Asking for a Primer on Approaching a Business About Selling Leads

Would someone please lay out the basics and the pitfalls?

[Webwork]

I'm looking for practical guidance about how best to approach a business about establishing a lead generating partnership.

Have we covered that topic here in any depth recently . . or in the past. I don't recall seeing such a primer.

Are there steps to the process?

How do you get the idea across that it would be a good idea?

What are examples of the best or most effective way to go about building a lead generating relationship?

Did you ever start up the process only to find that the beneficiary wasn't entirely honest or committed to due diligence? Were there warning signs that you ignored? What were they?

I'd love to read a history of how such relationships are effectively started and then nutured.

Thanks.

[markwelch]

I'm not entirely sure what you mean by a "lead-generating partnership." I think you're asking about an arrangement in which a web publisher is paid a fee per lead by a company that seeks customer leads. While you're asking about a direct relationship between only two parties, my experience is that most "lead traffic" involves one or more intermediaries (companies that identify themselves as "affiliate networks" but which traffic almost exclusively in leads, and which we generally refer to as "CPA networks"). In some fields (new car sales, for example), a lead may pass through 2 or 3 or 4 intermediaries before they are viewed by a dealer; some leads aren't forwarded for days or weeks; some leads are never actually delivered to a dealer/merchant.

The key problems are (1) defining a qualified "lead" and (2) getting paid.

On the issue of what is a qualified lead:
- What data is required for a lead to be valid?
- Which leads will be paid for, and which refused?
- What if the lead is already in the company's database?
- What if duplicate leads come from several sources?
- What if the customer says they didn't submit a form?
- What if the lead data is invalid (incorrect phone #)
- What if the leads just don't convert well?

I filled in a couple of new-car lead forms last night (we are considering buying a new Kia Rondo), and I'm sure that at least one dealer will end up with two leads with my info, from two "lead merchants" (Dealix and Edmunds). Who gets paid?

Also, general leads may be sold at different prices to different merchants, and there might not be any market for certain leads (for example, based on zip code).

Getting paid, of course, can involve these same issues (that is, the lead buyer may decide that your leads were crappy, or invalid, even though no terms were given earlier) or can simply involve the possibility of a pure default (just not paying you).

[davewray]

Webwork...I'll try to add on to what markwelch has alluded to already.

This is what companies like to hear:

1. You can take out the middle man (affiliate network), therefore they can save money per lead..and you can get paid more per lead. For example, the company pays the network $100/lead let's say. As the affiliate you may only get paid $75/lead. The affiliate network gets an automatic $25/lead cut. Here's where you come in. Offer $90/lead. They will save $10/lead and you'll make $15/lead more. There is risk in going alone with these deals though, as there is strength in numbers regarding affiliate networks...

2. Talk volume...If Company "A" knows that you can produce hundreds of leads/month then they will be more willing to talk with you and come up with a good deal. Company "A" will know that if you are a big player, they should take you seriously.

3. Write up a legal contract from the outset. It should detail how much you'll be paid for each lead, when you are to be paid. Also discuss which leads they will not accept (Most companies "scrub" leads). Usually they'll not pay for leads that have fake phone numbers, names, addresses...Also, they sometimes won't want to pay for leads that they already have in their database for past six months or so...

4. Be in continual contact with them over time. That way things/issues won't just "pop up" and take you by surprise. This happens especially with big companies that make stupid decisions Way up in their hierarchy that just never seem to filter down to the "troops" who actually do the work/deals.

It takes a leap of faith to do direct deals, but it is well worth it! Good luck.

Dave

[Webwork]

Thanks for the tips. It's a start.

Play time. ;)

I'll report back about scraped knees and climbed trees. ;)

[rfung]

On that topic, has anyone given it any thought about generating leads for local bricks and mortar businesses through geo targetted adwords and other online campaigns? It seems like there's a dearth of people to fulfill that need (ops I hope Im not letting the cat out of the bag).

For instance, a friend of mine works at an auto body store. I have thought to go to him, discuss if I would get paid for lead or for sale. Depending on which, the store could setup a separate phone number that rings only due to my online marketing efforts (an 800 number can track phone calls). For an auto body average sales of $3-4k I'm sure a 5-10% commission on sales could be profitable for both parties. The biggest obstacle for creating a per-lead (instead of a per-sale) relationship might be that the 'merchant' doesn't know what the quality of the leads would be, and thus would be hard to quantify how much. In essence a per-sales vs per-lead moves the risk from the merchant to the marketer.

Thoughts?

[davewray]

Rfung...You're right on the mark...there is a HUGE market for local lead generating. They are viens of gold....a little bit labour intensive and tedious at first, but worth it in the long run. You're right, there'd be not much risk with a pay per lead system (assuming you've nailed out a contract and signed it..)...and there is Far more risk with pay per sale...why? Because you are relying on the merchant's honesty as to how many sales they got because of your efforts...they may skim off the top so to speak. If it's a friend, this is less likely to happen...good luck to you :)

[mfishy]

I have done this basically my entire "career". It is actually quite easy. Merchants are all dying for good traffic. If they can see your site/s are not tricking anyone or making false claims they will typically be receptive to the idea of a partnership.

Now, as for protecting yourself, you have to collect the lead. Do not EVER pass the lead directly to your partner. Why? Because, before starting the relationship you need to clearly identify what constitutes a good lead (one that you get paid for). This needs to be in writing. When a lead is returned, the merchant should supply a reason. A common qualification would be an accurate phone number. if the partner claims this criteria is not met, since you have the data, simply dial the number...As we grew in some finance areas we would simply spot check returns to verify accuracy. if we were to get screwed one time, that was it.

Hope this helps a little...I could go on and on about business development and partnerships as this is the way I have made my mark on the web.

[natim]

I would suggest building a ping/post system that will allow you to get the best price for your leads. Your pricing will be based on perceived quality. If you are generating via, organic, paid search, email you have best chance of highest pricing. In my space sub prime auto loan leads, co-reg has reared it's ugly head and most main stream companies want absolutely nothing to do with this. You have to decide will you sell them as exclusive or multi sell. I will never buy a lead that isn't exclusive to me. We have sold in excess of 5 million leads to our national network of new and used car dealers and have never sold the same lead but once. Good luck it's a great business.

[natim]

MarkWelch: Most likely both dealix and edmunds will get paid. They probably have different dealers in the same area, therefore i would expect to get calls from each of them and there's even a great chance you can play one against the other for the best price. Do your homework though, if you have good credit look up invoice and based on kind of vehicle you can expect to pay invoice or even less. If you have credit problems though you will probably end up coming through one our sites.

[Receptional]

Here's my story then... slightly different model.

We set up a deal with a phone system supplier/installer which was lead based about four years ago. They did not have a clue about SEO but they DID know the value of a lead.

So, we built our own website (owning our own domain) and the company subsidised the cost of the development with those costs being offset against future leads. The point was not just that they paid for the development, but that they put some risk into the deal themselves.

What I think we did that was particularly sensible was to use our own (well - outsourced) call center for all telephone calls from the site. we tracked these and charged for filtering out the rubbish. the task of the person answering the call was to fill in the lead gen. form on our behalf, but only if it was chargeable as a lead, and push the caller off to somewhere else when the call was not a genuine lead. they end company were grateful to pay a small amount for this filtering pricess and it meant that we controlled the user right up until the point at which he/she was a saleable commodity.

The system worked well for a few years. there was enough money in the pot for us to do a bit of PPC and our rankings flew past theirs. But eventually, brand started being a factor and we were just riding on the back of other brands. We were also getting paid more per hour to do work on a consulting basis and that was our core business - so eventually we abandoned the lead gen idea a few months back and they went over to our traditional retainer and PPC management model. If they hadn't, we would have dropped them.