The Leader: December edition

The Leader is a monthly newsletter by Contact State that summarises the stories, trends and opinions for businesses that generate or buy leads. You can sign up to receive The Leader in your inbox here.

All those letters to Santa seem to be working... whisper it quietly but December is shaping up to be a stronger month than usual for some* businesses involved with generating and working leads.

Something has changed. 

Sales teams are reporting stronger customer intent and some lead generators are generating better lead volumes in late Nov / early Dec than they have for the previous few weeks, which is historically unusual. In the verticals that I monitor, even the effect of black friday was muted whereas in the past I’ve seen lead generation campaigns completely stall. 

With lockdown partially lifted in some parts of the country and a covid vaccine about to arrive, consumers seem to be looking to the future and making plans.

Takeaway: This could be the right time to explore a new lead supplier or propose a test to a potential buying client. I’ve always avoided setting up trials in December because what often happens is the lead seller and lead buyer both lose money and the client relationship stalls and then fails because of stats that didn’t shape up.

However, this is not a normal December and these aren’t normal trading conditions. The normal rules should be tested this year.

The holy grail in performance marketing is to have a marketing company so deeply entwined into your processes and targets that they are remunerated on actual sales. I chatted about this subject with Michael Ferree on his ‘Lead Generation World podcast’, last week. 

‘Backend deals’ or revenue sharing arrangements as they are also known, generally work with a lead generator providing leads at no upfront cost to a buyer and then receiving a share of the commission that a broker or product provider receives for making a sale.

Yes, but only in specific circumstances where both parties: 

The vast majority of revenue sharing arrangements generally fail because ‘free leads’ are viewed as having less or little value than paid leads. e.g. the lead generator dumps a whole load of data on a buyer because they feel they have ‘nothing to lose’ and a buyer agrees to a backend deal because “well, what have we got to lose, we’ll call this stuff when we’re quiet”.

If a campaign is constructed equally, with both sides inputting into what the marketing and landing pages should focus on, the next hurdle is real time data. Calling a lead quickly is the surest, easiest way of predicting whether a lead generation campaign will work and so the sort of metrics that both sides need to be reviewing and sharing are; time to first dial, how many dials and an accurate set of lead and case notes.

It's not enough just to send a report every now and then which tells a lead partner what the outcomes were, to truly build ‘buy in’, lead buyers should provide a real time API that allows lead sellers to check for themselves what is going and make performance adjustments accordingly.

Takeaway: Particularly for high value products and large purchases, revenue sharing deals really do make a lot of sense for a lead generator and helps buyers manage cash flow. A revenue sharing agreement is built fundamentally on trust and transparency. With exactly this topic in mind, we’ve been pioneering some standardised API reporting here at Contact State to help both seller and buyer clients use this method of lead exchange. Please do let us know if you’d like to see how ‘backend deals’ could work for you.

A word of warning: If a lead generator is receiving a commission specifically based on the outcome of a sales process, it is far more important that both sides have full transparency of the adverts and landing pages that are being used. In a regulated product, the lead generator is making a regulated introduction through the use of financial promotions and must be directly authorised or an appointed representative of the firm they are working with.

The FCA wrote to mortgage intermediaries last month and included in that communication any directly authorised lead generator who has the ‘directly authorised to make arrangements for non-investment retail insurance and mortgages’ permission.

For the FCA, the message to lead generators was remarkably and uncharacteristically clear:

There’s two parts of the letter that I think is worth unpacking and analysing.

Some financial firms who work with unauthorised lead generation firms comply with financial promotions regulations by the lead gen AR so that they can send them leads. The FCA knows this goes on and has no problem with the principal of doing it but are aware that lots of firms hand out ARs and then do very little to check and review the types of adverts that are used to generate consumers.

This is a regulatory warning that any DA firm that has appointed a lead generator to be an AR or IAR, the FCA are going to come calling and are going to want to see your levels of governance and control

If a lead generation firm becomes directly authorised by the FCA, implied in that registration and authorisation is that any websites they are generating leads from will be added to as a trading name to the FCA register. There’s a further implication of authorisation and that's if for example an affiliate network is directly authorised, each one of their ‘sub affiliates or agents’ needs to be made an appointed representative of the directly authorised firm.

This is a really significant piece of due diligence that is missing from many lead generation firms and although this letter was sent to mortgage intermediaries, this is a fundamental point of how the FCA register works and should be interpreted as the rules for any regulated product.

If are directly authorised you need to prove two things: