A Downside To Leads

To be sure, these programs are well-intentioned efforts to create new business. But there is a potential downside that VARs should consider before embracing those wielding a fistful of leads and promises of new customers.

The way most lead programs work is that the vendor or some organization acting on behalf of the vendor sets up a call center and begins cold-calling potential customers. As part of this process, they typically try and figure out which of their solution provider partners is closest to the prospect and then assign the lead out to that partner accordingly.

The problem is, should that solution provider fail to convert that lead into an actual sale, it could be passed on to another solution provider. The organization generating leads could in effect go out and introduce a competitor to your customer. Because most leads don't get converted into an actual sale, those that have invested millions of dollars in these efforts inevitably are going to be frustrated with the results. That means they will be sorely tempted to open another door to convert that lead. After all, a vendor is going to be suspicious that its original lead may have been usurped by another product, given the fact that most solution providers have relationships with two or more vendors in a given product category.

So on the front end of the equation, the solution provider's cost of sales will rise because even in the very best of programs, seven of every 10 leads are a waste of time and effort. And on the back end of the equation, vendors may be introducing competitors to the solution provider's customer base.

It's not clear that vendors or distributors are in these programs for the long haul. More than a few that have been down this path have found that the cost of sales associated with maintaining call centers sucks all the profit margin out of the product sale. But one thing is for sure: Anyone that tries to insert itself into the relationship between a solution provider and its customer is probably asking for more trouble than it's worth.

What's your opinion of lead-generation programs? I can be reached at (516) 562-7477 or via e-mail at [email protected].