Comments on: Can We Do Right By The Customer And Still Make Money? http://www.leadconfidential.com/customer-choice-and-lead-gen.html Lead Generation Industry Insight Wed, 03 Mar 2010 14:22:29 -0800 http://wordpress.org/?v=abc hourly 1 By: michaelferree http://www.leadconfidential.com/customer-choice-and-lead-gen.html/comment-page-1#comment-64 michaelferree Wed, 05 Aug 2009 13:50:25 +0000 http://www.leadconfidential.com/?p=256#comment-64 A company must charge more for a lead that has less competition or that is being distributed less, obviously. It seems logical and simple enough to build a tiered pricing model based on how many companies the consumer chooses and I am sure that is what InsWeb is doing. However I think there becomes a problem with the pricing model when a consumer picks only one company. This is pure speculation, but I would guess, based on my experience of buying and selling leads, that the exclusive price is at the very top of the buyers acceptable price range and in fact probably is out of it. Unless the lead seller decides to accept a lower profit margin for these leads, which would be my guess is what is done. <br><br>This problem stems from the fact that exclusive leads do not always convert at a marginally higher rate as compared to shared. In other words, the increase rate of conversions doesn't match the increased price that is needed to sell a lead exclusively and the ROI could, in many cases, be lower then that of a shared lead. Now there are a lot of caveats to that statement, but I think it can generally be accepted. <br><br>Regardless, my guess is that a large % of the consumers pick multiple choices when presented with them and there only few that choose one choice . It would be interested to find out, especially for this type of self-serve model, how many choices is optimal to present for the consumer so that they choose the most options. Example: if I show 6 options will the consumer pick 3, if I show 3 options will the consumer only pick 1, etc. <br><br>Anywho, good post and I couldn't agree more that the consumer experience could be improved. The question is, as you already asked, how to do it and still make money and use quality media to do so. A company must charge more for a lead that has less competition or that is being distributed less, obviously. It seems logical and simple enough to build a tiered pricing model based on how many companies the consumer chooses and I am sure that is what InsWeb is doing. However I think there becomes a problem with the pricing model when a consumer picks only one company. This is pure speculation, but I would guess, based on my experience of buying and selling leads, that the exclusive price is at the very top of the buyers acceptable price range and in fact probably is out of it. Unless the lead seller decides to accept a lower profit margin for these leads, which would be my guess is what is done.

This problem stems from the fact that exclusive leads do not always convert at a marginally higher rate as compared to shared. In other words, the increase rate of conversions doesn't match the increased price that is needed to sell a lead exclusively and the ROI could, in many cases, be lower then that of a shared lead. Now there are a lot of caveats to that statement, but I think it can generally be accepted.

Regardless, my guess is that a large % of the consumers pick multiple choices when presented with them and there only few that choose one choice . It would be interested to find out, especially for this type of self-serve model, how many choices is optimal to present for the consumer so that they choose the most options. Example: if I show 6 options will the consumer pick 3, if I show 3 options will the consumer only pick 1, etc.

Anywho, good post and I couldn't agree more that the consumer experience could be improved. The question is, as you already asked, how to do it and still make money and use quality media to do so.

]]> By: srascoff http://www.leadconfidential.com/customer-choice-and-lead-gen.html/comment-page-1#comment-63 srascoff Tue, 04 Aug 2009 16:45:49 +0000 http://www.leadconfidential.com/?p=256#comment-63 Great post. Thank you for the Zillow Mortgage Marketplace example!<br><br>- Spencer from Zillow Great post. Thank you for the Zillow Mortgage Marketplace example!

- Spencer from Zillow

]]> By: martinhudon http://www.leadconfidential.com/customer-choice-and-lead-gen.html/comment-page-1#comment-62 martinhudon Tue, 04 Aug 2009 15:22:46 +0000 http://www.leadconfidential.com/?p=256#comment-62 Great post! <br><br>What else is there to say than what you covered so well. It's just hard for most lead generation companies to take the time/money to turn their business on their head and focus on transparency and quality.<br><br>It's a decision very hard to make when you're making lots of money. The key thing to do is changing focus from the short term to looking further forward. <br><br>Hard decisions to make indeed but this is much easier for new comers to jump ahead and focus on transparency and quality. Great post!

What else is there to say than what you covered so well. It's just hard for most lead generation companies to take the time/money to turn their business on their head and focus on transparency and quality.

It's a decision very hard to make when you're making lots of money. The key thing to do is changing focus from the short term to looking further forward.

Hard decisions to make indeed but this is much easier for new comers to jump ahead and focus on transparency and quality.

]]>