In the realm of lead generation, the ongoing debate is quality versus quantity. When I say quality, I don’t mean non-exclusivity, non-opt in, or false/fraudulent leads. These unscrupulous tactics are good for no one. I am speaking specifically about varying levels of custom filtering and post lead generation validation. The final answer in this quality versus quantity debate, as you might already know is…it depends. Many lead buyers believe that the only answer is ‘yes please’, but the reality of the marketplace is that there is not a one size fits all approach that is effective in meeting the needs of all lead buyers. A lead buyer generally wants leads that meet their criteria in quantities that they can process effectively. The issue of course is that it is rare that multiple lead buyers have criteria that match each other’s exactly and different lead buyers are able to process varying quantities of leads effectively.
To figure out the solution it is necessary to evaluate the individual lead buyers value chain proposition and its place within the value system of that particular market segment (i.e. Finance, Travel, Health and Beauty, etc). If you are not familiar with the concept of the value chain, here is the quick breakdown. Michael Porter wrote a book in 1985 called Competitive Advantage. In that book, he introduced the concept of a value chain whereby products (leads) pass through multiple activities within an organization and each activity adds value to the product until the final end product (sale) is completed. Each value added activity has costs and the value added less the cost is the margin or profit that the company makes from their activities. The concept can be extrapolated into a system whereby multiple organizations have interconnected value chains and each one adds value to the product until the final end product (sale) is complete. The activities that each lead buyer participates in are broken into two categories: primary activities and support activities. Primary activities are those related to producing the leads and support activities are those related to running the business. Primary Activities include inbound logistics, operations, outbound logistics, marketing and sales, and service. Support activities include procurement, human resources, technology development, and infrastructure (finance, accounting, etc.).
The first step in conducting this analysis is to break down each of the key activities of the lead buyer according to the activities in the value chain framework. For our purposes and simplicity, lets assume that all companies in our value system are run similarly on the support side and evaluate them strictly on primary activities. Inbound logistics encompass the activities related to lead acquisition and storage within the company. You may ask these questions: How efficiently is a lead is processed? Do leads queue up and get processed on a weekly basis or are they processed in real time? Operations covers any enhancements made to the lead while it is with the company. For this activity ask if the lead buyer has systems in place to evaluate lead quality and duplication in real time. Does the lead buyer have systems that clean the data from the format that they acquired it to the necessary format? If so, can any of that information be shared to identify potential quality issues sooner? Outbound logistics are those activities related to lead delivery. This is not as relevant when you are working directly with the end lead buyer. If you are working with a broker, question how quickly the lead will get into the end buyers hands. Question how your leads will be aggregated with other lead providers and how will that information be relayed to the end buyer? Delays in outbound logistics and blending from multiple sources will change the perceived quality of the leads. Marketing and sales are the activities related to either closing leads or marketing the company itself. When you are working with a lead broker most of this is in corporate marketing, but when you are working with the end lead buyer the value is in them closing the leads to sales and this activity is crucial. Determine how competent the sales force of the lead buyer is? Are alternate distribution channels set up should the lead ultimately not meet the initial criteria? Determine if the lead buyer is familiar with their target cost per sale metrics and derive, based on your lead price, the target conversion ratio for your leads. Determine how transparent your lead buyer can be about their sales and if you can monitor those costs per sale closely.
Once you have answered these questions, you need to evaluate the potential for adding value into the existing system. This can be through cost advantage or differentiation, but your value has to match needs of the end lead buyer and the constraints of the system. For example, if you can generate leads at a lower cost than your competitors, but a broker or an agency turns around and sells your leads to the end buyer at full price then that value is stripped and the proposition doesn’t fit into the system. If you provide leads at a lower cost to an end buyer who can not add value on the inbound logistics and operations side, each lead may end up being more expensive to them in the long run as they must ramp up those other activities to effectively process your leads. On the other hand, if you provide those same leads to a lead buyer that is proficient in the inbound logistics, operations, and sales activities they ultimately will achieve a lower cost per sale and you have added value in the system. If you can differentiate the leads by adding value on the operations or sales side with added data verification and validation for a lead buyer that is not set up to do so then you may have added value to the system. If, however, you provide these same add-on services to a lead buyer that is already proficient at them, then you will introduce overhead into their value chain as you reduce the value of their like activities. Both lead providers and lead buyers need to be aware of the dynamics of these value systems if they are going to optimize the lead acquisition system.
In summary, the solution to the quality versus quantity debate lies in fit. A lead provider’s product must fit into the end lead buyer’s acquisition process and add value to their system. If the fit is not right, the quality and the quantity of the leads can be assumed irrelevant. If the fit is right, then delivering the correct quantity of an acceptable quality of leads to the right end buyer results in a long term and profitable partnership between lead provider and lead buyer.
Contact Intela’s Lead Generation Group for more information about tiered lead rates on value added services such as call center verification, second tier human verified leads, PAF validated addresses, ofcom allocation validation on phone numbers, and/or auto-responders for co-registration offers.
Ryan Wilson
VP Lead Generation, Intela