Validation Sense and Validation Cents, Part 1: The Mix
Validation is now accepted as a part of the future of the leads business. Yes, anyone can provide a line of data, but not everyone’s data is of the quality that is expected. In the pursuit of providing better leads, intent has been predicted at increasingly high levels, and validation services have been here to help find that point. While some bemoan this, the bottom line is that every lead buyer pays real money for hitting a proper conversion. While that might be a $60 CPA in insurance, and a $500 CPA in auto finance, the whole business is based on allowing those conversion points to be hit efficiently, as lead cost is balanced with call center cost. So how has validation made sense, and how is it expected to work going forward? How do ‘Real Validations’ promise to change the nature of the industry? How do the businesses tune their models? We’ll cover these in the series of blogs to come, but first, we’ll deal with the most important concept underneath them all.
Lead providers have always been accused of ‘the mix.’ This means taking a bunch of those pristine leads, and putting them together with a bunch of data that’s…basically a bunch of data. This was best alluded to in the classic Glengarry Glen Ross, where every guy in that office was screaming for the Glengarry leads (the high intent, high up front price ones), and referring to everything else as ‘out of a phonebook,’ or the ones that would require a whole lot of ‘working.’ The only thing that was missing was that those Glengarry leads were basically something for the movies.
In reality, you have better leads, and you have worse leads, because generation costs a lot of money, and because lead value isn’t as clean as you may believe. For example, past studies have shown 15% of auto finance internet leads are sold within the first 30 days of conversion, and then another 15% are sold in days 30-90. Then, if you look at who buys cars on those leads, as you go further out, the mix goes on to secondary and tertiary dealerships that were sold the leads.
In reality, people shop for cars, they don’t just let themselves get hard sold every time.
The reality is that lead value will always have room for a marketer to attain greater effective conversion, and can’t stop at the point of first contact. Regardless of what your mother may have told you, good marketers do exist, and they’re more clever than you think. Nowadays, they aren’t just mixing Glengarrys with phonebooks. The tools they’re using to make this happen are getting more sophisticated by the day.