Performance Marketing Today: So Many Solutions, Still So Many Bad Leads

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ADOTAS – Those in performance marketing operate in an interesting world. It’s all about scale — more clicks, more leads, more sales. It’s a constant balancing act between volume and quality. In an ideal world, every lead would turn into a customer. It would make for a simpler world, but it doesn’t scale. And, when you get paid only on a performance basis, it may not be right, but it’s understandable if a marketing partner focuses more on the volume side and and less on the quality side.

Quality versus quantity is always an interesting topic. It’s one that will always remain relevant so long as businesses need additional customers. It’s a topic with little consensus, where one’s views depend heavily on which part of the ecosystem a company sits. Ask any buyer, and they can tell endless stories about bad leads, poor quality, undesirable practices, unscrupulous companies and more. Ask any seller, and they will tell you countless stories of leads not called, leads that were allowed to go cold, leads where they contacted someone but said to the buyer they didn’t, and other stories of mishandling the marketer’s hard work.

Has quality increased over time? That’s an even tougher question, because if it hasn’t increased, then whose fault is it? Then again, is it anyone’s fault? Perhaps it is the market dynamics. Take the mortgage space, for example. In 2003, the conversion rate for leads was higher than it is today. But jumping to conclusions about who to blame would be entirely incorrect. It’s the market, not the players in the market. In 2003, very few people had refinanced, but more importantly, the mortgage brokers had greater ability to get people loans. Obviously, unlimited ability to underwrite loans didn’t help the economy in the end, but the reaction to that has meant fewer people can get loans, even from people who are highly interested and should qualify.

It does not come as a surprise, at least, that as markets mature and/or as more people become aware of a product or service, and/or as market dynamics change, quality, if defined by ultimate conversion rate, decreases. Fine. It is what it is. But, on the other hand, you could easily make a case that it shouldn’t be. The amount of technology available and implemented to help turn quantity into quality is unlike that of any other period in performance-based marketing. It can tell you if an address is correct, or compare physical addresses to phone numbers, even to names. There is technology that can tell you the likelihood that person will turn into a customer, not to mention technology that can tell if the person entering the data is actually a person. We can validate, verify and squash fraud, but at times it seems like things are just staying steady in the battle to move the needle of quality. Why?

Here is where we make an over-the-top plug for LeadsCon East, where some of the most successful, smart, and opinionated executives and entrepreneurs will discuss the topic. They don’t agree on everything, but here is something upon which all can agree. Lead generation is really tough. It’s harder than clicks, and in many ways harder than sales, because the sale doesn’t happen right away. There are so many moving pieces, it’s amazing that things can work this well. An impression, a click, a “lead,” the routing of that lead — data or call, the follow-up, the sale, the attribution. Each part has room for errors, but one of the big ones that gets overlooked is during the routing.

Quality can’t happen unless you know that something is quality, and that’s where so little time has been spent to date. Here’s what happens. Buyers set price based on performance, but — and it’s a big but — performance varies widely by source. Let’s say that a buyer pays $10 for an auto insurance lead. Their conversion rate dips, so they lower their price to $8. When you take all leads as one source, $8 is the right price, but you’ve now just dinged not the bad guys but the good guys. The bad guys are still overpaid at $8, but the good guys now don’t send traffic, so it creates a losing proposition all the way around. In this case, it’s not that quality is lower;it’s that the ability to reward quality doesn’t exist. That’s where we will hopefully get a system where quality is quality and quantity is quantity — one doesn’t have to impact the other, because correct pricing exists to ensure you buy what you want.

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