Challenges of Being A Small Lead Buyer
Our recent conversation with AllSeniorHomes, reminded me of another recent interaction, not with a lead generator but a lead buyer. I was having breakfast with a friend and one of their friends. The friend of a friend turned out to own a boutique moving company specializing in moves from New York City to South Florida. For those familiar with their East Coast geography and the migratory behavior of a certain demographic, focusing on that particular route isn’t accidental. Anything but arbitrary, it’s a specialized product that attracts a very specific demographic. What surprised me though was learning that this small company supplements its referral business with the purchase of online leads – surprising because we often think of those fulfilling the higher end of the service spectrum as being unwilling to embrace lead generation. What I found more fascinating than the purchase of leads are the challenges they face in the ecosystem.
Just as the small to mid-size businesses make up a great percentage of the employers, they also make up a healthy percentage of the lead buyers. Certain areas of online lead generation, like online education, will have a disproportionate percentage of the leads going to a handful of buyers, but that isn’t the case in all verticals, not in auto insurance lead generation (for aggregators with a strong buyer network) and not in moving. The small lead buyers, just like any smaller quantity advertiser, can be a Catch-22. It takes a lot of small lead buyers to make up the volume of a larger lead buyer, and the smaller lead buyers tend to have two other disadvantages – a) they are harder to deal with because they are more sensitive to fluctuations in lead performance/behavior, and b) they tend to have less sophisticated systems for following-up with leads.
It’s one thing to be a small lead buyer in a market full of just small lead buyers. It’s another to be a small lead buyer in a market where they receive the same lead as a larger, more institutionalized player. For that smaller player, a lag time of a day to get to a lead doesn’t necessarily seem like a bad thing. For a large buyer though, they often – either as a result of in-house efficiency or working with companies like Lead Qual or Double Positive – will have the phone ringing minutes after receipt of the lead. Were we speaking of just hot transfers, it would be different; instead we are focusing on just data leads. Here, the buyer is responsible for follow-up and management, and there is both challenge and opportunity. The challenge isn’t just competing to get to the lead quickly, it’s not having the staff. Unlike a large lead buyer, the small lead buyer doesn’t have a dedicated team to call on the leads. In the moving leads example, the owner of this highly lucrative company is the one who is getting on the phone and sending out emails. That’s not necessarily the best use of his time.
I see opportunity in this, because the total number of small lead buyers is already significant, and more importantly, it’s just the tip of the iceberg compared to where will be in two, five, or even ten years. While we might have specialized software for certain industries, e.g. mortgage, to manage the leads they receive, there isn’t this robust platform for all types of lead buyers. Many moving lead buyers , for instance, license an industry specific CRM system. This system allows them to fire off automatic emails to the leads they purchase repeating much of what was captured – the date of the move, size, location. And, if the agent gets a lead on the phone, they can update that information centrally, and send out a revised email that can act closer to a contract. But, it’s a clunky system with much to be desired for the lead buyer and consumer.
We will hopefully come to a point in time where there is an integrated system – lead management and analytics with modules that buyers can enable such as verification, scoring, and tapping an outside firm to translate data leads into hot transfers. These are all things that the large buyers, but they have it only because they have had to built it or they have the savvy to integrate multiple different services. Just as Salesforce has transformed the way many sales people and sales organizations deal with their clients and prospects, so to will there come a time when a similar product can exist for those buying leads online. And, I can’t wait as strides are made because it will lower the barrier for buying leads and create a virtuous cycle of companies of all sizes using online lead generation.
