double POSITIVE Marketing Group, Inc.

Post By
Brian Ocheltree

How to identify value while diversifying and increasing lead supply

Summary

• The value of aggregator leads – both shared and exclusive ­­– has changed
• After self-generated leads, the best option might be aggregator leads, not paid search
• Shared leads are often a better value than if the same leads were exclusive
• Lead-Buyers should also test exclusive leads to determine whether they convert better
• New quick connections allow Buyers to add more lead supply, from more diverse sources, without adding IT integration costs

A New Mix of Business Drivers

When planning the integration of Internet leads into the company’s sales and marketing efforts, Lead-Buyers need to check their assumptions about shared versus exclusive leads.  The market has changed.  Optimized properly, both lead types can be significant growth drivers.

The Problem of Shared versus Exclusive

There’s a misunderstanding about the value of the different types of leads today.  Because exclusive leads can be 2-3x the cost of shared leads, some Lead-Buyers think they are too expensive.  But are they?  Others think that because shared leads are shared, they are not worth the price.  Is that correct?  Could both be right?

Rather than guess at answers, DoublePositive recommends taking a step back and considering the facts.

Your Most Valuable Leads

First, a word about your most valuable type of online lead, the self-generated branded lead.  These are the leads generated from your own website typically.  Generally, these leads are the highest quality because they are from highly motivated, proactive consumers who tend to be “in market” and are therefore the consumers most likely to convert.  In addition, self-generated leads are often very inexpensive since many come from free organic search traffic.

So, if self-generated branded leads are the best, and usually the cheapest, why do anything else?

In most cases, the volume of self-generated leads is not sufficient to hit required sales goals.  Increasing the volume is a slow process, and Lead-Buyers can’t simply “step on the gas” to generate more self-generated leads overnight.  You can use paid search to increase the volume quickly, but in most markets, this becomes cost prohibitive quickly due to brand advertisers bidding up the primary keywords to unrealistic prices.   Think of trying to compete with Geico and Progressive for the key phrase “Auto Insurance” to drive traffic to your website.  It doesn’t work.  So, to fill the gap between self-generated leads and sales goals, aggregator leads are one of your best options.  Both shared and exclusive should be considered and ideally tested since everyone’s situation is different.

Are Shared Leads a “Necessary Evil”?

Some Lead-Buyers have always believed that shared leads are bad.  We hear it all the time.  Shared leads are “a necessary evil”.

DoublePositive challenges our clients to look deeper before deciding whether that statement is true.  Some shared leads are bad, no doubt.  Perhaps most are.  But we have found that if a shared lead is bad, it probably isn’t because it’s shared, but rather more likely due to other reasons.  For example:

• The lead was generated from a low quality source
• The lead was sold too many times, or is aged
• A Lead-Buyer has abused the lead with unscrupulous dialing methods

Are Shared Leads Any Good?

A complaint I hear every day from our lead buying customers is that shared leads are no good because they are shared.  There is too much competition fighting over the consumer’s attention, they complain.

While it may be true that these leads would be better if they were not shared, they become less attractive when the price is adjusted appropriately.  Suppliers would have to charge 2-3x the price of a shared lead to make their economics work.  And I do not believe these leads would convert 2-3x higher if they were exclusive, which would be required to justify the higher price.  Keep in mind that if a consumer is truly “in-market” and motivated to buy, it is likely that they visited multiple supplier sites and submitted multiple forms, so even though you got an exclusive lead from one supplier, you probably aren’t the only sales organization calling that lead.

During a recent client visit, my client asked “How do the lead suppliers do it?  They only charge me $7 a lead, and it costs me $50 per lead to generate on my own through paid search.”  I was speechless.  This was the first time I had ever been asked that question, and usually it’s the opposite.  In my opinion, sharing the leads is a big reason the economics work for all of us.

What about Exclusive Leads?

If all else is equal (lead type, lead source, speed to lead, etc.), then an exclusive lead should convert higher than a shared lead simply because there are fewer companies pursuing the sale.  However, all else is rarely equal, and these other attributes contribute more to the likelihood to convert than the exclusivity attribute, I believe.

Just as with shared leads, some exclusive leads are good, and some are bad.  We believe the best plan is to include them in your testing and optimization process along with shared leads so that you can see which type and sources convert the best for your particular situation.  As long as all lead sources are optimized for Cost Per Sale Per Supply Source (see DoublePositive white paper “Tapping the Value of Supplier Leads” at http://bit.ly/lnjmaz), the more supply sources you have, the better.  For the clients whose lead supply we manage, we rarely see the cheapest lead source being the lowest cost per sale, or the highest priced lead source being the highest cost per sale.  It is different in almost every case, and it changes over time as each supply source adds new affiliates, and other lead sources to their offering.

Access to More Suppliers

As we have shown in previous white papers, there are compelling financial reasons for having as many supply sources as possible.

A supplier offering exclusive leads generated from search is just one example of the multiple lead sources available.  In our opinion, every Lead-Buyer should try out as many lead sellers as they can.  Especially since the greatest obstacles to connecting with these suppliers has been eliminated.

Utilizing Third-Party Connectivity

In the past, the technical integration to connect to more suppliers was difficult and time consuming.  For many clients, getting connected to new suppliers could take months, if not a year or more, due to the technical and testing requirements with each data feed.  This level of complexity and cost prevented most companies from engaging with any but the largest of suppliers, at least initially, thus limiting their supply diversification.  It has been difficult to justify the effort for a small set of new suppliers.

Third-party connectivity platforms have eliminated this problem.  DoublePositive’s Lead Funnel, for example, facilitates and automates the physical connection to many lead sources automatically.  Lead-Buyers simply build one physical connection that is already connected to multiple supply sources.  This allows them to maintain a direct relationship with the supplier, without incurring technology integration costs.

Lead-Buyers with a Lead Funnel can turn the lead flow on and off for new suppliers, without any expense, and pay only for leads.  Let’s take another look at how it works:

In the above illustration, “You” are using a DoublePositive Lead Funnel to make a single data connection to multiple, diverse suppliers.  Our proprietary Translation Engine handles the entire custom data mapping per supply source.  By building one connection to the Lead Funnel, the company can be connected to virtually every supplier, large and small, quickly and efficiently.

Once the necessary connections are in place, Lead-Buyers can add and test new sources at the same time, filling the gap between self-generated leads and sales goals.

Review

What options are available for companies looking to leverage diversified lead types and drive growth?  Let’s review the facts.

1. Misconceptions about the value of shared versus exclusive leads can cause missed opportunities for today’s Lead-Buyer
2. A shared lead can be good or bad, depending on factors such as speed-to-lead, quality of lead, lead type, source, etc.
3. The best exclusive leads often are not exclusive, because a motivated buyer is likely to visit multiple “exclusive” supplier sites and submit multiple forms
4. Connecting to a Lead Funnel allows companies add more suppliers and test more shared and exclusive leads, without adding IT costs
5. Companies that pay only for the lead, and optimize their supply sources, can successfully use both shared and exclusive leads to reach sales goals