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Lead Services: Pros and Cons

by Fred Showker

WITH TRADITIONAL AD OR PORTFOLIO SERVICES you can end up spending a lot of money in advertising to get just a few decent leads. Using a lead service can be a good way to find new clients without spending a lot of time on marketing and advertising.

As opposed to bidding sites which allow any of there members to bid (and try to outbid each other) on every project, a site like www.DesignQuote.net allows you to browse projects based on predefined budgets. They also pre-screen job clients and validate the authenticity of the project. No other services do this for you.

Approved clients will post the general project requirements along with a budget range, if the project looks good to you, you purcahse the lead information and then bid on the project. The cost of the lead depends on the budget and the lead is restricted to only 8 other designers. Compared to Adsense, other Pay-Per-Click programs or bid-war sites, your actual cost of acquiring a new client is signfigantly lower. Better yet, your risks of spending time and money on dead-end or no-show jobs is next to nill.

While there may be some clients asking for way too much work for too small a budget, you as a designer can tell them so through the anonymous commenting function. Most jobs that want 20 or 30 hours of work for under $100 never even get bid on -- clients get the message that designers will not work for peanuts. They come back with a more realistic job budget. Good for you and good for the industry.

One of the best things about lead sites like DesignQuote is that once you get a client, you can keep them for life. You purchase the lead once. Performance is up to you -- but you pay no commissions to any middle-men. You establish your own relationship with the client. When the client needs work in the future, if they are happy with you, you get repeat business. Repeat business is the really key to success in the design business.

The bottom line

The bottom line is no matter how you market, you will have to spend money and/or time to get your marketing message out. You can spend the time learning SEO and using blogs and other free web services to promote your company on the web, but the results take time -- months, possibly years. If you are in a competative market it can be next to impossible to compete with more established designers that are all competing for the top spot in your city.

A $250 Case Study

Lets take a look at where a $250 marketing budget will take us. We'll assume that you already have online samples of your work and information on hiring you.

$250 PayPerClick

First, consider Google Adwords or Yahoo Sponsored Search type ventures. If you are in a large market you will have some competition, but thats also where the most clients are. To get on the first page for something like "Graphic Designers in Houston" you will be paying somewhere in the neighborhood of $2.50 a click. Some keywords or cities will be much higher.

Wesley Warren of Vexcom says:

"In my experience running web design ads in Atlanta cost about $5 for a top position. You can expect about 1 out of 10 clicks to actually materialize into a real contact from a potential client."

Working with $2.50 per click, your budget buys you 100 clicks.
That should bring you 10 potential clients.
Assuming the response rate is about 20%, you should be able to talk to and land 1 out of every 5 clients that approach you. With 10 potential clients you might be able to close 2 or 3 of those projects and actually get a contract.

Your average design client is usually willing to pay $200 to $2000 for a simple brochure, a logo or a catalog or magazine ad. As an example, three jobs landed are $250, $1500 and $700 - thats $2400.00. That would seem to be a pretty good return for your $250. But this is a best case scenario. On the other hand, you could spend your $250 (easily be spent in a matter of days) and get no nibbles at all. There goes your $250. Or you could get the typical client who wants a full-scale corporate identity campaign for $100. Thats all part of the business.

Assuming you've captured the best-case scenario, you at 11% return, roughly $85. About double target 5%. If you don't make the best-case, and 2 or 3 clients want $200 projects, you've spent $250 for $400 worth of business. That's actually a 50% return -- and you can't survive like that.

$250 Chamber of Commerce.

Wesley Warren of Vexcom says:

"In a larger city could be more expensive -- I think the Atlanta chamber is $400 per year. Now, with that you have a monthly meeting you can attend and meet other local business people, some will even let you give a little presentation at a meeting or set up a table with some brochures or info about your company.
      The important thing to find out is how much competition is already involved. Look through the Chambers member roster and maybe even call a few of the people listed, ask them if they are ever in need of services like yours and if they already have someone. Meeting with people and passing out cards is a great way to make connections, but it can take some time to pay off.
      You might not get a job from your first two or three meetings but it is a great way to meet other business people in your area. Its hard to calculate a return on a CoC membership so I wont even try. I was a member of the Atlanta chamber in 2004 but I only went to two meetings and we never landed any clients from it. It might have been a different story if I attended every meeting."

$250 on DesignQuote leads.

$250 buys you 60 credits on DesignQuote.net.
You can break that out any way you wish -- for the sake of this investigation let's say you bid on 5 jobs with budgets of $5,000-$7,500 - this would be 6 credits each, costing 30 credits. (Half of your budget.)
If you close the average of 20%, (one job,) you should earn say $6,000. Remember, these are pre-screened clients and projects -- so they're ready to go, checkbook in hand.

With the remaining 30 credits, you could bid on $500-$1,000 budget (quickie) jobs which take 4 credits each -- that's 7 more projects.
If you close one more project in that budget you should earn an average $750 giving you a total return of $6,750.00.

You may want to bid on some $2,000 projects. These cost 5 credits, with a potential eleven $2,000 projects.

The pro-active benefit here is that you decide, up front, what projects you want to bid on. You eliminate wasting marketing dollars turning away small jobs, or trying to bid on jobs that are too large and beyond your current capabilities.

In the above scenario, your client acquisition cost is about 4%. You're now under your 5% target. Spending $250 to get $6750 worth of business is definitly worth it. Some designers have reported better ratios, but its really all in the numbers. If you can close 20% of your leads, then you need to start out with 10 leads and get on that phone talking with the prospects, it's a numebrs game and its all about getting enoough leads to keep you in busniness.

Bottom line

In the end, the best bet for getting a design business going is using a combination of several of these techniques and methods to develop your business and build up a good client list. The best way to get clients is from an existing client referral, but everyone has to start somewhere! Good luck.

I hope others chime in to this discussion.

Good luck, my friends.

Fred Showker

Also see:
* Getting Clients
* How much should I charge
* Business margin
* Operating margin
* Profits
* Gross profit margin

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