A Lead Dilemma

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thinker1.jpgDuring his presentation at TARGUSinfo’s most recent online lead quality summit, Terrence Thomas, CMO of eLearners, made a comment that sounded like any other, but some comments end up sticking with you more than others. It’s nothing dire, given eLearners stake in the online lead generation market as both one that earns all their money from it and whose parent company Halyard Capital Partners has invested more than a hundred million on its acquisitions in the education space. Having picked up several highly regarded shops, Terrence’s statement reflects, if anything, a selling point as they approach others in the market. For everyone else it underscores an important point, “There are only so many quality leads.” There are a lot of leads out there, and while no one doubts that all leads are not created equal, I’m not sure what dialog, if any, has taken place around how those leads fall along the quality spectrum, and what if anything can be done to shift the dispersion. This week is all about exploring the scarcity in quality leads and the quality spectrum.Let’s start with the lead spectrum. Presented below is a rough estimation of the relative dispersion of leads by quality. What makes a lead high quality versus one that doesn’t? You could probably ask ten people and get eight different answers, so let’s go with one of the metrics for quality, the close rate. High quality leads require fewer in quantity to gain a customer. In mortgage, the higher quality leads would turn into funded loans with greater frequency over the same number of leads than the medium ones, and the medium one would require fewer than the low quality ones. Per the graphic below, low quality leads make up the majority. Perhaps calling them low quality does them a disservice, so we’ll simply call them lower converting leads.Lead Dilemma Spectrum

If close rate determines quality, then intent impacts it. The graph below illustrates the relationship between quality and intent. The greater the intent, the higher the quality, which in this case implies a higher close rate of a lead. A person that types into a search engine – california refinance options – who then fills out a form, will on the whole convert to a lead more frequently than someone who clicks on a catchy banner. The person clicking on the banner has shown less intent, even on a contextually relevant page. It’s the reason why clicks on content, even with Google, will cost less for the same word than clicks from search. Do intent and quality have a linear relationship? It probably varies by industry as opposed to the directionally accurate representation here.

Lead dilemma intent and quality

Let’s assume that your business reflects a cross section of the lead spectrum as a whole. The dilemma comes when you need to increase the lead flow. It’s an easier problem for those who have low quality leads; they can only go up. They probably won’t, but wishful thinking never hurt. The challenge of generating more high quality leads gets tougher when you’ve already achieved decent scale, like LowerMyBills has. With their reach, they will already have among the greatest quantity of high quality leads, but they will have plenty of other levels too. The below shows what happens to a company already at scale that increases their reach – leverages the long tail, ups the ante on display, etc.

Lead Dilemma Spectrum Growth

Look below, and see the net result. The real volume gain comes not from the top but from the bottom, from the low quality leads.

low quality leads

Unfortunately, there is no quick and easy solution for generating high quality leads, especially from companies that have already achieved a reasonable level. Companies that have high quality leads today can get more, but the main thought here is to be realistic. Understand where your leads fall along the spectrum and don’t immediately think that you will get more of one type without the other.

Ideally, companies would have means – manual and technological – that could help increase the level of intent from the lower quality leads, turning them into higher quality leads. This is very different from validation, which will help reduce the number of leads but doesn’t necessarily increase the quality of the valid leads.

From a lead buyer perspective, the understanding that good leads don’t grow on trees, that you can’t just order up more, will save time and frustration. You can up the rate, but depending on where the company falls along the lead volume spectrum, their ability to generate more will be tough. Ask some questions of them. Find out what percentage of their leads you are getting and what you could do to get more. If you already command a large percentage of their lead flow, then no price increase can truly make a difference.

Non-reputable firms will gladly take more money per lead and promise more high quality leads, but these companies will simply buy lower quality leads (as they are easier and cheaper to obtain) and enjoy a margin boost. Anytime you increase in volume, watch the quality carefully – a little degradation is natural if either they or you have hit the quantity threshold, but you should not experience a huge dip.

Editor
DM Confidential
www.dmconfidential.com

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