Online Lead Generation

Introduction

    Online Lead generation is the act of collecting personal information of people who are interested in a product or service over the internet.  This information is called a lead and it’s regarded as a high value sales opportunity. Often, companies that engage in this practice sell the contact information to other companies that offer the product or service.  In 2007 US companies spent an estimated $1.6 Billion on Lead generation, a 23% increase over 2006[1].  There are many businesses that exist purely to sell leads to other companies.  These B2B enterprises are called lead vendors.

How does it work?

   Lead generation is a profitable marketing strategy because it allows companies to find people who are interested in buying their product/service so they can be engaged in a complex sales process.  A lead may be called by a highly trained sales representative, engaged in a lengthy conversation, and sent some in-depth information before ever being asked to purchase anything.

      Here is an example of how the lead gen process works.  Go to www.google.com and search for “Mortgage” the second or third result should be for a website called www.mortgageloan.com.  Click on their link and you will see three dropdown boxes next to  the phrases “Type of Loan,” “Home Description,” and “Your Credit Profile.”  If you answer these question and click on continue you will be taken to a page that asks more question in order to understand why type of financial service you would be most interested in.  If you continue to fill out the form you will see that this company also asks for your name, address, email address and phone number.  If you choose to submit your information to this company they will then send it to mortgage providers for about $20-$30. 

    If you gave them your contact information you would be contacted by phone, email, and postal mail by mortage providers.  These companies would engage you in a very informative and professional sales process.  It would be reasonable for a lead buyer to spend $50 on the sales process if they are dealing with an individual who is interested in the product and qualified to purchase it. 

What industries use lead gen?

Lead Gen’s Reputation

    Lead generation has gotten some negative publicity from businesses built on deception.  In the early 2000’s even casual internet users frequently saw lead generation banner ads such as punch the boxer, shoot the alien or shoot the rapper (pictured).  When users completed a short flash based game in the banner they would be taken to a page that congratulated them on winning a prize and asked for a users name and address so the prize could be quickly delivered.

    Upon giving away their contact information users would then find out they had to complete dozens of surveys and repeatedly give away more of their personal information to qualify for the original prize.  In some instances user would even have to purchase other items to qualify for the “free” prize.  The drop-out rate on these contests proved to be very high, and that allowed the prize companies to spend very little on actual prizes while generating many low quality leads for their advertisers.

    Eventually this practice caught the attention of the FTC.  In May on 2007 ValueClick; one of the industries largest and most notorious lead generator admitted in statements to investors that they were being investigated for possible CAN-SPAM act violations by the Federal Trade Commission.  Eventually a settlement was reached in which ValueClick paid $2.9 million.[2]

    Since this case the industry has evolved to embrace transparency.  Many of the most powerful companies in the lead gen business have joined together and formed the Online Lead Generation Associate (OLGA).  This group sets industry standards and guideline that include making it easy for users to opt out of offers, and only using incentives when they directly relate to the offers consumers are selecting.

Collecting User information

            There are many ways companies collect lead information.  Some of the most popular include co-registration, custom co-registration, full Page lead generation, white papers, webinars, content sponsorships.

• White paper: An advertiser lets user read a white paper (solution to a business problem) in exchange for user contact information. Example
• Webinars: An advertiser offers online presentations on a particular topic in exchange for user contact information. This is more popular in B2B marketing than B2C. Example

 

Data Transfer

    After the Personally Identifiable Information of users has been captured it must be sent to the advertiser.  The possibility of impending legislation has compelled many in the industry to adopt more secure methods of transferring data, but at this time many companies are still transferring data without encryption.

    The Internet Advertising Bureau recommends all data be transferred “in real time with encryption equal or greater than 128-bit SSL encryption (through HTTPS web service).”[3]   Many companiesin the lead gen space will be quick to agree this is the best method for security and speed of delivery, but it is also expensive and time consuming to implement.  That is why many companies are still using unencrypted HTTP posting, unencrypted FTP transfers, and even email delivery.   

    Sophisticated companies often use HTTP or HTTPS posting to enter leads into a advertisers lead management system.  This system makes it easy for a company to manage their contact with a lead, billing of the lead, and measuring the ROI of each vendor’s leads.  In the event a lead management system is used it is vital to have it send a message back to the vendor each time a lead is received to inform the vendor if a lead was properly received.  If it was not properly received the lead management system should tell the vendor why the lead failed.  Vendors should be tracking this feedback to make sure they get paid for all the leads they sent.

    Lead forms are constantly being changed and updated and the only way to truly test whether the form is working properly is to send a test lead to an advertiser.  If a mistake is made while changing a lead generation advertisement and the vendor does not know about it the mistake will continue until end of month billing.  I have seen instances where a vendor sent $20,000+ worth of leads to a client only to find that none of the leads were received because somebody made a mistake on the ad and was never informed about it.

Terminology

Cost per lead advertising – Synonym for lead generation.  Advertisers only pay for sales leads (not impressions or clicks) so this is sometimes called CPL (cost per lead) advertising.

Lead – Personal information of a user who is interested in an advertiser's product.

Field – A lead is composed of data fields about an end user.  Leads are usually sold with the following fields: name, address, phone number, email.  More expensive leads will contain more information such as gender, age, income, or education level.

Validation – A process where contact information is checked for validity.  Users often give false phone numbers and email address when filling out lead forms, so these fields must be checked by a lead provider to ensure lead quality.

Co-registration – Lead gathering strategy where lead fields are gathered when a user registers with a site and opts-in to receive more information about an advertiser.

See Also:

1. "Sales Training" - great video of the speech Ben Affleck gave in Boiler Room.
2. Lead Generation for the Complex sale - Book written by Brian Carroll.
3. Exclusive Leads - a Knol I wrote about the costs and benefits of exclusive leads vs non exclusive leads.
4. "10 tips for Lead generation landing pages" - Article written by Lee Odden.
5. www.leadmarketwatch.com - blog about lead generation.
6. Online lead generation industy - a knol I wrote about the nature of this industry.