Lead Generation in the UK

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