Guide to Buy Tax Resolution Leads for Your Tax Settlement Business
Buying leads for tax relief seems like it can be an easy way to grow your practice, right? When purchasing leads, you get fresh leads delivered right to you. These people are looking for help with tax debt, and that service is what you do. Is it that easy? The short answer is no. In this industry, many lead providers fall short of the expectations set. Buying leads can be expensive and cannot obtain a necessary return on investment. Are there good lead providers out there? Yes, but finding them may be a challenge. This article will cover the common lead types sold, what you should pay per lead, some questions to ask companies offering leads, and how to avoid ripoff companies.
This guide is to help tax professionals from losing money trying different lead buying campaigns and identify the right ones to try. I’m sorry for those lead providers that work on a churn-and-burn model. This guide will hurt their sales and ensure the tax professionals save their marketing dollars for things that will work!
If you are a licensed EA, attorney, or CPA, you can get found by taxpayers looking for your services from TaxCure by creating a profile and showing up in various searches for taxpayers looking for help that matches your skills. You can sign up here. Our goal is to help taxpayers find the best tax professionals that can help with the taxpayer's unique tax situation.
How Does Lead Buying Work for Tax Relief Leads?
There are many different models when it comes to how companies sell leads. Below are some of the common models.
These types of leads are when the marketer has a landing page about the services that they are selling and has an online lead form or a phone number that the taxpayer can call for assistance. When buying these types of leads, the form-fill leads will be delivered directly to the buyers, and the calls will be routed directly to the buyers. Generally, these can be seen as pricey leads to buy since they can be expensive to generate.
These types of leads come in many forms. Below are some of the basic models of internet leads:
- Exclusive data leads: You get exclusively sold the lead, which means no other buyer is sent this lead. Generally, these are the most expensive. A data lead means that someone filled out an online form to request more information about the services or requested a free consultation with a professional.
- Multisell Data Leads: This is when the data lead sells to multiple buyers. Generally, these are cheaper to buy, but you are competing with other firms on the lead, lowering the contact rate and close rate. These are only good for companies that will dial the prospect as soon as the lead is received.
- Phone leads: People may call instead of filling out an online lead form. There are many models of how this may work, and sometimes the lead is qualified before being transferred to the buyer of the lead with basic information. Sometimes the call is routed to potential buyers and given a “qualifier.” A qualifier is when you have a certain amount of time to determine if it is a good prospect, and you will only be charged for call times over a certain allotted time. Generally, this can range from 30 seconds to 5 minutes.
These types of leads are when someone is completing information for another product or service, and then they are asked a series of other questions, and they can check boxes if any apply to them. So they could be asked if they owe taxes after filling out a form for a mortgage quote.
The quality of these leads and the close rate is generally extremely low. The prospect was not actively looking for those services, making them likely to become clients. Sellers of these leads won’t advertise they are co-registration leads, so it is essential to ask questions to understand how they are generated. The price point should be pretty low.
Radio Tax Settlement Leads
I’m sure you have all heard the radio ads that offer tax resolution services. If you don’t hear a brand name in that radio ad, this is likely a lead-generation radio ad, and when taxpayers call in, they will be routed to various buyers around the country. These are generally costly leads, and you must be available to field these calls at the agreed-upon times. Sometimes they may allow a qualifying time on them, but most of the time it will be a flat rate per caller.
Email Tax Relief Marketing Leads
Buying email marketing leads is when a lead seller uses their email list to generate prospects interested in tax resolution services. The quality of these leads and their price can vary greatly depending upon the quality of their list and the message they deliver.
Aged leads can be anywhere from a week to years old. This could be prospective prospects that inquired about getting help with a tax problem. The term “aged leads” can mean many things and vary in quality. These leads are very cheap, come with a low closing rate, and require significant work to monetize them.
What Should You Pay for Leads?
Not all leads are created equal. You want to take in more revenue than you spent on the leads. The price of the leads should be at a point where the average buyer gets a return on ad spend between 3 and 4. For every $1 spent on leads, you expect, on average, $3-$4 in revenue. To determine the proper price point for what will work for you, you need to back into the price based on metrics. A legitimate lead seller should have the necessary metrics to back into the cost to see if the pricing will work. Below are some questions you should ask the lead provider to assist you.
- What is the price you charge per lead?
- What is the average close rate on these leads from other buyers?
- What is the average ticket price that they obtain?
- Are there any returns for the leads?
- Do you have any filters for qualifying certain leads to ensure I don’t get prospects I cannot help?
Once you have this information, you can see if their price is reasonable based on their data. If, based on their data, it shows anything less than an average of a three return on ad spend, then they are likely pricing their leads too high.
Below are some sample calculations of potentially good and bad lead prices.
Sample 1: Good Lead Pricing
- Price per lead: $170
- Returns: No
- Average close rate: 15%
- Average ticket price: $4,500
- Expected spend on a 100 lead purchase: $17,000
- Expected deals closed: 15
- Expected revenue: $67,500 (15*$4,500)
- Return on ad spend: 3.97 ($67,500/$17,000)
Sample 2: Bad Lead Pricing
- Price per lead: $70
- Returns: No
- Average close rate: 4%
- Average ticket price: $3,500
- Expected spend on a 100 lead purchase: $7,000
- Expected deals closed: 4
- Expected revenue: $14,000
- Return on ad spend: 2.0
If you are reaching out to buy leads, it is likely that they already have buyers at other prices, and if they are going to take on a new buyer, you will likely pay more than the other buyers, and they will give a price point that just may not work. Do the simple math before committing to a lead-buying campaign. If the numbers don’t work out based on the figures they provided, there is no way the campaign will work.
Basic Metrics to Have in Place Before Buying Leads
When buying leads, it is essential to know if it will be a winner or a loser as fast as possible to limit potential losses. When purchasing leads, you will lose money more time than not in this industry. When engaging with a new lead provider, attempt to buy the minimum possible leads to get enough data to determine if the campaign will be a winner or a loser. To do this, the more metrics you have in place, the better. Below are the basic metrics you should have before engaging with any new lead-buying campaign.
When you are sold leads, there is a good chance that many of the leads won’t even answer the phone when you reach out to them. Tracking the contact rate is an important indicator to determine early on whether the campaign will be a winner.
Contract Out Rate
The percentage of leads that you send out engagement contracts. Generally, for a lead that is qualified and interested, you will send out an agreement. This metric helps assess quality sooner rather than later because you may not get a deal back yet, but you can evaluate the likelihood of the campaign turning into a winner soon. So if you know your standard contract back rate is 50%, and you send out three contracts on a campaign and haven’t had any come back yet, you can assume, on average, you generally would receive 1.5 back.
Close Rate & Break Even Close Rate
Generally, you would need to buy a significant amount of leads to determine the average close rate of a campaign. Close rate is an important metric to keep in mind, and watch how it trends over time. Using other metrics to determine the probable close rate before you meet statistical significance in this calculation is best. You should also know your close rate to break even on the campaign. If you know you must obtain at least a 10% close rate with an average ticket price of $4,000 for a campaign, then you will need to make sure the other metrics point to this possibility. If the metrics are falling short, it is best to cut the campaign sooner rather than later.
Average Ticket Price
What is the average price per client you get from the leads? Generally, you would need a lot of data to determine this. It is important to try to come to an early assumption on what this figure would be based on your current pricing for services and the types of leads being delivered.
Some Questions to Ask Potential Lead Providers
Here are some standard questions that you can ask a potential lead seller to help you avoid potential losses when engaging in a new campaign.
Are your leads GEO targeted?
Leads based on GEO location can increase the ability to close. While being GEO targeted isn’t something that is necessary, it sure helps when someone is asking a high price for a lead. Potential leads will prefer to work with someone working locally or even in the same state vs. across the country.
What is the standard close rate on your leads?
You would hope they have a quick answer to this question because someone without a quick answer is not working closely with lead buyers. Lead buyers should always be getting feedback to continue optimizing their campaigns. This is also a necessary metric to determine if the campaign has the potential to be a winner.
How are your leads generated?
You want a clear answer here. Many shady lead providers will not provide information on this to not share their “secret sauce.” You really need to know this to understand how to approach the potential client to increase your chances of closing the deal.
How many times do you sell your leads?
If you are engaging in a multi-sell campaign, you need to know this to help you back into the necessary figures to see if this will work. Many times with multi-sell campaigns, a seller makes much more money than an exclusive lead. So an exclusive lead that is $100, they may sell three times for $50 each and yield $150. With his model, the buyer with the slower response time generally loses, and the buyer with the quickest response time wins. These leads favor the national tax resolution companies with auto-dialers and a large sales staff in place to respond as quickly as possible.
What is your call time qualifier? (for phone leads)
It is important to know the qualifier limit for buying call leads that offer a qualifying time. If there is a short time to qualify the lead, you will need a very stringent process to qualify the leads to avoid overpaying. They are likely priced at this point because other buyers qualify effectively; if you don’t, you will probably pay a higher percentage than you should. Another follow-up question to this should be, “what percentage of the leads are generally qualified?”. This will give a good gauge of how aggressive your qualifying script will need to be.
Buying calls on a call qualifier can be a tricky model. You will need enough time to effectively qualify the candidate without rushing them off the phone and making a bad name for your company and the lead provider. Qualifying times should be long enough not to rush the call and allow a short and effective conversation about the situation to determine if they are a good candidate for the services. How much time is necessary? From experience, 2 minutes is the absolute minimum. Lead providers asking for something like 30 seconds or a minute can hurt your reputation and theirs. Good qualifiers are anywhere between 2-4 minutes. If they ask for anything less, ask for their price per unique caller.
Do you qualify leads before sending them?
Generally, with much higher cost leads, they will be “qualified” before you receive the information. This can be basic questions like, “do you owe the IRS” “are you currently in a payment plan” and basic contact of the lead to ensure their information is valid. With many lead-buying campaigns, you will get bogus leads mixed in. Removing the fake leads adds an extra cost and is sometimes justified depending on how they are generated and priced.
What is the messaging used to generate the leads?
Well, you don’t want to be involved with one of those companies promising for pennies on the dollar campaigns. Understanding the general message sent to prompt prospects to reach out for more information is essential. You must ensure that their message aligns with what you are selling.
Most importantly, you don’t want to get involved with something where you are in a situation where they are overpromising, and if they hire you, you will under-deliver based on their message. Lead providers that fail to be transparent about this messaging be sure to avoid them!
Alternatives to Buying Leads & Generating New Clients
Lead buying is a great way to generate new clients when you don’t have an internal marketing plan or add additional marketing diversity to your company. In the industry of lead buying, it can be difficult to rely on this as a main source of income for your business. The more hooks you cast, the greater your chances of a bite. In marketing, having multiple baits is essential to attract quality fish. The choice of bait matters as some baits are expensive and require less effort, while others are cheap but work to acquire. Finding the right balance is crucial to maximizing the chances of catching the best fish.
Regarding the ultimate bait for tax professionals, we have created TaxCure. It has an unbeatable combination of affordability, ease of use, and high yield. TaxCure delivers the best clients with minimal hassle and cost. If you are a licensed EA, CPA, or Attorney, consider creating a free account. Get highly targeted leads delivered right to you by showcasing your talent and specialties. We allow taxpayers to assess local tax professionals based on their unique skills and reach out directly to the professionals listed on the site. You can create your free account today and schedule a free onboarding call to maximize your profile for the best results.