people and their full-time job is to make our marketing engine and to build our sales funnel every single day. That's a more efficient way and it's gonna allow you to be more flexible too.
Alex Winter
0:39:04
Yeah, and when you start talking about some of these budgets you were mentioning the 100K a month budget. That's more than enough money to shift some of that towards having a full-time person. Yeah, it definitely can be. That's plugged into your company that knows the culture, that knows the products, that knows the services, that's got their finger on the pulse. And
Alex Winter
0:39:18
you don't have to submit a ticket every time you need to change something or do something. 100%. We've covered a lot of ground. I have. I'm going to ask you a tough question. You ready? Okay. We talk about this a lot. It's very, they ask, you answer. What's the one thing? So from our conversation today, if you have, I'm a business owner. You're telling me all this great information. What's the one thing I should take away from this conversation
Connor DeLaney
0:39:40
as I go to implement and bring this back to my team? Woo, okay. The one thing that I would want anyone in our audience to hear and take away today is that buyer preferences are changing, and it's the biggest driver of the cost of leads going up.
Connor DeLaney
0:39:58
There's a million other factors that could come into play, but the way that buyers actually make decisions is shifting even faster than some of us want to accept. I like to think we have a nice, what was the phrase, hand on the pulse? Yeah, like a good finger on the pulse. Yeah, finger on the pulse. I like to think that we have a good finger on the pulse. It is shifting rapidly, and we need to be willing to accept that the way that buyers and the
Connor DeLaney
0:40:29
way that we used to sell and the way that buyers used to buy is shifting and we have to adjust our strategies to the way that consumers want because we're never going to tell them how to buy, they're going to dictate how we sell. That is incredibly well said and that's so true. The buyers dictate what they're purchasing, not us. Yeah, it's not about us, it's about them.
Alex Winter
0:40:52
I love that. Cool. Connor, thanks for all your insights. I love talking with you, man.
Connor DeLaney
0:40:56
This has been really great. Appreciate it, Alex. It's been a blast. Awesome. Well, you're welcome on the show anytime.
Alex Winter
0:41:01
And for everybody out there watching and listening, this is Endless Customers. And for everybody out there watching and listening, this is Endless Customers.
Alex Winter
0:41:02
I'm your host, Alex.
About This Episode
If you’re a business owner or lead the teams responsible for marketing and sales, you’ve likely noticed something unsettling. If you’re paying for leads or ads, your leads are becoming more expensive! You might find yourself spending more money to get the same number or even fewer leads. What’s going on? Why is this happening?
These are the questions that Connor Delaney, Lead Sales Consultant at IMPACT, tackles on the latest episode of Endless Customers, hosted by Alex Winter. In this insightful discussion, Connor breaks down the driving factors behind the rising cost of leads and what business owners can do to get more quality leads while minimizing cost.
Why Are Leads Getting More Expensive?
Alex kicks off the conversation by addressing what many business owners are feeling but not fully understanding: why are leads becoming so costly? According to Connor, it’s happening across industries, and there are multiple reasons behind it.
One of the biggest changes, says Connor, is the evolving way customers are interacting with businesses. “The way people search and find information is changing, and that means businesses need to adapt,” Connor notes. He points out that the rise of AI tools, changes in customer buying behavior, and the sheer competitiveness of digital marketing are all contributing to the upward trend in lead costs.
The Impact of Big Players
In many cases, it’s not just AI or technology that’s changing the landscape, but also the fact that bigger players are spending more on the ways they’ve traditionally won. “Big companies are spending more to stay at the top,” Connor explains, referring to companies that dominate lead aggregators and paid ads. With deep pockets, they can afford to outbid smaller businesses and dominate online spaces where leads are generated.
It’s not just about having the biggest budget, though. Connor shares that big players are benefiting from established customer trust and widespread brand awareness. This is something smaller businesses can’t always match head-to-head.
But how does this affect medium-sized or smaller businesses? It creates an uneven playing field, especially when those larger companies are using the same lead generation methods that smaller businesses rely on. “If they’re outspending everyone on paid ads, that pushes costs up for everyone,” Connor explains.
Buyer Behavior is Changing
What’s fascinating is that even with all this spending, customers are more hesitant to bite. This, Connor says, is where buyer behavior plays a massive role in the rising costs.
“The reality is that customers today are much more educated,” he points out. They don’t just click on the first ad they see. They research, compare options, and make informed decisions—often long before they even interact with a sales rep.
Connor highlights a recent conversation he had with a business owner in the home improvement space, who said they used to get 10 to 30 jobs a month from their SMS campaigns. Now, they’re lucky to get one or two. “People are just not buying based on a quick text anymore,” Connor says. “They’re doing their homework.”
Customers are more informed, but they’re also savvier. Alex chimes in with his own experience, noting that when he shops online, he does a ton of research, looking for the best deal and using multiple tools to make his decision. “I go on incognito mode, I check prices on multiple platforms, and it all plays into whether or not I’m going to buy.”
This means businesses can’t rely on high-volume, low-quality leads anymore. Instead, they need to focus on smaller pools of higher-quality leads—people who are more likely to buy but also more demanding when it comes to their decision-making process.
So, What Can You Do?
Connor’s message is clear: while bigger companies can afford to keep throwing money at paid ads, smaller and medium-sized businesses need to be more strategic. Here are some of his key takeaways for navigating the rising cost of leads:
1. Adapt to Changing Buyer Preferences
The most important shift businesses need to make is understanding that the customer journey is different now. “It’s no longer about hitting as many people as possible and hoping something sticks,” says Connor. Instead, businesses need to understand where their buyers are in the decision-making process and tailor their messaging to fit that.
Buyers are doing more research before they reach out to a company, and businesses need to meet them where they are. This might mean offering more educational content that helps buyers make decisions or focusing on lead nurturing to guide them through the process.
2. Diversify Your Lead Sources
Connor stresses the importance of not relying on just one lead generation tactic, especially paid ads. “You can’t just throw money at ads and expect it to work forever,” he says. Instead, he recommends businesses diversify their lead sources. This could include investing in organic SEO, creating high-quality content that draws in leads over time, or using referral programs to bring in more word-of-mouth leads.
Connor shares an example from a roofing company he worked with that spent nearly $100,000 a month on paid ads. Despite this huge investment, when the business owner Googled “how much does a roof repair cost?”—a key question their customers would ask—the company didn’t even show up on the first page of results. “It’s a huge wake-up call when you realize that paid ads aren’t always the answer,” Connor warns.
3. Focus on Quality Over Quantity
The days of blasting out cold emails and hoping for a return are over. “Businesses are realizing that you can’t just hit volume anymore,” Connor says. “We’re all focusing on smaller pools of quality leads who actually have buying intent.”
This is where smaller businesses can compete effectively. Instead of trying to outspend the competition, focus on offering value to the right people. Create personalized experiences, offer genuine solutions to problems, and build trust with potential customers.
Alex echoes this sentiment, emphasizing that buyers today aren’t easily fooled by flashy ads or discounts. “Buyers are smart,” he says. “They know when they’re being sold to, and they’re looking for authenticity.”
4. Leverage Local SEO
For businesses that serve a specific geographic area, local SEO can be a game-changer. “There’s huge value in dominating your local market,” Connor says. By optimizing for local searches—think “lawn care services near me” or “best bathroom remodeler in [your city]”—businesses can position themselves as the go-to solution in their area.
Connor recommends focusing on building out local content, optimizing your Google My Business profile, and ensuring that your website is mobile-friendly. “Local SEO doesn’t just get you seen—it gets you seen by people who are more likely to buy.”
5. In-House Marketing Is Key
Outsourcing marketing can sometimes lead to slower decision-making and less flexibility. Connor suggests that businesses bring marketing in-house whenever possible, allowing for more agility and faster response times.
“The companies that can quickly adjust to market trends and customer needs are the ones that are going to win,” he says. Having an internal team allows businesses to experiment with different tactics, tweak strategies on the fly, and better align marketing efforts with sales goals.
Buyer Preferences Are Changing—So Should Your Strategy
Connor’s final takeaway is one that every business owner needs to hear: buyer preferences are evolving, and businesses that don’t adapt will struggle to keep up. “It’s the biggest reason why leads are getting more expensive,” he says.
But for those willing to adjust, the opportunity is there. By focusing on quality over quantity, diversifying lead generation efforts, and building trust with customers, businesses can not only survive but thrive—even as lead costs rise.
As Alex wraps up the episode, he leaves listeners with this thought: “You can’t control how buyers act, but you can control how you respond. And right now, it’s all about being smarter, not just spending more.”
Connect with Connor
Connor Delaney is a Lead Sales Consultant at IMPACT who helps businesses understand how they can create the growth they have always dreamed of.
Learn more about Connor
Connect with Connor on LinkedIn
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