Lead Generation in the UK

The changing face of lead generation

The following blog post recently appeared on IFAonline.

It was not so long ago – less than 18 months – that lead generation had a bad reputation. The finance press was full of horror stories about unscrupulous lead providers based in far flung corners of the world taking brokers’ hard earned money and providing poor quality leads. Even for the advisers that had found their way to a reputable lead provider, buying leads was perceived as something extra rather than a significant source of new business. In truth, most decent adviser firms didn’t really need lead generation as many could rely on their own client banks and referral networks to generate business.

Fast forward to 2009 and everything has changed including the perception of lead generation as an industry. Most of the cowboy outfits have disappeared and lead generation is now widely accepted as a very powerful marketing tool for financial advisers. This process has been hastened by the current economic turmoil where adviser firms of all sizes are wondering where their next piece of business is coming from.  At the same time more and more consumers are going online to find out about financial products and services. As lead providers connect these online consumers with the companies that can help them, naturally advisers have started to flock to lead generation.

Whatever the macroeconomic environment lead generation has been proven to work and often the difference between the successful lead buyers and those that aren’t is down to the lead buyer themselves. For many companies that have used more traditional forms of marketing in the past, coming to lead generation for the first time can be quite a culture shock.

One of the key factors that determines whether a lead generation campaign will be successful is the initial commitment of the lead buyer in terms of number of leads. The reason for this is simple mathematics. For example, if 25% of life insurance leads convert on average, if you buy 100 leads it is impossible to predict whether they will be the first 25 or the last 25 so you need to receive all 100 to see that conversion rate. Committing to this volume of leads can be a significant investment for any adviser firm so the ones that are prepared to make this outlay have a larger incentive to make it work and as they have committed to more leads they are more likely to generate the desired return on investment.

18 months ago there weren’t many adviser firms that either needed to or were willing to spend a significant amount on lead generation but today there are. The result of this shift is that more advisers are now buying leads in the right way and more are making a good return from their investment.

The Future of Lead Generation

Last week saw the world’s biggest online lead generation conference in Las Vegas aptly named LeadsCon.

Our CEO, Marc Diana, participated in a discussion on the future of Lead Exchanges moderated by James Cham of Bessemer Venture Partners. Additional panelist included Anik Gagnuly, Board Member of Detroit Trading, Payam Zamani, CEO of Reply! Inc., and Keith Moore, Senior Vice President of Tree.com.

For a summary of the discussion, click here.

More on Conversion Rates

There are hundreds of different topics to cover in a lead generation blog but the one topic that keeps coming up time and time again is conversion rates.

The thing is that lead providers don’t have conversion rates, lead buyers do! What this means is that it is only ever possible to give a very approximate industry wide conversion rate for each product.

The whole subject of conversion rates often clouds a lead buyer’s ability to measure the performance of a lead generation campaign as the key metric is return on investment (ROI) and not conversion percentages. Take the following example, as a lead buyer you should prefer campaign A which has an ROI of 300% and a conversion rate of 5% to campaign B that has an ROI of 200% and a conversion rate of 10%.

More often than not conversion rates will vary on the ability of the lead buyer and their processes for working the leads rather than the quality of the leads themselves. If you give the same 50 leads to 3 different lead buyers they will invariably give you a different assessment of lead performance.

Digital Marketing Podcast

Last week we took part in the inaugural Knexus Podcast, which featured insights on Universal search, recession and digital marketing, the Smartphone race, monetisation, brand strategy and key prediction for 2009.

Taking part in Knexus Digital Marketing Conversations was our very own Justin Rees along with Eliza Dashwood (Ambergreen), Katy Howell (Immediate Future) and Graeme Foux (Knexus).

Download the podcast to hear these digital marketing experts talk shop about the latest news, trends and stories to impact digital marketing in 2009!

To listen to the podcast in full, click here.

 

Lead Generation – it’s a numbers game

There is a distinct difference between the more common digital marketing techniques such as display advertising and the use of online lead generation. The more common marketing techniques are often done on a smaller scale initially to test the campaign before committing a significant budget. This is a sensible approach and should be used in most cases. However, to be successful in the longer run with online lead generation, the opposite approach is needed.

The reason for this is simple. If product A has a conversion rate of 10 per cent from lead to business, then in effect 1 out of 10 leads should convert to business which means that a random sample of 10 leads should generate at least one converted lead. However, the converted lead could have been the first one, the fifth one, the seventh one or the last one!

If a buyer then enters the market with the belief that just 3 leads represents the quality of the lead provider, he then not only limits his chances of actually converting a lead, he also runs the risk of never actually having the ‘true’ lead generation experience. It is therefore advisable that any lead trial should contain a larger sample of leads, spread out over a couple of weeks, in order for the numbers to play out.

In the end, online lead generation is a numbers game – ROI is everything!

Nik.Johansson@leadpoint.com

The Power of Lead Generation

We are constantly telling lead buyers that the performance of a lead generation campaign should be compared to the performance of other marketing spends. The true power of lead generation as a marketing tool is most clearly visible in this context.

The following is a genuine anecdote from one of our customers. The company in question is a large regional finance company and recently they ran an advert in their local yellow pages for the duration of a year. The total cost of this campaign was £2,500 – a fairly significant sum of money in the current climate. So, what was the result of this campaign I hear you ask? Well, the advert generated 6 enquiries in total throughout the entire year!

Now, there is value in many different forms of marketing but it you just compare this spend to a potential lead generation campaign then it’s not hard to see where the money should go. Let’s assume for example that the company wanted to target customers looking for life insurance in their local area. Lead generation would allow them to do this. At the current time of writing, life insurance leads cost around £35 and some lead buyers are converting more than 20% of these leads. So for £2,500 they could have bought 71 leads and they could have expected around 14 to convert into business.

So the question is, which form of marketing would you choose?

The Psychology of Lead Generation

Lead generation is undoubtedly one of the most cost effective and measurable forms of marketing. Unlike most forms of marketing when you buy leads you are actually paying for a physical piece of information. This is what makes it so measurable and appealing to marketers but it also brings into play certain psychological aspects that other forms of marketing don’t suffer from.

The measure of success for any marketing campaign is return on investment. Spend £x, generate £y and work out what your ROI is and if the number meets or exceeds your objectives then you have done well. The problem with lead generation is that although you can work out ROI on the back of an envelope, lead buyers often get distracted by the leads themselves and are inclined to focus on the leads that didn’t convert.

The following scenario is one we often encounter. Company A runs a lead generation campaign. They plan to spend £10,000 for a month’s worth of leads and they expect a return on investment of 25%. Let’s assume the price of a lead is £10 so for their campaign they will receive 1,000 leads. Now after the campaign they begin to work out the performance of the leads and it turns out that they achieve an ROI of closer to 30%. So everybody is happy right?

Well you would think so but what often happens is that companies tend to get hung up on the leads that didn’t convert. This is totally the wrong way to look at things. If you achieve your ROI targets then it is irrelevant to a certain extent whether you converted 5% or 50% of the leads. Of course, the more you convert the better but what really matters is the revenue that you generated and did the campaign meet your objectives.

Real-time-express-consent-online-lead-generation

The lead generation industry is growing at a phenomenal rate but in the UK it is still a very young industry and even many of the most sophisticated marketers don’t really know what it is. This is best illustrated by the fact that when you speak to advertisers about lead generation opportunities, most of them have no idea what part of their business you should speak to.

The most common preconception of advertisers is that lead generation belongs in the data world but this is not the case. The main reason they make this mistake is that at face value, lead generation is about tangible, measurable, calculable information and therefore fits with other data marketing efforts.

A quick comparison of what a lead is compared to a piece of data will clearly demonstrate that the two are worlds apart.

-    A piece of data may just be a name and a number whereas a lead should be a full suite of information about the product the consumer is interested in as well as full contact information

-    A piece of data can be weeks, months or years old whereas a lead should be generated in real-time

-    A piece of data may just be contact details from the electoral register whereas a lead is a consumer who has given express consent to be contacted about a specific product or service

The problem for companies that are pioneering lead generation in its truest form is that many data companies call themselves lead generation companies but actually they do something different. So maybe it’s time to rebrand lead generation but unfortunately I haven’t got much further than real-time-express-consent-online-lead-generation, so if anybody has any better ideas then let us know!

Justin Rees
justin.rees@leadpoint.com

Lead Generation and Click Fraud

After last weeks report from Click Forensics stating that 17.1% of the clicks on pay-per-click advertisements last year were fraudulent, Google hit back by claiming that the real figure was less than 10% which probably means that it is 10%! Either way, this doesn’t sound like much of a convincing argument and click fraud is quite clearly a problem.

Any advertiser undertaking a PPC campaign faces a number of challenges. For most, it is hard enough to get consumers to click on your advert let alone do anything once they hit a landing page. Sophisticated marketers using PPC campaigns will be able to optimise and work out the exact return on investment from such activity but click fraud can put a spanner in the works.

As an example, if your objective as an advertiser is to collect contact details from a consumer when they have clicked on your advert and each record is worth £10 to you, then if a click costs £1 you need at least 1 in every 10 people that clicks to submit their information to make this cost effective. When you add click fraud into the equation then this could be the difference between success and failure.

Any advertiser using PPC marketing could potentially be adversely affected by click fraud whether it is 17.1% or indeed “less than 10%”. So the question is, what can you do about it? Well that’s an easy one – buy leads not clicks! Lead generation mitigates some of the advertiser’s risk as the lead provider will be absorbing additional costs such as click fraud.

As lead generation is one step closer to a converted customer than a click, it is much easier for an advertiser to plan their marketing campaigns because there are fewer variables and less risk. If we look at an example, say life insurance leads then the logic is fairly straightforward. A life insurance lead might cost £35 and on average you might convert 20% into business. For an insurance company buying leads they don’t have to worry about click fraud. The lead supplier absorbs the fraudulent clicks as they only sell leads and not “non-leads” (i.e. the fraudulent clicks). In addition, any reputable lead provider should allow the advertiser to return and get refunded for any invalid leads, i.e. wrong phone numbers, incorrect consumer details etc.

Ultimately, the question is in the current economic climate, where marketing budgets are being made to sweat, can advertisers still afford to pay for those fraudulent clicks?

Justin.Rees@LeadPoint.com

2009 - the year of the lead

January is traditionally a busy time online. After the lull in activity over the festive period, consumers rush back online from January 1st looking for everything from electrical goods at knock down prices to financial advice. If you are a lead buyer gearing yourself up for the influx in business that the New Year delivers then it might help to consider the journey of a consumer.

With the proliferation of broadband and finance related websites, the average UK consumer is going online more often and visiting more websites to look for financial advice. They are filling in more forms and submitting their details multiple times. Whereas previously they may have left their information at a later stage in the sales process – i.e. when they were ready to make a purchase – now they are looking for advice at an earlier research stage. The result is that when buying leads, you get access to the consumer in this earlier research stage and will therefore require more time and effort to convert into business.

This is an effect experienced by many online companies and is not something exclusive to the world of lead generation. So a firm buying 100 leads in a month, is receiving the information of consumers who have gone through a journey described above. Although each consumer has filled in the same form and given their express consent to be contacted, they will all be different. It is impossible to predict whether an individual lead will convert into business but the law of large numbers means you can predict what will happen on a larger scale.  Essentially, lead generation is a numbers game and conversion rates, contact rates, interested customers etc. can all be predicted but only from a statistically significant sample. That means usually at least 100 leads over a period of a month or so.

When you start your lead generation campaigns for 2009, remember the above and make sure you are prepared to work every lead properly over the course of the month. Persistence is key and only after you have hit that 100 lead mark can you really make an accurate measurement of how successful your first campaign of the new year has been.