Lead Confidential

As an advocate for the online customer acquisition industry, I want to see more buyers buying leads. Without buyers, the industry can generate all the leads it wants, but it would be a virtual spinning of the wheels. Consumers aren’t helped, and generators lose not only financially but more so because they can’t help the user. We saw this with mortgage lead generation during the financial crisis. The supply of leads didn’t diminish; the ability to service those leads did.

“Coverage” is a topic in and off itself, but in short coverage refers to a generators ability to sell leads regardless of location. National brands generally mean greater coverage. There are only so many large, national brands though. For many of the growth areas of lead generation, coverage comes from a greater number of buyers who buy smaller amounts of leads, often with greater restrictions (time of day, geography, etc.). Connecting buyers and sellers is a little bit of a chicken and the egg. As a seller, you want to get paid for your leads, especially as there was a cost to generate them. As the buyer, you don’t want to get ripped off.

It’s a game of trust that to date has left a bad taste in many people’s mouths when an imbalance occurs. For an example of the chicken and the egg, read the below, shared by a buyer in a newer vertical (non-mortgage, non-edu):

With [redacted], they want our business and [redacted] is dealing with someone. The issue there is that they want 5k up front committed funds. We have no problem sending them 5k. Our problem comes in that if they send us a bunch of garbage, we want the ability to cancel and get a refund on the unused balance. So far, we have been unable to accomplish this. So, I was hoping to get [redacted] a contact that might waive this provision. We have been burned a few times by companies promising good leads only to send bad leads. We have no problem testing a company for 1k or so to see how they do but 5k is a hefty test to take a chance on given our experience. Make sense?

Chicken and egg considerations:

Pre-pay vs. credit – This is ultimately dictated by leverage. The bigger player gets to decide on average. If you are Quicken Loans, you get to pay on credit. If you are Google AdWords, you get advertisers to pay upfront with a credit card until they reach a certain size. There is no right answer. But, the onus is more on the seller than the buyer. If a seller wants pre-payment (assuming they do not have a credit card, auto-charge system), they and the seller must come to an agreement regarding the product and expectations. That is really the key.
Trust – When two parties have an established working relationship, what they really have is trust. If you are a buyer, you know that you will receive a certain quality product, and more importantly, you have assurances of what will happen if those conditions are not met. As the seller, you want to know that the buyer won’t just use you for free product. You also want to know that the buyer won’t blame you for their shortcomings, e.g., too busy to call on all leads, not trying leads more than once, expecting 100% close ratio, etc. Trust is the aim, but trust must be earned. The barrier for trust can be low ($1k versus $5k), and both sides need to earn it.
Refund, Refund, Refund – I’m a big believer in a good refund policy. A good refund policy is not whatever the buyer wants, nor is it draconian restrictions. It’s just like buying merchandise at a store. The best retailers generally have some of the best refund policies. Why? Because they believe in their product. The same should be true here. If a seller has a good product, they can afford to stand behind it. Those that require high pre-pays with poor return policies don’t mean they are bad. They too could have been burned by buyers, but I still think the onus is more on the lead generator than end buyer.

Category: General Thoughts
Tags: lead buying, lead selling, new lead buyers
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Howard

You're entirely right that the "trust" aspect has to be earned...over a long-term. It seems human nature that anyone who is selling leads would cherry-pick what they know to be the best-quality leads at the beginning of the sales process. As time goes on, lead quality diminishes. We've all been there before where this has been the case. The challenge is to have a long-standing advertiser base that will stand behind you.

Ross Treakle

The interesting part is that if we found a couple companies that actually delivered on their promises, we would be more likely to spend the up front guarantee. In the lead generation space, I am sure both the buyer and the seller have been burnt. Our current track record is 1 out of 4 that have actually delivered on their promises. I even had someone send me a press release that mentioned their renewal rate, well one our failed companies mentioned an even higher renewal rate. Press releases, renewal rates and guarantees mean nothing. Let me use your service and deliver a balance of both quantity and quality, then I will be a customer for life.

GM

try Underground Elephant - super-reliable - G. Merx

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