Today, buying online sales leads from third parties and converting them into customers is akin to eating a lobster dinner: there is much hard work and messy cleanup involved in getting at a modest amount of tasty lobster meat hidden beneath a hard, daunting shell.
The internet has evolved into a terrific source of plentiful, relatively low-cost sales leads. Sophisticated online lead-generation companies are adept at identifying interested consumers, seizing their attention and compelling them to fill out online registration forms. They find prospects for a variety of consumer products and services, from higher education and mortgage refinancing, to wireless calling plans, to book and DVD club memberships.
Until recently, online lead generation has been a seller's market. Because online leads are typically less expensive than those obtained through traditional offline, direct response channels, consumer direct marketing companies said "give me everything you got," and business boomed, growing to more than $1.3 billion by 2006, according to the Interactive Advertising Bureau (IAB).
However, smart lead buyers realize the quality of third-party leads can vary widely. The effort to rapidly qualify high lead volumes can be significant, and conversion rates are often below expectations. The cost of chasing after poor leads often exceeds the initial price paid for them. Just as with the lobster dinner, consumer marketers want to reach all the tasty meat possible, but accidentally chewing on the shell is no fun.
Is there a way around this problem? Fortunately, the answer is yes.
By using a combination of consumer information and predictive scoring services, marketing pros can painlessly separate the shell from the meat, so to speak, among online leads. For lead buyers, it can all be boiled down to four easy steps:
So, your call center is dealing with countless consumer leads, purchased from multiple sellers, which can include names, postal addresses, email addresses, and/or phone numbers. The confirmation of a postal address is called validation, and that is a very basic first step in the process. Leads with addresses that the U.S. Postal Service says do not exist (e.g., 1234 Zip-A-Dee-Doo-Dah Lane) do not result in high conversion rates!
Once you know you have a real mailing address, verification takes the process to the next logical step: confirmation that the name can be linked to the address and phone number. In other words, does this person actually live at this address, and is this his/her phone number? This is another elementary process.
Thus, validation and verification determine if the lead is a real person. A third-party consumer information service provider can perform both steps for a fee, on either a batch file or real-time service basis.
These first two steps measure consumer data quality and "contactability," while the next two involve deriving the most value from purchased online leads; i.e., maximizing overall conversion rates.
The more you know about a person, the better, but online registration forms should remain short. For every field you add, user abandonment rates can grow by 10 percent or more. Therefore, you are likely to receive inadequate information for each person, limited, perhaps, to just basic contact info, gender and age. By appending additional demographic data to each lead using a service bureau, you can quickly gain a comprehensive view of the consumer, or group of consumers, responding to your online advertising campaigns.
This additional data can provide insights into preferences and shared characteristics. It can also be performed on house files of converted and unconverted leads. However, it can remain difficult to distill this raw data into meaningful action. How can you use this information to quickly make automated, data-driven decisions that improve performance? That is where the fourth and final step, scoring, comes in.
4. Score the lead
The fourth and most important step in improving online lead performance goes beyond identity verification and appended consumer attributes to utilize an automated scoring model that predicts response (i.e., conversion) rates for leads. A high-scoring lead equates to a high probability of conversion into an actual customer, while a low-scoring lead indicates a low probability of conversion. Similar to FICO scores lenders use when making consumer loan decisions, online lead scoring uses underlying statistical formulas that allow you to create automated policies about what to do with each lead in order to maximize conversion rates and minimize costs.
For instance, you can use scoring technologies to determine how to deploy contact center resources most effectively according to distinct lead-response policies:
- Use your best contact center agents to immediately phone high scoring leads to maximize conversion rates and long term value. Don't under pursue high scoring leads!
- Send medium scoring leads an initial (i.e., lower cost) email for online purchase, and use telemarketing resources more sparingly.
- Reject low scoring leads altogether.
Beyond this, scoring can be used to make better pricing decisions about how much you are wiling to pay for a given lead. You can decide not to purchase lower scoring leads, or simply negotiate a lower price for them. Likewise, you should be willing to pay more for scarce, higher scoring leads. The scoring of online leads makes for a more robust, efficient marketplace in general, just as credit scores have done for the consumer lending market.
A predictive scoring model can be developed quickly by a third-party scoring bureau, and can be deployed as a real-time web service, or as a daily batch file procedure.
Online lead quality scoring: rolling up all four steps into one
If your goal is simply to figure out what to do with each lead purchased from a third-party online generator, you can streamline the entire process by using a single rolled-up scoring methodology. This means you can skip steps one to three altogether, because the elements behind those steps can be included in a robust predictive scoring model.
Think about it: Leads that do not fare well in Step 1 (Validate) or Step 2 (Verify) will score quite low. Yet, verification of phone numbers and addresses is just one component of a complete scoring formula, which predicts conversion much more precisely. The addition of consumer data (Step 3) and corresponding variables are essential parts of the scoring process.
Maximizing the quality and performance of online leads using external consumer data and predictive scoring can sound pretty complex and intimidating. Fortunately, third-party scoring services exist today that make it easy, automated and cost effective. Therefore, you can get the most bang for your buck when purchasing online leads, savoring every tasty lobster morsel and avoiding biting down on that empty shell.