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Buying Guaranteed Leads
GoRefer's word-of-mouth referrals are a far cry from cold calling.
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The traditional way of acquiring business leads may eventually fall to the wayside, with companies such as GoRefer.com emerging and promising 100-percent guaranteed sales leads.

Gil Levy, CEO of GoRefer, and two other co-founders launched the site this past summer with the idea of capitalizing on their unique consumer B2B model, which pays site visitors between $2 and $25 per every submitted lead, depending upon the value of the lead. GoRefer's staff then asks a series of questions on the phone and through e-mails to confirm the leads, which they then sell to merchants.

"Nowadays, direct marketers use a shotgun approach to finding customers," Levy says. "They buy lists of interested potential prospects or randomly call people based on lists. The Internet can change that. It can enable direct marketers to have information about purchasing intentions. It's a system where a lead can get to any marketer. This couldn't exist before the Internet."

The system may be what merchants are looking for. In its first three weeks, GoRefer acquired 130,000 members, PC Data Online ranked it as the 10th Fastest Growing Site on the Web (determined by the amount of hits), and some merchants who have purchased leads from the site have positive things to say.

"The leads vary and they're quite good," says Leora Schachter, director of marketing at Sundial, a marketplace for wireless products. Even after two weeks of acquiring leads from GoRefer, Schachter noticed a difference. "They're very valuable consumer and business leads, and the bids are more qualified."

Marty Johnson, the online business development manager at Handymanonline.com, agrees with Schachter, saying even though his company has just signed on with GoRefer, he's already seeing positive results.

"One of the things that is better about their referrals is they're word-of-mouth, which is better than cold referrals."

But Robert Labatt, research director at Gartner, says he believes GoRefer will lose its popularity because he thinks the people who are being referred will not appreciate their names being used without their permission.

"It seems like it would be tattle-telling on someone. There's no visceral relationship," Labatt says.

He believes the site would benefit merchants, but doesn't think it will become a million-dollar business for GoRefer.

"This is an interesting idea, but I don't think it's big business. Merchants are likely to get leads from this, but are they qualified leads? Who knows," Labatt comments. "Will it supplant the casual referral? Will it take a big chunk out of that? I don't know."

Levy refutes these points, saying that in most cases, businesses, rather than people, are referred, so there is usually interest in the merchants' products. If the lead is a person, GoRefer asks for permission to proceed. As for the quality of leads, Levy says his company is heading in the direction of only paying for successes. "So why would you give leads if they're not the best you have?" Levy asks.

Scott Eager, director of business development/customer service for GoRefer, also says his company's model will prove to be more cost-effective than traditional methods of acquiring leads.

"If you're doing a mailing and looking for a 1 percent response, you may have to pay $500 for that
1 percent response," says Eager, whose direct and database marketing career spans 13 years. "This is pretty much a
no-brainer. You can take it across any sales or marketing development that relies on direct mail and it should be well-received by the marketplace."

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