Value of Feedback in Improving Lead Quality

September 21st, 2009 by Lead Point

This week I read an article on how Netflix offered a $1 million dollar prize associated with a contest to improve its movie recommendation system by at least 10 percent.

I assume everyone knows who Netflix is and how they work, but in case you don’t it is an online DVD movie rental business. Customers create accounts and pay monthly fees to receive DVDs through the mail. When finished viewing the movie, the customer mails the DVD back to Netflix and Netflix mails out another movie that is on the customer’s movie wish list.

A company with a subscription based business model, Netflix needs to focus on keeping customers signed up with their service to grow their business. The recommendation system is one means to accomplish this. When customers provide feedback on how much they like a movie they rented, the recommendation system provides additional movie suggestions for that customer. If the recommendation system works and accurately suggests new movies to the customer that they might not have known about, then the customer is more likely to continue with their subscription.

Consequently, a best-in-class recommendation system differentiates Netflix from its competitors by delivering an exceptional customer experience which contributes to higher customer retention rates. The more satisfied the customer, the more likely they are to become an advocate of Netflix, helping the company to attract new customers (through word of mouth) which in turn lowers customer acquisition costs. With the increased profits Netflix receives, it likely continues to invest in technology to differentiate itself from its competitors, further improving its recommendation system and other features that contribute to an excellent customer experience.

How Netflix uses feedback to improve its customer experience is not new. In fact, feedback and how customers interact with a site is typically the cornerstone of most successful Internet companies. EBay relies on feedback to establish trust within its marketplace. Prospective buyers are much more inclined to bid on items from sellers with significant positive feedback than those without strong feedback ratings. Amazon provides individual product reviews from customers. Additionally, it tracks the browsing habits of its users and makes additional product recommendations based on what visitors have previously looked at. Google uses customer traffic for websites in the ranking of links for both organic and paid searches.

Within the lead generation industry, LeadPoint has taken a leadership position in using customer feedback to improve the quality of leads sold over our exchange. LeadPoint uses our buyer feedback to carefully monitor the quality of leads sellers submit to the exchange. Based on the feedback, LeadPoint increases lead flow from quality sources and removes from the exchange poor performing sources. Further, feedback is the cornerstone of our LeadClass Quality Scoring program (currently rolled out in our Credit Card Debt and Tax Debt products). The more customer feedback LeadPoint receives, the greater our ability to improve lead quality which ultimately has a direct impact on the performance of Internet data leads that our buyers receive.

While most of our buyers gladly provide negative feedback, they tend to be less inclined to provide positive feedback. Part of this is in how LeadPoint incentivizes negative feedback. As part of our return policy, LeadPoint requires that buyers send appropriate negative feedback within three days of receiving the lead. This applies for all lead products with the exception of Education. If the feedback is confirmed by LeadPoint’s call center, the buyer receives credit for an invalid lead.

There is no immediate monetary incentive for providing positive feedback (though higher performing leads in the market provides a long-term incentive). Providing positive feedback is also slightly more complicated. For one, there are more outcomes of what constitutes a good lead. A good lead means that a buyer was able to 1) speak to an interested customer; 2) qualify an interested customer; and 3) close a customer. Additionally, how a lead positively performs takes time (potentially months). Receiving detailed positive feedback per above generally requires the buyer’s CRM system being set up to send this feedback to LeadPoint.

Fortunately, LeadPoint has a number of buyers who do provide feedback in such detail. Some buyers, however, continue to remain hesitant to share such information considering it proprietary. How much information should a buyer provide to the company that they purchase leads from is an ongoing point of discussion that regularly is raised on online blogs and at lead gen conferences. The vast majority of lead gen thought leaders have, however, come to the conclusion that when working with an ethical lead provider it is in the buyer’s best interest to provide the provider with as much feedback on leads as possible.

Similar to Netflix example above, LeadPoint has in place best-in-class processes to deliver our buyers the ultimate customer experience. With LeadPoint, improved buyer service means greater overall quality and visibility into the leads they purchase over our exchange. Buyers can help us to continue to improve on this service through regular, honest feedback (both positive and negative) on the leads they receive. We do not view ourselves as just an exchange, but as a partner in our customer’s success. It is only when our customers succeed that we succeed, as growing a successful lead gen business requires both retaining current customers and acquiring new customers (often through positive word of mouth from satisfied existing customers).


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