Solved: Bad Leads After Switching to SMS Verification

Hi there,

Thanks for reaching out!

Happy to give you some of my initial thoughts on the lead quality problem you're facing. It's a classic situation, you try to fix one problem (bad leads) and end up with another (no leads). The good news is, it's almost never about the verification step itself. The SMS verification is just a magnifying glass, showing you a deeper problem in your advertising funnel. You're stuck between a rock and a hard place, but we can figure it out. The trick isn't to remove the filter, but to improve what you're putting into the funnel in the first place.

Let's get into it.

We'll need to look at why the leads were bad in the first place...

So, you were getting leads, but they were duds—wrong numbers. Then you added SMS verification, and the tap turned off. This tells us something really important. The people clicking your ads and filling out the form had incredibly low intent. They were either bots, or real people who weren't serious enough to even give a correct phone number, let alone type in a simple code.

Removing the SMS step is tempting because you'll see the numbers go up again, but you'll just be back to square one, wasting time and money chasing ghosts. The verification step is doing its job: it's filtering out the tyre-kickers. The real question is, why are you attracting so many of them in the first place? This almost always comes down to a fundamental misalignment in your strategy. You're likely attracting an audience that's just not a good fit for what you're selling.

Think about it like this: if you stand on a busy street corner shouting "Free stuff!", you'll get a massive crowd. But if you then ask them to step inside a shop to get the free stuff, 99% will wander off. They wanted something for nothing with zero effort. Your ads are currently shouting "Free stuff!" to the wrong crowd. The SMS verification is the 'shop door' they can't be bothered to walk through.

Your "broad campaign" is almost certainly the main culprit here. When you tell a platform like Meta to go "broad" with a lead generation objective, especially without a lot of historical conversion data, it does exactly what you ask. It finds the cheapest people within your geography who are most likely to complete the action of 'filling out a form'. It has no concept of 'quality' or 'intent'. It just knows that some users are serial form-fillers. They'll click on anything that looks remotely interesting, pop in some fake details, and move on. You're paying to reach the least discerning, least motivated people on the platform.

We see this all the time. I remember a B2B software client who came to us with the exact same issue. They were getting hundreds of 'leads' a week for $2.38 a pop from a broad campaign, but their sales team couldn't get a single one on the phone. We implemented a simple email verification step, and their lead volume dropped by 90%. But the 10% that remained started turning into actual sales demos. The problem wasn't the verification; it was the targeting that was attracting the wrong people to begin with. We had to rebuild from the ground up, starting with who the customer *really* is.

I'd say you need to define your customer by their pain...

So how do we fix this? We have to forget about the broad approach. You need to get ridiculously specific about who you're trying to reach. And I don't mean "women aged 25-45 who live in London and like yoga". That's a demographic. It's useless. It tells you nothing about their problems, their motivations, or whether they have a need for what you sell.

You need to define your Ideal Customer Profile (ICP), but not in the way most marketers do. Your true ICP isn't a person; it's a problem state. It's a specific, urgent, expensive nightmare that your product or service solves. Once you know the nightmare, you can build your entire advertising strategy around it.

Let's make this real. Instead of thinking about demographics, ask yourself these questions:

• -> What specific, frustrating problem keeps my ideal customer awake at 3 AM?
• -> What is the professional or personal cost of them *not* solving this problem? (e.g., losing money, wasting time, looking bad in front of their boss, missing out on an opportunity)
• -> What have they already tried to solve this problem that didn't work? (e.g., a competitor's product, a DIY solution, hiring a cheap freelancer)
• -> What language do they use to describe this problem? What are the exact words they type into Google or complain about to their colleagues?

This is the work that 99% of advertisers skip, and it's why they end up with wrong numbers. They're selling a feature, not a solution to a nightmare.

For example, we worked with a B2B SaaS company selling a tool for legal firms. Their old marketing targeted "lawyers" and "law firms with 10-50 employees". The ads were generic and the leads were terrible. We scrapped that. We redefined their ICP's nightmare: 'a senior partner missing a critical court filing deadline due to disorganised documents, exposing the firm to a multi-million-pound malpractice lawsuit.'

Suddenly, everything changed. We weren't selling 'document management software' anymore. We were selling 'career-saving malpractice protection'. We could now target our ads with messages that spoke directly to that deep-seated fear. The lead quality transformed overnight, because we were attracting people who felt that specific pain, not just random lawyers who happened to be scrolling Facebook.

You need to do the same. Stop thinking about who your customers *are* and start obsessing over what they're *struggling with*.

You probably should rethink your entire offer...

Once you know your customer's pain, you can look at the next part of the puzzle: your offer. This is the single biggest reason why campaigns fail, even with the right targeting. Your current offer is likely a standard "Contact Us" or "Get a Quote" call-to-action. This is a massive mistake.

A "Request a Demo" or "Contact Us" button is one of the most arrogant things you can ask a stranger on the internet to do. You're asking a busy, sceptical person to book a meeting to be sold to. It's incredibly high-friction. It provides them with zero immediate value and positions you as just another commodity vendor. Only the most desperate or the most clueless prospects will fill out that form. And the clueless ones are the ones who give you wrong numbers.

Your offer's only job is to provide an undeniable moment of value. An "aha!" moment that makes the prospect sell *themselves* on your solution. It has to solve a small, real problem for them, for free, right now. This builds trust and pre-qualifies them. Someone willing to engage with a valuable asset is a far better prospect than someone who blindly fills a contact form.

What does a value-first offer look like?

• -> For a SaaS company: A truly free trial (no credit card) or a freemium plan. Let the product do the selling. We've seen this work for countless software clients. One of our clients reduced their Cost Per Acquisition from £100 to just £7 by switching from a 'demo' model to a self-serve free trial. The product proved its own worth.
• -> For a service business (like an agency): An automated tool or a high-value resource. A free, instant SEO audit that shows their top 3 keyword opportunities. A 'Data Health Check' that flags issues in their database. For what we do, it's a free 20-minute strategy session where we audit failing ad campaigns. We solve a real problem for free to earn the right to solve the whole thing.
• -> For an eCommerce store: A quiz to help them find the perfect product. A detailed buyer's guide for a high-ticket item. A free sample (if feasible). Something that helps them make a better decision.

You have to shift your thinking from "how can I get their contact details?" to "how can I be genuinely helpful right now?". By doing that, you'll naturally attract people who are serious about solving their problem, and they'll be more than happy to give you a real phone number in exchange for real value.

The level of friction in your offer has a direct and dramatic impact on your lead quality and volume. A high-friction offer will always give you a small number of low-quality leads. A low-friction, high-value offer gives you a larger pool of higher-quality, pre-qualified prospects. Use the calculator below to see how this plays out. It’s a simplified model, but it illustrates a fundamental truth of online advertising.

You'll need to fix your targeting to match the pain...

Right, so we've defined the customer by their pain and we've created a high-value, low-friction offer. Now we need to put that offer in front of the right people. This is where we get tactical with targeting. Your "broad campaign" and generic "audience campaign" need a complete overhaul.

The key is to structure your campaigns around the customer journey, often called the funnel. We typically break this down into three stages: Top of Funnel (ToFu), Middle of Funnel (MoFu), and Bottom of Funnel (BoFu).

• -> ToFu (Top of Funnel): These are people who have the problem you solve but might not know you exist. This is where you use your pain-based ICP research to find them.
• -> MoFu (Middle of Funnel): These are people who have shown some interest. They've visited your website, watched a video, or engaged with an ad. They're aware of you but not ready to buy.
• -> BoFu (Bottom of Funnel): These are people who are close to converting. They've added a product to their cart, started a checkout process, or visited your pricing page. They just need a final nudge.

For a new account or a strategy reset, you'll focus almost entirely on ToFu and MoFu. You need to stop using broad targeting immediately. Instead, your ToFu campaigns should be built around highly specific, layered interests, behaviours, and lookalike audiences.

Let's go back to the Amazon e-commerce owner example. Targeting the interest "Amazon" is far too broad. It includes millions of shoppers. A much better approach would be to layer interests like: People who have an interest in "Shopify" AND are "Facebook Page Admins" of a "Retail" page. Now you're getting much closer to your actual target audience. You're targeting them based on the tools they use and the role they have, which are strong indicators they fit your ICP.

Once you start getting traffic from these targeted ToFu campaigns, you build your MoFu audiences. This is retargeting. You create audiences of:

• -> All website visitors in the last 30/60/90 days.
• -> People who watched 50% or more of your video ads.
• -> People who engaged with your Facebook or Instagram page.

You then show these people different ads. They already know who you are, so the message can be different. It might be a customer testimonial, a case study, or a reminder of your high-value offer. The goal is to build trust and stay top of mind.

Only once you have significant data and conversions should you even consider testing broad targeting again. And even then, it should be in a specific campaign optimising for conversions, where the algorithm has thousands of data points to learn from. Starting with broad is like trying to find a needle in a haystack by buying the whole farm. It's expensive and inefficient.

I've seen so many accounts transformed by simply structuring them this way. We worked with an eCommerce client selling cleaning products who was getting a terrible ROAS from broad campaigns. We restructured their account into ToFu (interest-based targeting), MoFu (website visitor retargeting), and BoFu (checkout abandoner retargeting). In the first month, their revenue jumped by over 190% and they achieved a 633% return on ad spend. It's not magic; it's just logical, structured targeting.

I'd say you can now understand what to expect cost-wise...

Before you spend another pound, you need to understand the numbers that actually matter. It's not just about getting the cost per lead (CPL) down. A cheap lead that never converts is worthless. A more expensive lead that becomes a loyal customer is a bargain. The key is understanding how much you can *afford* to pay for a customer.

This is where most businesses go wrong. They focus on the wrong metric. To figure this out, we need to calculate your Customer Lifetime Value (LTV). This is the total profit you can expect to make from an average customer over the entire time they do business with you. Once you know your LTV, you can work backwards to determine a sensible Customer Acquisition Cost (CAC).

The calculation is pretty straightforward:

LTV = (Average Revenue Per Customer Per Month * Gross Margin %) / Monthly Churn Rate %

Let's break it down:

• -> Average Revenue Per Customer (ARPA): Simple enough. What's the average a customer pays you each month?
• -> Gross Margin %: Your profit margin on that revenue. If a service costs you £20 in direct costs to deliver and you charge £100, your margin is 80%.
• -> Monthly Churn Rate %: What percentage of customers do you lose each month? If you have 100 customers and 5 leave, your churn is 5%.

Let's say your service is £200/month, your margin is 70%, and you lose 4% of your customers each month.
LTV = (£200 * 0.70) / 0.04
LTV = £140 / 0.04 = £3,500

This means each customer you acquire is worth £3,500 in profit to you. A healthy business model often aims for an LTV to CAC ratio of at least 3:1. This means for a £3,500 LTV, you could afford to spend up to £1,166 to acquire a new customer and still have a very profitable business. If your sales process converts 1 in 10 qualified leads into a customer, you can afford to pay up to £116 per *qualified lead*.

Suddenly, that £5 lead that gives you a wrong number looks incredibly expensive (because it has a 0% chance of converting), and a potential £50 lead from a highly-targeted campaign that has a real chance of converting looks like a fantastic deal. This is the maths that unlocks intelligent scaling.

Use the calculator below to plug in your own numbers. This will give you a much clearer picture of what your target CPL should be, and free you from the trap of chasing cheap, worthless leads.

This is the main advice I have for you:

Okay, that was a lot to take in. The core message is this: stop patching the symptoms (bad leads) and start fixing the root cause (a broken strategy). You need to completely re-think how you approach your advertising, from the ground up. It's a process, and it takes work, but it's the only way to build a predictable and profitable lead generation machine instead of a leaky bucket.

I've detailed my main recommendations for you below in a table. Think of this as your action plan for the next few weeks. Go through it step-by-step. Don't skip the foundational work on your customer and offer—it's the most important part.

As you can see, fixing this is more involved than just flicking a switch in your ad account. It requires a strategic approach that connects every piece of the puzzle, from deep customer understanding to the nitty-gritty of campaign setup. It can be a bit overwhelming to tackle alone, especially when you're also trying to run your business.

This is where expert help can make a huge difference. An experienced paid advertising consultant or agency has been through this exact process hundreds of times. We can quickly diagnose the core issues, build out the proper strategy, and implement the campaigns correctly, saving you months of expensive trial-and-error.

If you'd like to have a chat about your specific situation, we offer a free, no-obligation 20-minute strategy session where we can take a look at your campaigns together and give you some more tailored advice. It might be exactly what you need to get things moving in the right direction.

Hope this has been helpful and gives you a clear path forward.

Regards,

Team @ Lukas Holschuh