Friday, June 5, 2009

Lead Gen 2.0 - The future of Lead Generation

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Obviously this is just my opinion but at the end of the day that is what a blog is all about. I have some strong impressions on the direction of the industry and firmly believe that a sea-change is underway. I call it Lead Gen 2.0 even though it has nothing much to do with the social-centric, folksonomic drivers of Web 2.0. Sorry, I just don’t think the future of lead gen has anything to do with Twitter or Facebook ;-)

Like all technology revolutions, in my opinion Lead Gen 2.0 will be driven by consumer dissatisfaction with what went before it (Lead Gen 1.0). Consumer pain that has been simmering for some time will lead to a dramatic change in the nature of demand once a set of progressive-thinking industry players figure out how to provide products and services that serve consumers better. That’s how people like Kevin Rose at Digg took on Yahoo! and how Jeremy Stoppleman at Yelp! has taken on CitySearch in the Web 2.0 revolution. They figured out that consumers were tired of being told what to think and do by “big media” and actually prefer to rely more on the wisdom of crowds.

So what is really painful about lead generation from a consumer’s point of view? Gosh, where do I start? Whichever way you dress it up, from a consumer’s point of view the experience of “being a lead” is fairly horrible. A consumer responds to some form of inducement to hand over their information and is then invariably called/pursued by multiple (read: “more than hoped for”) vendors.  I remember completing a loan lead form back in 2006 to see what happened and receiving the attention of 14 mortgage providers. I still receive form letters from some of them!

It isn’t news to anyone who’s honest with themselves in the lead gen industry that consumer pain is high and that the industry needs to move on just to survive. If nothing else, it is becoming increasingly difficult to get consumers who have been burnt in the past to part with their information when they are unsure of who is actually going to call them. So where to next?

I think the answer lies in thinking about what the consumer is actually looking for when they embark on a trip to the Internet for information. In most cases where leads are generated I believe that the consumer set out with the following goals:

  1. To compare prices
  2. To find provider ratings that they trust
  3. To compare products and service details 

In conjunction with this I believe that control is important. The consumer needs to feel like they are driving the process. Lead Gen does much of this but in a sub-optimal way. You only get to compare a handful of providers and only on their terms i.e. if and when they decide to call you.

Lead Gen 2.0 is about putting more power into the hands of the consumer. It is about letting them qualify sellers before they are put in touch with them. My favorite example of a Lead Gen 2.0 provider is Zillow. Zillow’s Mortgage Marketplace is a great idea, well executed and marks a significant paradigm shift in lead generation.

For those readers who are unaware of exactly what Zillow mortgage marketplace does, let me briefly summarize. The process is as follows:

  1. Consumer enters information about the mortgage product they are looking for but DOES NOT provide any personal information
  2. The inquiry is sent to every Zillow-validated lender
  3. Most lenders receive the lead into a lead management system, generate an auto-quote based on the rates available to them and send instantaneously send a quote back to Zillow
  4. Old-school lenders with no auto-quoting capability respond manually to inquiries that pique their interest
  5. The consumer is presented, within a few seconds, with a list of quotes, the name and contact details of the lenders who provided them and the ability to contact the lender to find out more information.
  6. To reduce bait and switch situations lenders are rated, eBay-style by consumers who have received quotes from them.

This is a consumer-centric service in which everyone wins. Zillow currently charges nothing for inquiries so lenders have access to a remarkably cost-effective marketing channel. Consumers have choice and control, which I would argue is exactly what they are looking for.

In the UK consumers completely reject the notion of providing their information without a clear promise that they will retain control of who they are put in contact with. This is reflected in the services that are popular in the UK. The largest financial product lead generator is MoneySupermarket; this company aggregates and instantaneously displays rates for thousands of service providers before connecting consumers to those companies.

In this new world of lead generation new rules apply. First of all, whereas lead providers used to become successful mainly through expertise in marketing rate arbitrage, they now need to become well-versed in building comprehensive price/rate and product description engines. It also means that there is increasingly less room for many players. There is currently a very long tail of small lead providers. If the prevailing model is one where a large number of competing offers are aggregated and displayed to consumers, this has the characteristics of a winner-takes-all or a few-take-all market. Large, innovative lead generators will dominate and small ones will shrink or serve ever more obscure niches. For many of the current players in the industry, the thought of this outcome is frightening. However, an industry that better serves the consumer is a stronger industry in which brave, innovative and focused organizations prevail. I am looking forward to the challenge!

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