Lead generation is now widely recognised as a valuable tool to help advisers source new business, and in the current climate, it has been a lifeline for many adviser firms. The mortgage lead market has of course been affected by the lack of lender products available, but mortgage leads do still convert, and if you find your way to a reputable lead provider, they should be able to give you an idea of approximate conversion rates.
All you need to know is the lead price, and with an estimate of your average fees for a completed case, you can easily calculate whether lead generation will work for your business. Any adviser who considers using lead generation should use this as a starting point for planning their lead buying campaigns.
As an adviser, you have most control over the lead price you will pay and the commissions you will earn for completing a case. The one variable that needs most attention is the conversion rate. All variables can be adjusted but fluctuations in conversion rates will have the biggest affect on your return from buying leads. For example, if you buy 100 leads and only five convert into business, one extra conversion is far more valuable to you then paying £2 or £3 less per lead.
The key for any lead buyer is to maximise your chances of achieving that ‘market average’ conversion rate. If remortgage leads convert on average at around 10%, then what does this actually mean to a lead buyer? Quite simply, it means that if you look at lots of data – such as thousands of leads over a long period of time – 10% of these will convert to business. However, if you take a random sample of ten leads, then five leads may convert, but equally, none may. This means that you cannot make a judgment on lead quality and conversion rates from such a small sample. Lead generation is all about numbers, and to see that 10% conversion rate, you need to receive a large enough sample of leads.
This point is fundamental to the success of any lead buyer. Everything you do before you have received your first lead is as important as what you do with the leads themselves. Committing a decent budget for a lead trial is probably the most important thing, as the more you spend the more leads you will receive.
Although times are tough, advisers should look at lead generation as an investment in their business. Of course there is always a risk involved, but remember that it is in the interest of any reputable lead provider that advisers make money from buying leads. A lead provider would not last very long if it had no repeat business, and the only way that lead buyers will keep coming back is if the leads work. By the same token, it is in the interests of a lead provider to be honest about the expected conversion rates as success is always measured against expectation.
Conversion rates are only the starting point. The ultimate measure of success for any lead generation campaign is the return on investment. However, there is no single measure of what return counts as success. What this means is that it is up to the lead buyer to determine what constitutes a successful campaign before they even talk to a lead provider. They should then work with the lead provider, to establish whether this is a realistic return to aim for, based on things like lead price and conversion rate and the experience of other lead buyers.
Once you have that return benchmark, it will focus you on the right things about the lead buying campaign. Lead buyers with no initial measure of success often get distracted by the leads themselves, and are inclined to focus on things like the leads that did not convert or contact rates.
Consider the following scenario. Company A runs a lead generation campaign. They plan to spend £1000 for a month’s worth of leads and they expect a return on investment of 25%. Assuming the price of a lead is £10, they will receive 100 leads. After the campaign, they work out that they achieved an return of closer to 30%.
You would expect everybody to be happy, but what often happens is that companies get hung up on the leads that did not convert. This is the wrong way to look at things. If you achieve your return target, then it is irrelevant whether you converted 5% or 50% of the leads. Of course, the more you convert the better, but what really matters is the revenue that you generated and whether the campaign met your objectives.
This example also highlights another important point and that is to take into account more than one scenario when planning your lead generation campaign. Even though buying a larger volume of leads is more likely to get you nearer to the market average conversion rates, it is still impossible to predict everything, so when you are planning your campaign make sure you take into account a number of outcomes. For example, what does your return look like if you convert fewer leads than you expected? What about if you sell some additional products as well? Can these additional revenues make up for lower conversion rates?
Lead generation is a powerful tool for advisers to source new business and many adviser firms make a very good return from buying leads. Planning ahead and making sure you have the right approach will make sure you are more likely to be one of these successful firms. n
