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Value based pricing is the new buzz term in online lead generation, but what does it take to sort your Rolls Royces from your Robin Reliants?

The infamous quote “Half my advertising is wasted, I just don't know which half” may be a century old but it still applies today in the digital age.

However, in the world of online lead generation (OLG) where every lead can be tracked from creative used to generate the lead through to an end conversion not only can you determine which half is wasted, you can also measure the true value of the half that works.

Although many advertisers are attracted to lead generation because of the potential to measure every part of the process, the mistake they often make is to rely on gut feeling and instinct when planning their lead generation campaigns.

The focus is too often on how clever the creative looks or how pretty the landing page is when these are just variables to be optimised to maximise return on investment (ROI) from the campaign.

Of course, creatives and landing pages are important, but they are only important in the context of the objectives of the campaign, which is to generate a required supply of quality leads not to garner an entry into an online marketing creativity awards.

Online lead generation is a science and no matter how experienced an advertiser is, it is not possible to just look at a set of creatives and landing pages and make a judgement on likely lead performance or lead volume.

What’s needed is data, and lots of it, that can be tracked back through the sales funnel to determine which creatives and landing pages work best and then arrive at an appropriate lead price for the particular supplier or channel.

This is the value based pricing model and while this is the holy grail for lead buyers, to achieve this in practice requires a sophisticated technology platform, as there are thousands of variables at work that can influence the campaign performance and need to be tracked appropriately.

For example, just one supplier might use a variety of different types of marketing to generate leads and each method might involve thousands of creatives or keywords that might direct the consumer to multiple landing pages with different messages and calls-to-action. 

Scale this up to a large campaign with multiple suppliers and the advertiser might need to manage, monitor and measure potentially thousands of leads across hundreds of sources every day.

A lead generation platform allows advertisers to measure lead performance between suppliers and channels and get a genuine like-for-like comparison which enables them to determine the correct CPL.

Only then can advertisers move from the old model of paying an average price for a blend of leads from a variety of sources to a value based pricing model only purchasing leads from sources that work and making sure the CPL is a function of lead performance. 

A lead generation platform can also offer advertisers that are working with multiple suppliers additional benefits, such as the ability to deduplicate leads in real-time.

This means that, no matter how many forms a consumer fills in across suppliers, the advertiser will only pay once for the lead. For campaigns with high CPLs such as for financial services products, this alone can save tens of thousands of pounds.

Lead generation is an extremely powerful form of direct response marketing but success is often determined by the technology wrapped around the process.

The level of transparency, tracking and reporting offered by lead platforms allow advertisers to be far more efficient by enabling them to determine down to a granular level how their far their lead spend is going.

The next challenge is to try to source more leads from the best performing suppliers.

Justin Rees

Published 17 February, 2011 by Justin Rees

Justin Rees is founder of Talking Customers and Cofounder of Currently.

15 more posts from this author

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Steve D

This is a topic very close to my heart since nearly 17 years ago we built a series of methods which we called ‘value based management’, building on from the earlier work by Alfred Rappaport in the 1980s. In those days we made the same mistake of immersing ourselves in the data and many of our clients paid 7-figure consultancy bills for the detailed analysis of their activities to find the ‘holy grail’ of each key business process. After years of analysis and many implementations we realised there was a less expensive and more reliable way to manage the value of business outcomes and the tools we produced are now a staple of any business school textbook.

What concerns me when I read your article is the presumption that ‘the answer is in the data’, which from my experience that is a fool’s errand. The other assumption you make is that the ‘only’ route to a qualified sales lead is through a lengthy process of ‘targeting, communication, funnelling, filtering and then selection’ – this assumes that as marketers we don’t know much about the people we are targeting (hence the need to repeatedly find them), they need coerced and influenced and also that the data from past performance is able to inform our decisioning about someone’s future intentions. This may be acceptable for a high-volume consumer product purchased for needs rather than wants, but the process is far less usable for discretionary purchases where the consumer is more likely to base decisions on aspirational factors or the behaviours of their peer groups.

The other danger when tackling such online lead generation is that the problem statement (i.e. how can be improve the ROI of our online lead generation process) becomes.. part of the problem itself. As I’m sure you know, people are organic sentient beings who do not only exist ‘online’, so the first step in any digital campaign ‘should’ be to question whether it should in fact be a ‘solely’ digital campaign. An effective lead generation process should connect with the customer through whichever channel ‘they prefer’ and the chances are that this will employ both offline and online tactics.

Finally on the point, “What’s needed is data, and lots of it..”, I would suggest that what’s needed is ‘insight’ and ‘expertise’ which can be broadly captured in the phrase ‘intelligence’. My concern when looking at many of the campaigns currently in play is that there’s too much data being crunched, and far too little intelligence in use.

almost 6 years ago

Justin Rees

Justin Rees, Cofounder at Talking Customers

Steve,

Thanks for taking the time to add your comments to my post.

I actually agree with a lot of what you say. I should have perhaps added the caveat that much of the article was referring to mass market/generic types of products/services.

I also don't believe that the answer is in the data - it is more that analysing the data can give you useful information for improving campaigns.

The article is more to draw people's attention to the fact that buying leads from multiple sources at an average price is not the most efficient way to use lead gen.

Justin

almost 6 years ago

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popspace

very nice I like it thank you for your sharing

almost 6 years ago

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SarahQuinlan

Very interesting article, thanks. The issue for me - running lead generation websites in Suffolk - is that although we can monitor how many leads we take to a client wwe don't know what the conversion is when the lead reaches the client (via web/email/phone call) & my clients don't know either - is there a cookie we can put on clients websites to track all the way through to say, booking page? Until I can demonstrate the actual value my Rolls Royce clients will continue to want to pay Robin Reliant prices!

almost 6 years ago

Peter Bordes

Peter Bordes, CEO & Founder at oneQube

Justin this is an excellent post and very in line with what we think is the next evolution of things to come. We believe that technology innovation is the key will that move our industry forward into a real-time , transparent ecosystem of end to end solutions. Solutions that connect the entire value chain together and allow much more dynamic pricing & value based on quality. CPL and CPA performance marketing is finally ready to move into an exchanges based environment from a flat fragmented one.

We have spent the last year moving our performance marketing platform into this real-time exchange model and are launching the PerformanceExchange next week at LeadsCon http://www.mediatrust.com/performanceexchange.html We are committed & looking forward to working with our industry and partners to develop system that are the next generation of platforms that create more quality and value for everyone in the Leadgen ecosystem ...

MORE thought leadership post like this please! :)

almost 6 years ago

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Rishabh Gadodia

An insightful read! i totally agree with the ideas presented. As a B school student, I see a lot of companies spending wastefully on advertising which fails to have an impact on consumers due to the amount of 'noise' and clutter in the mind of the customer. It is imperative for companies to explore newer methods of advertising and sales. While going online is 1 such avenue, companies are sometimes reluctant to explore online leads as they are not sure of the usefulness of leads and due to their lack of knowledge in this area. The fear of being ripped off exists and value based pricing, with enhanced transparency will help overcome those fears.

over 5 years ago

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