Monday, August 31, 2009

Leads360’s explosive year

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Leads360 announced our 4,000th client today. It also coincided with it being a large win in Leads360’s newest vertical. Leads360 is a different company to the one that I joined 18 months ago and it has been exciting to see how the company has rallied around bringing on Jones International University. The level of enthusiasm for what we do and the potential for the education vertical seeps from everyone’s pores.

It’s hard to believe that just 18 months ago, although by far the largest Lead Management Software system in the market, Leads360 had sustained losses to our customer base due to our overwhelming exposure to mortgage where companies were going out of business left-right-and-center. Our mortgage business has grown a lot since then but more importantly mortgage now makes up much less of our overall revenues because of the dramatic growth of new verticals.

It has certainly been a fairly wild 12 months for everyone, to be growing revenues at 50% in a downturn creates a lot of work but it also creates a perfectly virtuous cycle. The growth has helped us hire new people and due to the recession the people that we have hired have tended to be A+ players, thus fuelling more growth. While I was at Bain we used to often talk to clients about what created an Unstoppable company, what I never knew as a consultant was what it was like to be part of one.

And now it looks like we are poised for even more growth, if most experts' speculation is correct, the lead industry is about to undergo a tectonic shift in importance and size. Being part of a company at the center of this seismic level of activity just gets better and better!

Wednesday, August 19, 2009

LeadsCon: An Overview

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I decided that live blogging was a little too difficult but here is a summary of the best bits of LeadsCon instead. Overall it was a very strong event. I was surprised because I thought that two shows was overkill. In fact online performance marketing is doing better than most in the economic downturn so the event attracted a large and varied crowd and the content of each of the meetings that I joined was quite enlightening. I really have to commend Jay, the conference’s founder. LeadsCon has become the must-attend event for anyone who is a serious lead buyer or seller. I was particularly pleased that there were more lead buyers there than I noticed at previous shows as well as a lot more venture capital, private equity and investment banking folks. Given the sector’s buoyancy a lot of the finance folks were there trying to fill gaps in their portfolio likely caused by the slow-death of offline media, I suspect. The show’s proximity to the HQ of many finance houses also probably didn’t hurt.

There were a few negatives. There were far less exhibitors than at previous shows. I think that is a shame for anyone attending the show who is trying to educate themselves on who the companies to do with business are. I’ll be recommending to my marketing department that we invest in a booth at all future events, although I think LeadsCon could both lower the price for exhibitors and plan a larger space next time. The other mild negative was due to the fact that the event was clearly more successful than Jay was expecting. It meant that the space for the evening’s drinks soiree was way too small for the number of people there. Trying to meet with people in a dark, underground, only mildly air-conditioned bar, packed with heavily perspiring lead people was probably not the intended kick off event.

Here is a detailed overview of each meeting I attended:

Keynote: Crossing the Chasm - The Unprecedented Partnership Between a Lead Gen Company and One of the World’s Premier Brands

Jordan Rohan, Founder & Managing Partner, Clearmeadow Partners
Peter Pham – Billshrink - Chief Executive Officer
Jeff Hopper - T-Mobile - Vice President

I was surprised when I saw that LeadsCon had chosen a panel-style session as the keynote. However, it actually turned out to be pretty fascinating. Partly, this was because the panelists were well-spoken and thoughtful, but also was because we got to learn about Billshrink and its ingenious business model. The point of the discussion was that it was incredible how a 2 year old start-up with 12 employees had convinced a major advertiser to place them in their TV commercials for free. “Crossing the Chasm”, the title of the session is a reference to the book by the same name written by Geoffrey A. Moore. As a side note, it is a seminal work and the only book that was covered in multiple sessions and that wasn’t written by the professor while I was at Harvard Business School. The book describes how most start-ups (particularly high-tech start-ups) do well at getting customers initially, largely driven by the founders immediate sphere of influence like friends and family but then hit a wall or as Moore puts it, they can’t get across the “chasm”. They can’t push beyond friends and family and get mainstream mindshare; eventually most companies that don’t cross that chasm fizzle out. To ruin the punchline of the book for you, the solution to the chasm is to, as my Harvard Professor put it, “build a frikkin’ expensive bridge across it”. Basically you need to abandon your frugal ways and spend as much as you dare and then some on marketing. It is indirectly the single most compelling argument for why venture capitalists are important for start-ups that I have come across. I digress.

Billshrink was founded by the guy who built Yodlee which is the backbone of the internet banking industry; you may know, don’t buy their shares if they go public because mint is just a fancy front-end that sits on top of Yodlee (or at least that’s what one of the early investors in mint told me a few years ago). Billshrink is somewhat similar to mint apart from considerably more useful and broadly appealing in my opinion. What it does is takes sectors with highly complicated pricing structures; cell phones is a classic example; and crunches every possible data point from direct feeds from the company’s, scraping data from online sites and uploading customers bills until it has a model that covers the entire industry. Yodlee then allows users to go online and upload their bill. The system then analyzes the bill against every other pricing plan on the market (apparently there are over a million possible plans in the US for cell phones) and tells you a) if you have the right plan and b) if not which plan and/or network you should be on. They then take money from the lead that they generate in sending that customer to a new provider if that is what they recommend. It’s a very well thought out system that even analyzes when you contract end date is, what early termination and activation fees are so that it can tell you what your best plan is today and what it might be in the future e.g. when your contract is over as well as who you call most and what network they are on. Ingenious! It now makes total sense to me why Matt Coffin, the founder of lowermybills, a guy I have a lot of respect for, was one of the angel investors and why they raised $8M at Series A.

As a consequence of the great business model and seemingly bullet-proof technology, they caught the attention of T-Mobile who's marketing team were contemplating a recession-busting emphasis on price in their marketing since this is an attribute that they beat their competitors on. Apparently, about 70% of the time a user of Billshrink will be recommended T-Mobile as the lowest cost for their needs. The suspicious-minded folks may think that T-Mobile would prevent Billshrink from being completely impartial before putting their url on their prime-time TV commercials. They claim that this hasn’t happened in any shape or form. I believe this to be true; Billshrink would shrink on the vine if it was ever discovered they were less than 100% unbiased. So there you have it, if you want free advertising as a start-up you need to develop an insanely innovatively solution that uniquely showcases an attribute of a major brands product. For the rest of us we will need to continue to pound the streets in Silicon Valley when we need money for our startup ideas.

Brand and Performance - Achieving The Best of Both Worlds

Jere Doyle, President & CEO, Prospectiv
Joe Barone, Media Director, Greater Than One, Inc.
James Keyt, Digital Marketing Services Manager, Unilever
Sal Tripi, Sr. Director of Operations & Compliance, Publishers Clearing House

Although this was an intelligent discussion, it’s a little hard to sum up since the topic was quite broad. Here were my major takeouts:

1. Marketing Performance is super-important and increasingly measurable
2. The big brand companies do a lot of work in the realm of traffic driving (probably as you would expect)
3. Every touch point with the consumer impacts their brand impression. Brand Stewards (as Ogilvy & Mather/WPP guys self-servingly refer to marketing people) have to care about performance marketing
4. For the well-known brands, performance-type advertising doesn’t always have the goal of driving as much traffic to a site as possible. It can be about attracting a particular type of customer and altering their brand perception.

It was the kind of discussion that seems a little obvious when summarized but if nothing else was quite thought-provoking for me as to whether the well-worn wisdom regarding performance marketing being important to all marketers but a little brand dilutive were true. Unfortunately I think the real answer is, it depends, largely upon how good your marketing team is.

Achieving Breakthrough Results

Murthy Nukala, Founder & CEO, Adchemy
Rob Leathern, Chief Executive Officer, CPM Advisors, Inc.
Alan Edgett, Sr. Director, Digital Media Strategy & Innovation, Experian Consumer Direct
Paul McLenaghan, Vice President, Interactive Markets, TARGUSinfo
Scott Spencer, Group Product Manager, DoubleClick Ad Exchange, Google

This session was 75% taken up by a presentation from Murthy Nukala. I am going to try to find a link to the actual presentation (in the meantime here is a presentation from Rob Leathern that he created for the purposes of the conference too). It essentially described the information value chain that occurs between a variety of different groups that enables Adchemy and others to serve up dazzlingly finely-targeted ads to consumers on websites. The reason that this can save you money is that if you can target your ads to precise demographic or psychographic (attitude-based) targets then you can buy less advertising and get better results. It was clever stuff. If I bought leads Adchemy would without doubt be one of the companies I would buy leads from.

Role of Institutional Capital in Shaping Internet Advertising

Bruce Eatroff, Partner, Halyard Capital
Linda Gridley, Gridley & Company, LLC, President & CEO
Matt Blodgett, Principal, North Bridge
Robert Carter, Development Executive, Welsh Carson Anderson
Stowe Tolman Geffs, Managing Director, The Jordan Edmiston Group, Inc.
The title of this session sounds a little dry but for me it was one of the most interesting of the conference. Some of that has to do with the fact that my previous careers have involved stints both as an entrepreneur and as a venture capitalist. However, what was really good was that each major type of institutional capital was represented:

  • Boutique Investment Banking by Gridley & Company and The Jordan Edmiston Group
  • Private Equity by Halyard Capital and Welsh Carson Anderson
  • Venture Capital and “Growth Equity” by North Bridge

Here were my takeouts from the session:

1. Despite the financial bloodbath of the past 12 months we should expect a lot of M&A transactions in the lead gen space over the next 6 months.
2. A lot of the bigger online companies are paying attention to the vertical although traditional media doesn’t seem to have the resources to do anything interesting M&A-wise
3. Suprisingly we should expect several IPOs in the space in the next 12 months, although it may require a few companies to roll-up as you really need to be at at least a $300M market cap to be successful with this in today’s market.
4. VC and PE is starting to flow to the sector
5. What “walks-up” a multiple valuation significantly for any company is the possession of either data or proprietary technology.

That sums up the morning of LeadsCon East. I will give a brief over view of my takeouts from the afternoon sessions in a second post.

Monday, August 17, 2009

Why Lead Management isn’t Customer Relationship Management

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The title might sound obvious. Lead management isn’t CRM because it isn’t, right? However, the number of prospects and partners I’ve met who refer to lead management software as a CRM and vice versa suggests that most people are unaware of the fundamental differences between a system like and one like Leads360.

It is an easy mistake to make. A lot of CRM’s claim to allow users to manage their inbound leads while many Lead Management Systems (LMSs) handle ongoing drip marketing to existing customers. There is definitely an overlap between CRM and LMS, but then there’s an overlap between what a car and a bus do too but few people would mistake the circumstances under which each of these are more appropriate.

The bottom line is that LMSs should be used if you have ANY of the following objectives:

  1. Your primary goal is to expand your base of new customers

  2. You devote more than 20% of your marketing budget in generating Internet leads

  3. You want to enforce robust sales processes at your organization

A CRM on the other hand is the RIGHT tool if:

  1. You want a system that allows you to interact with and serve existing customers

  2. Expanding your share of wallet with your current customers is your major focus

What I tell customers is that if they want to gain customers chose a LMS and if they want to keep customers chose a CRM. In other words if both are important, you need to have both. You are fooling yourself if you think you can use either on their own to do both jobs well.

The reason that a good LMS is essential for customer attainment is as follows:

1. Speed to contact is essential

According to a recent MIT study, an Internet lead that is called within 5 minutes of a customer submitting the inquiry is 22 times (not percent) more likely to convert to a customer than one called after just 30 mins. In other words leads go very cold very fast.

A good lead management system is built with speed to contact in mind. Leads are received and distributed with in seconds of leads being submitted, notification systems alert the rep to the new lead and click to dial features enable lightening fast telephone calls so that a sales rep can be on the phone to a prospect before they have even had chance to close their browser window.

2. Sales process really matters

The leading lead management company recently conducted a complex statistical analysis of over ten million internet leads and was able to prove that 43% of a leads likelihood to convert is determined by differences in sales process. The remaining 57% was dictated by the quality of the actual lead.

Lead management systems are finely tuned to mimic the most successful processes you can possibly implement to maximize the chances of converting a lead. For instance, how many calls do your sales reps make before forgetting about a lead. Research shows that 6 call attempts with two left messages is optimal. 93% of leads are contacted during contact attempt 1 through 6. If your sales agents are making 12 calls they are probably focusing on the wrong thing, whereas if they make just two calls your contact rate is going to be fairly awful.

3. Persistence is very important

The majority of leads that are contacted don’t close in the first 30 days. However, most sales reps have a short attention span. If they can’t effect a one or two call close they’re on to the next best thing. A good lead management system drives persistence in the sales process through auto-reminders, prospect nurture emails and email notification systems that tell your rep when one of the automatic emails has been opened. Calling a lead when they open an email is a sure fire way to start off a good conversation.

At the end of the day, many people can’t afford both a Lead Management System and a CRM. You are probably looking at $150-200/user/month for both systems combined. So if you have to chose one, be very careful that you chose the option that is designed to help you achieve your primary task whether that be customer acquisition or customer retention.

LeadsCon East – Live Blogging

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This is the first time I’ve blogged from 35K feet, I love Virgin! For those of you who don’t know, LeadsCon East, the sister event to LeadsCon West – the lead industry’s largest trade show, kick’s off today in New York City. I was initially skeptical about the need and relevance of two shows per year but it seems like the event is going to be very well attended. In fact I understand it is completely sold out. It should be a good event, although looking at the attendees list I can see that only about 10% of attendees are potential lead buyers. I definitely hope this improves over time as I’d prefer to drum up business than participate in industry navel-gazing at shows like this. This is the main reason that my lead management company decided not to bring a booth. Everyone in the industry already knows who we are.

My intention is to (semi) live blog from the show to keep you all informed about what is happening if you can’t attend. The agenda involves a drinks soiree this evening followed by the main even tomorrow. Here is the agenda (I have bolded the events which I intend to attend):

General Sessions

9:00am - 9:45am Keynote: Crossing the Chasm - The Unprecedented Partnership Between a Lead Gen Company and One of the World’s Premier Brands

9:45am - 10:30am Brand and Performance - Achieving the Best of Both Worlds

10:30am - 11:15am Achieving Breakthrough Results

11:15am - 12:00 The Role of Institutional Capital in Shaping Internet Advertising

12:30pm - 7:00pm Exhibits

Performance Track

2:00pm - 2:45pm Targeted Marketing - Different Clients. Different Needs.

2:45pm - 3:30pm The Rise of Direct Response and Per Inquiry Advertising

3:45pm - 4:30pm Improving The Conversion Funnel

4:30pm - 5:15pm Instant Contact - Hot Transfers and Beyond

Marketing Track

2:00pm - 2:45pm Stories from the Front Line

2:45pm - 3:30pm Ad Exchanges - The Future of Online Media Buying?

3:30pm - 3:45pm Break

3:45pm - 4:30pm Display 2.0 - Bridging The Performance Divide Between Display And Search

4:30pm - 5:15pm Marketing Strategies Showcase

To anyone who’s attending. Do say hi to me, I’d love to meet up. You can reach me at 310 920 zero-one-one-one.