Ways to improve the effectiveness of lead generation for extended payment or credit offers
By Mark Arnold, Client Services Director
The concept of lead generation has been around in some form or other for many years. Focusing sales & marketing activity on known hot prospects, ready to buy now, is the basis on which all direct marketing is built. Historically, the main channel able to offer sufficient market coverage consisted primarily of sponsored questions on paper based lifestyle surveys, distributed via the post and product registration/guarantee cards. But this method of data capture has declined in recent years due to market saturation (database sizes suggest that c60% of households have completed a lifestyle survey at any one time) and the negative impact on conversion by a significant time delay from survey completion to point of capture to lead availability – typically several weeks. Today, with the growth of digital channels and consumers empowered by easy access to a huge choice of products, buyers and end users want the best leads at the best price and they want them fast.
These factors have driven the significant growth of alternative data capture channels, such as the Internet and telephone, and they do indeed bring a number of benefits to the channel:
- Flexibility – it’s easy to test, measure and amend questions.
- Immediacy – purchase intentions and product interest can be acted upon almost instantaneously, thereby improving conversion rates.
- Continuity – leads can be captured and streamed on a continual basis, or as specified by the end user, rather than restricted by the timings of postal surveys and sale of brown/white goods.
However, the lead generation market is driven by the same buying principles as the list rental market; quality, recency, relevance and price. Very rarely are these channels able to satisfy all four and in today’s economic downturn the pressure to drive down price tends to drive out quality. The characteristics of the channels themselves can also have a detrimental effect on quality:
- Much online data capture is driven by surveys that are incentivised by prize draws and other competitions, or from specific competition based websites. With survey completion a pre-requisite to entry, the accuracy and relevance of the data can suffer.
- Telephone surveys are limited by time (cost of call and maintaining consumer interest) which in turn limits the level of qualification possible in the questioning. Accuracy can suffer again, from incorrect answers if the consumers’ attention and interest is not held.
But these issues are usually out weighted by the benefits and many users continue to convert leads into sales. But does the quality issue end there? No.
The problem with conversion
Measuring lead performance on conversion alone misses the true metric on which quality should be assessed by businesses offering extended or instalment payment terms – customer value. Even when a conversion is achieved, lead generation continues to offer an element of financial risk – default on payment. Fraudscreen Members using the channel have reported higher than average default and bad debt levels compared to other media channels.
Fraudscreen coding solutions predict the ‘payment intentions’ of prospects – segmenting who is most or least likely to pay or default. Using these solutions to analyse lead generation conversions demonstrates that not all leads, nor all providers, offer value. Example findings show the following:
Client A:
- The payment rate for green codes was 42% better than for red codes and was the only segment to generate an acceptable intro pay rate, the client’s key measure for success.
- Across 6 different lead sources, providing equal volumes, there was an 80% variation between the provider with highest contribution of green codes and the provider with the least contribution. Including/excluding sources would optimise final campaign performance.
- Red codes had an average order value 23% above the green codes; but will pay off that outstanding amount at a value 188% lower than green codes.
- Green codes were 98% less likely than red codes to go into the collections cycle and 143% less likely to be written off to debt collection agency.
Client B:
- Red codes converted 50% higher than green codes, taking advantage of the offer, but their payment rate was 280% below the green codes.
- 58% of red codes were written off to debt collection agency; 500% more than the green codes and 93% above the acceptable rate.
- The revenue per customer was 240% higher for green codes than it was for red codes.
- Green codes were 55% more profitable than red codes.
Fraudscreen provides a solution to the problem
Fraudscreen payment intent solutions offer both lead providers and end users an opportunity to increase the £ value obtained from leads. For users, Fraudscreen offers a pre-screen to all leads, providing an extra level of qualification and insight that can impact in two key areas:
1. Increase the value gained from leads that represent the least financial risk.
- Up-sell/cross-sell additional products and services; or offer more favourable payment terms that enhance their experience as a customer and retain their loyalty.
2. Improve the performance of what for some can be a marginal channel
- Exclude those codes that offer the greatest financial risk and only pay for the codes accepted.
For lead providers, Fraudscreen offers increased revenues by maximising income from current users and re-invigorating potentially lost opportunities:
1. Create a sliding scale of price according to Fraudscreen segment
- Rather than reduce volumes, increase prices for leads offering the least financial risk
2. Exclude the most risky segment, improve channel performance and keep the customer buying
- Where channel performance is marginal, suppress leads representing the greatest financial risk.
Fraudscreen codes can be applied to leads using either automated daily batch processing or in real-time. The real-time technology enables both lead providers and call centres to integrate a client specific translation table, within their own systems, that filters leads at point of capture. The solution has the capacity to code up to 1,000 records per second.
