By Sean Fenlon on April 5, 2008
LeadsCon Blog Coverage Table of Contents:
LeadsCon Learning from The Offline Marketers
This panel made me think more than once about my post long ago about quality, quantity, and cost. Before the Internet, direct marketers relied heavily on direct mail and telemarketing. Mailing to or calling the consumers with the highest probability of conversion into high-value sales was the primary driver, which meant modeling and scoring the list. Companies such as Capital One and First Equity Card have generated unbelievable profits by modeling and scoring consumer data.
In the early years of Internet leads, the quantity of leads was relatively low, the quality was relatively high, and the cost of an Internet lead ($10 – $100) was substantially greater than the cost of a cold consumer data list (which cost perhaps $0.01 – $0.50 per record). Thus the need for and desire to model and score leads was virtually non-existent. Fast-forward to 2008, and the quantity of Internet leads being generated is excruciatingly high, and the bands of performance of these leads has broadened tremendously.
This panel was based upon the premise that all Internet leads that are being generated absolutely are not created equal, and that the methods for modeling and scoring consumer data from the offline world ports over very nicely to the Internet lead world. In fact, these days, the function can yield even better results since 5 or 6 fields of consumer data (i.e. name, address, phone, email) can be appended with hundreds and hundreds of other pieces of data that can make the scoring algorithm much more robust.
During the end of the panel during Q&A, an audience member stood up to make some skeptical arguments about a “one size fits all” score, and that every lead buyer would need their own scoring algorithm. While I’m certain eBureau would be more than happy to setup a unique scoring algorithm for each and every lead buyer in the world, I was impressed with how David Dowhan handled the answer. He merely pointed out that some (if not most data) that gets appended to a lead, can have a profound impact on the predictive nature of a lead score, and is indeed empirical – meaning it does not vary from lead buyer to lead buyer. He mentioned consumer credit or buying power. It’s a great point, David. Doesn’t matter WHO the lead buyer is or what source the consumer came from – if they can’t afford it, they ain’t gonna buy it.
As a side note, I was also very impressed with David in a conversation I had with him in the lobby of the conference. I too have been preaching that “not all Internet leads are created equal,” which is the business thesis for having started DoublePositive back in 2004. But David made an example that I had never fully thought through, that even though a consumer that goes through our Hot Transfers is 1. Live, 2. Genuinely-interested, and 3. double-qualified, that not all hot transfers are created equal either. We agreed to collectively test some theories to see exactly how much predictive variance there is in LIVE Hot Transfers.
Uncovering Local Lead Generation
Moderator: David Carlick, Managing Director at VantagePoint Venture Partners
Peter Adams, President of Matchpoint
Dick Larkin, Strategic Sales at Spot Runner
Paul Ryan, CEO of DoneRight!
Robert Wright, EVP Business Development at ReachLocal
I did not expect to get much from this panel. “Local” lead generation is such a different animal than lead generation in the mega-lead-buying verticals (mortgage, education, debt, insurance, automotive, etc.) that I’m so familiar with. “Local” lead generation is directly going after the $10-$15 Billion per year spent by local advertisers in their local yellow pages. Thus, “Local” lead generation can span across hundreds if not thousands of “verticals.”
That I said I was pleasantly surprised as to how incredibly engaging I found this panel discussion. Of course, all the panelist shared the same challenge of how to acquire customers (local locksmiths, plumbers, florists, etc.) without the 30,000+ “boots on the ground” that are represented by the yellow pages collective sales forces who will go to see the advertisers once or twice per year at their shop and sell them an ad. Explaining the Internet, clicks, leads, calls, and the economics of it all to this market via telesales does indeed sound challenging.
I was particularly intrigued by Paul Ryan’s liberated view of lead generation to include offline and online channels. His argument was that the vast majority of local leads were NOT originating on the Internet, and what small pieces of the pie that were are being over-bought by too many local lead gen firms and/or agencies.
I was also really impressed by some of the value-added features that Spot Runner has been adding, including call tracking, data appending, and hyper-demographic-targeting based upon TV media buys.
I was also impressed to learn of the consumer-advocacy angle offered by DoneRight, to function as a vetting mechanism in the fraud-filled area of home improvement and other home contracting services.
This market is big and it’s real. That said, these early days of this paradigm shift from yellow pages advertising to other higher-tech alternatives must be painfully frustrating to these firms at times. I know how frustrating it can be to work with a lead buyer spending $100K/mo, so I can only imagine the noise of working with a much less sophisticated customer spending $400 per month. These guys were all very impressive and engaging speakers.
Other significant players in this space that were not on the panel include Yodle, Leads.com, and LeadStream.
Lead Management Systems – Lead Gen’s Killer App?
I found this panel to be one of the more timely and relevant panels of the entire conference. The panelists were the CEOs of the four most significant Lead Management System providers. These entrepreneurs are filling a badly-needed void.
Many are familiar with Salesforce.com, a company that has helped to define “Software-as-a-Service” (SaaS), whereby users of the web-based system pay per user per month. However, Salesforce.com is almost entirely designed for B2B selling environments and is extremely difficult to adapt to B2C selling environment – especially those driven from Internet lead generation. Bill Rice offered a good analysis as towhy these Lead Management Systems (LMS) should not be tagged as CRM (which stands for Customer Relationship Management). His argument is that the first two acronyms “Customer Relationship” are incongruent with the spirit of receiving an Internet lead. An Internet lead is neither a customer (yet), nor does a relationship exist with that consumer (yet). I found this to be a valid point.
Each of these firms integrate directly into most major Internet Lead Providers, so that leads can be delivered directly into the Lead Management Systems, and then subjected to logical workflow and assignment rules.
The moderator was “Lead Critic” Michael Ferree, who had spent many years on the (mortgage) lead buying side, and recently joined ZipSearch on the lead selling side.
The panel was very vibrant/lively with several smart CEO’s engaging in meaningful (and sometime a bit edgy) debate. A topic that came up early and often was new features and new feature-sets. The question was raised, is the more the better? Is there ever enough? Leads360 appears to be leading the new-feature-release race, while Rick Doyle described LeadsMailbox as being more of model of only releasing new features that the customers are specifically requesting as customizations. Bill Rice used the features debate to broaden the argument into whether Lead Management Systems are “boxing in” the users, and thus encouraging less user adoption, not more, which is the goal. He also took the opportunity to announce a new paradigm (my word, not his) in Lead Management – SalesTwit. I have not yet visited this site (as I am writing this on my plane ride home), but I remember it being described as using the Twitter infrastructure to liberate the Lead Management user in such a way that they use whatever engagement channel is more ideal for them at the moment, such as IM, SMS, etc. I’ll be curious to learn more about this idea.
Bill Rice also stirred the pot a bit as he announced SalesTwit would be free (not sure yet if that means ad-supported or a freemium play or something else), but Rick Doyle was quick to request from all his fellow panelist to ensure that they are getting fairly paid for the great value they are all creating.
I consider these firms to be the heroes of our industry. For lead sellers to command a higher yield for their efforts, they will need lead buyers to “squeeze more juice” out of their leads. Moreover, lead buyers will need more detailed reporting on the true performance and ROI of their lead buying, and these systems facilitate both of those things. Anecdotally, I would say the majority of lead buyers do little or no lead management or lead tracking – some merely print out leads on paper and then hand the paper to their sales professionals.
I made an offer during my panel (and challenged all the lead sellers in the audience to do the same) that DoublePositive will pay Lead Management System’s monthly bill on behalf of the lead buyer (or Hot Transfers buyer, as it were).
Hot Transfer and the Latest Advances in Voice
So, this was the last panel of the event, and not surprisingly was the least attended. That said, the remaining attendees were quickly to flow toward the front/center seats and appeared to be quite engaged. The panel was originally scheduled for four panelists. Per Petterson (Co-founder & CTO of LeadPoint) was to replace the original assignment of David Sobie (GM of the Education Vertical at LeadPoint), but we were all surprised that LeadPoint stood us up. I’ll try not to take it personally, Per. ;-)
The panel began with an ounce of accidental comic relief as the moderator Jason Stoffer announced me as “Sean Fenlon, CEO of LeadPoint” to the crowd, to which I quickly asked him to take another look at the sheet. In full disclosure, Jason and I have known each other for a few years now, but only by phone and email – this was the first time we had ever met in person. It was a simple mistake – besides, I am nowhere near as good-looking as Marc Diana. ;-)
Jason let each of the panelists speak for a few minutes about their business and the evolution of data leads to live leads. This gave me the opportunity to go through my well-rehearsed chronicling of how performance-based advertising has gone from CPM to CPC to CPA/CPL and now CPT (or Cost-per-Transfer).
Sam Reed had the luxury of describing many dynamics that are more specifically designed to work well on both the supply-side and the demand-side of his business since Find Your Customers has strategically focused entirely on the Debt Settlement industry. Conversely Andrew Coleman and I had to describe business processes that could work equally well across all verticals. We also discussed some of the more notable differences between the LeadQual business model and that of DoublePositive. DoublePositive has two business model “offerings” – a full-service retail offering (our primary offer in both the mortgage and debt settlement industries), which we bundle in the lead buying in addition to the hot transfers services into one single cost-per-transfer. The other DoublePositive “offering” is what we call Platform-as-a-Service, where we unbundle the lead buying from the hot transfers services (our primary offer in the Insurance and Education verticals). Thus, the lead buyer has two cost-centers. This unbundled platform approach is the sole approach that LeadQual offers, however our respective pricing models are slightly different – DoublePositive offers a price-per-transfer, while LeadQual price per lead managed. Hypothetically, the overall cost could be example the same. For example, if it takes four Internet leads to generate one transfer and LeadQual charges $3 per “managed” lead and DoublePositive charges $12 per transfer, the cost is exactly the same. That said, there are some performance dynamics that could conceivably make one model more attractive to the lead/transfer-buyer than the other.
During questions from the audience at the end of the panel, a lady stood up and identified herself as a lead buyer in the education vertical who has tested Hot Transfers (the “bundled” variety as described above, not the “Platform” approach) from some un-named source. She described horrible experiences where consumers were on the phone with a call center about something completely unrelated to education (I believe she gave an automotive example) and then the consumers was asked if they wished to speak with someone about furthering their career through education and ultimately transferring the consumer directly to the schools’ enrollment counselors. All the panelists were quick to point out that that was not our respective business practices and/or business models. What the questioner was describing was clearly some sort of cross-sell offer. For veterans in the leads business this is the moral equivalent of the co-reg path. As the co-reg and other forms of incentive-ized marketing taught us all back in 2002, not all leads are created equal. And as it applies to cross-sell offers to live consumers, not all Hot Transfers are created equal either. Hopefully we explained the differentiation to the audience member sufficiently that she will not close the door on Hot Transfers categorically, but will test out an industry leader instead where the results are more valuable by orders of magnitude.
I was thrilled to be on the panel with both Andrew and Sam. I thought there was a genuine sense of collegiality amongst the three of us. I also thought that Jason Stoffer did a remarkable job at moderating. He was very modest in introducing himself as a Sr. Associate for Maveron (Venture Capital) – Jason was one the pioneers in the education space to engineer an internal hot transfers process during his days at Career Education Corp.
My only wish is that Hot Transfers panel gets more front-and-center placement in LeadsCon 2009. No pressure, Jay. ;-)