Rainmaker Problem #14: Are Lead Junkets Worth the Cost?
(This post is another in our series of Rainmaking Problems. We invite your comments on this problem and would also welcome any problems you would like to submit to get comments from other readers.)
Over the past twenty years a handful of companies have prospered by running what I call lead junkets. A class of corporate manager; human resources managers, facilities managers, financial managers or some other group; are invited on an expenses-paid trip to a resort or on a cruise ship for an event with some educational content. In return they agree to participate in a set number of short meetings with people who would like to sell to them. The sellers pay a fee to attend and also get a set number of meetings with the buyers with additional opportunities to rub elbows with all attending buyers at receptions, meals and the like.
These can be pricey events, costing a seller over $10,000 plus travel expenses. In return they are promised twenty uninterrupted minutes to pitch their wares to each of the twelve buyers. Though some sorting and matching of buyers and sellers may be done by the organizers, the sellers do not get to pick whom they meet with. Also the organizers restrict attendance by sellers who compete with each other.
The appeal of the lead junket is having prospective clients delivered to you with little effort on your part. It all seems so painless, compared to cold calling, attending association meetings, giving speeches and all of the harder ways to generate leads.
I acknowledge that I have never attended a lead junket and my skeptical view of them is reflected in the term I use to describe them. In my experience, those who want their firms to send them on these jaunts are usually those most uncomfortable with other kinds of lead generation. They are looking for fixes with a minimal feeling of rejection.
I get asked about lead junkets four or five times a year.
My question is, when, if ever, are lead junkets worth the cost? In your response, please note whether or not you have ever attended one. If you have had good or bad outcomes, I would like to hear them. Please do not name the operator of the event in your comment. Also, if you work for or are an investor in a firm running this kind of event, please state that in your response.
April 15th, 2009 at 8:58 am
Ford,
All in how it’s handled and presented, and the time. Most annual Broker-Dealer conferences are sponsored largely by the venders (mutual fund, money & tax mgrs…) who often have a part in the program somewhere as well as their booth, break-out and hospitality suite. (I suppose it could all happen on a boat!) But it’s so blantantly out in the open you know what you’re getting before the fact. Some of it’s good info/stuff. I’d object only if its disguised as something else.
David
April 16th, 2009 at 6:03 am
David,
Transparency helps. My concern with lead junkets is the implication that buyers are there primarily to meet sellers, as opposed to, say, an association event, where that is always portrayed as a byproduct. Do buyers at these events actually buy from those who purchase those one-on-one meetings a significant percent of the time? Though I am sure there is no promise made, the implied link seems pretty blatant. Is the probability of a reasonable return worth the cost?
Thanks for the comment.
Ford Harding
April 16th, 2009 at 1:32 pm
Ford,
I have some experience with “minor junkets”. Not the big, expensive, take them on a cruise types; but conferences funded by vendors where a condition of attending for attendees is to have a number of scheduled meetings with the vendors. As described in your post, the organisers did some matchmaking based on both attendee and vendor preferences.
My experience varied.
Some attendees were really interested in talking. Although they were rarely “hot” prospects, they genuinely had issues/needs and would have been potential buyers over a 6-18 month timeframe.
Many were just going through the motions because it was a condition of their free attendance. Having said that, a couple turned out to be reasonable introductions - we found areas of commonality and interest that could have led to work eventually.
Some were actually resentful of being “forced” to meet vendors. They hadn’t expected it and it had been badly communicated to them.
Overall, out of about 15 or so meetings I (or colleagues) had, none turned into actual sales. So we didn’t go to any more of those sort of events.
Having said that, I believe we had the wrong perception and approach. We went into the meetings looking for “hot prospects” (and to be fair to us, the organisers kind of gave that impression - “lots of attendees who really want to meet you…”). Had we thought about it we’d have realised that most would be in the very early stages of buying. Instead of treating it as a sales meeting and later not following up because the attendees had no immediate needs; we’d have used it as an opportunity to start up potentially valuable relationships. We’d have explored their business and challenges more broadly and have followed up with a campaign to nurture the relationships.
Whether these early stage relationships were worth the amount we paid for the conference I’m not sure. I suspect other lead generation methods could have generated similar or better leads for a lot smaller outlay of cash & time.
Ian
April 16th, 2009 at 2:39 pm
Ian:
Thanks for sharing your experience and for your thoughtful response. It generally confirms my suspicions that these events, including a bit of over-selling by the operator, unrealistic expectations of many attendees, and lack of followup result in a lot spent that could be used more effectively pursuing leads in other ways.
I do hope we hear from other readers on this, too.
Ford Harding