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Succesful Business Model for "Lead Generation"?

Are companies in the Lead generation business (like www.buyerzone.com) succesful? I got the impression they are. But I don't understand why. The "only" income they have is like 50 USD for a lead provided to a qualified vendor. If you want to do this right (find the right vendors, qualitfy them etc.), you need a lot human interaction and a large portion of the cost are variable instead of fix like webservices normally work: low variable cost and Fix cost per transaction tend to 0 with increased number of participants over time. Perhaps I am wrong.

What do you think? Does anyone have experiences within this field? Looking forward to a controversal discussion.

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Permalink Reply by Maurice van Steensel on July 31, 2010 at 10:22pm

I think they are successful because they sell the illusion of ease and comfort. Confronted with the wealth of information and choice available on the internet, consumers are willing to spend money to have someone take that load off them, even if they do not actually perform the research. I am suggesting that they do not do the work you think they are doing :)

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Permalink Reply by Thomas Hayk on August 2, 2010 at 11:43am

thanks for your comment. I would also pay for someone having the relevant information on hand. But that's not how companies like buyerzone or www.käuferportal.de work. The customer is NOT paying. The VENDOR pays for the contact to the potential buyer (lead). I would understand a model where the customers pays.

I got the same impression, that they either don't provide the services they claim to provide or that they fail to generate a substantial revenue stream. That's why I started the discussion.

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Permalink Reply by Maurice van Steensel on August 2, 2010 at 3:06pm

Aha, didn't get that the vendor was paying. Now that is interesting. Perhaps they are paying because this presents an additional customer relation?

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Permalink Reply by Thomas Hayk on August 3, 2010 at 10:30am

Yes. That's exactly how it works and it's called "lead generation". The generation of quified leads is a business with nice growth rates. Via theses platforms you can also exactly measure the return on this marketing activity.