Importance of Diversifying Your Lead SourcesSeptember 9th, 2010 by David LaPerle
Experienced investors recognize the importance of having diversity in one’s portfolio. Invest in just a few stocks and run the risk that the poor performance of one company could have a disastrous impact on the performance of one’s entire portfolio.
Similarly, in business it makes sense to diversify with one’s vendors. For example, auto manufacturers nearly always have a couple component suppliers. If one supplier has issues, the auto manufacturer doesn’t have their manufacturing come grinding to a halt. Additionally, by using multiple suppliers it provides the manufacturer with greater flexibility in picking up volume from another supplier should one of his suppliers go down.
The importance of lead diversification has received a great deal of attention over the last few years. Online advertising is constantly changing with advertisers regularly applying new strategies to reach customers. Offers are continually being tweaked to improve consumer response and the performance of leads. Recently government compliance issues have come into play, dictating what marketing tactics are appropriate. Current events also play a role. For example, changes in interest rates or swings in the economy impact both the quality and volume of leads that advertisers generate.
Given this state of flux, it intuitively makes sense to use a variety of vendors (which you should carefully track) to ensure that you receive both the volume and quality you need. When a given source regularly provides better quality, you can increase supply from this supplier and decrease supply from lower performing sources. This provides freedom to shift volume in order to capitalize on quality changes while also protecting yourself from unexpected volume declines.
The stock market with its liquidity is a perfect example of a sector where companies purchase and sell stocks based on their relative expected performance at any given moment in time. A key reason for the liquidity of the US stock market is the low cost of buying and selling stocks.
With its revolutionary lead gen trading platform, LeadPoint provides liquidity in the buying and selling of leads. One way it accomplishes this is through the low cost and ease of adding and removing lead vendors. Traditionally, when adding lead vendors, buyers have to deal with a variety of costs. For one, there are contracts that need to be signed with each vendor. Second, there are integration issues requiring engineering work. The list goes on. When all these costs are totaled, they often eliminate any benefit of bringing on a new vendor.
The hindrance of being able to add new vendors has a hidden cost of also negatively impacting market innovation. If buyers become less inclined to test new vendors, existing sellers have a tendency to become complacent. The less fluidity in the market, the less pressure lead vendors feel to compete, thus the less inclined to innovate and improve the quality of their leads. There is also less downward pressure on price. In a fluid market, competition drives prices down and quality up through competition for a buyers business.
By creating a fluid market for leads and lead vendors, LeadPoint helps both buyers and sellers. Buyers are rewarded by being able to purchase directly from specific top lead sources and diversity their vendor portfolio. By tracking the performance of sources they are able to allocate budget to the sources that perform best for them at a given point in time. Top performing lead sellers are rewarded as they have greater access to a larger numbers of buyers who can more easily shift their purchasing to them.