Exclusive leads

Basics of Lead Generation

Lead Generation is the act of creating prospective consumer interest and inquiry about a product or service.  When successfully executed a lead generating ad entices a qualified buyer to submit their contact information to a company so they can learn more about a product.  Lead generation is often used to fill a sales channel with prospects.

Lead generation is often used to market big ticket purchases that have a complex sales process.  This tactic allows a company to identify prospects that are interested in a product and qualified to make a purchase.  Lead generation is often the first step in educating a consumer and moving them further along the buying cycle so the deal can be closed.

 

Meaning

The term “exclusive leads” can have a few meanings.  Usually it is a straight forward term that means a company will sell leads exclusively to one client.  Some trickier companies will sell a lead as being exclusive and then 3-4 days later will sell the same lead as being non-exclusive.  This may not be a big deal to buyers who have very short sales cycles, but to most buyers this means that all the high quality leads that getting close to making a purchase will be hounded by competitors before the deal is closed.

Some lead vendors also have a policy of not allowing clients to reject exclusive leads, while allowing buyers to reject non-exclusive leads.  For example, in some cases if a lead has a fake phone number it can be rejected for that reason if it is a non-exclusive lead, but it cannot be rejected if it is an exclusive lead.

Non-exclusive lead is always a pretty straight forward term.  It means the seller will also be selling the lead to 3-5 other buyers.

 

Costs and Benefits

Obviously exclusive leads convert better than non-exclusive leads because they are only being persuaded by one company.  These leads also cost more because their value is higher and a vendor can not make additional revenue from the lead after it has been sold.

Conversely non-exclusive leads do not convert as well because they are being marketed to by several companies.  These leads cost less because their value is lower and a vendor can always make more money by selling them to other buyers.

At first glance there does not appear to be any advantage to either kind of lead as long as it is priced appropriately.  However, over time many companies have found that non-exclusive leads are superior to exclusive leads for all parties involved because they provide a consumer with choice.

For example lets say Lead X and Lead Y are both interested in purchasing a mortgage.  These consumers are identical in every way except Lead X can only visit one provider, while Lead Y can visit 5 providers.  Naturally, because Lead Y has more choice he is more likely to make a purchase than Lead X.

Now let’s assume the non-exclusive lead will make a purchase 10% of the time and the exclusive lead will make a purchase 5% of the time.  Let’s assume the profit margin on a purchase is $100, so the non-exclusive lead is worth $10 and the exclusive lead is worth $5. 

If the act of selling a lead to multiple sources can double or even marginally increase the value of the lead, why wouldn’t a lead vendor want to sell it to multiple companies?

 

Effects

Lead generation is still a new and rapidly evolving industry and it takes time for any company to adapt best practices.  This is why many lead vendors still only sell exclusive leads.  Over time lead vendors sell more non-exclusive leads and less exclusive leads.

Buyers will be smart to anticipate this change by developing expertise in selling to non-exclusive leads and reducing investment in developing expertise in selling to exclusive leads.  Over time buyers will have to do more to differentiate themselves from their competitors and they will have to get better at dealing with more educated consumers.

 

See Also:

1. My Knol about online lead generation.
2. Question on Marketing Profs about exclusive lead providers.
3. Perfect phrases for lead generation - book written by Bill Brooks.
4. "8 sales lead generation methods" an article by Shamus Brown.
5. Jim Boyd's blog: "Lead Generation Tips"