For those of you unfamiliar with Kaizen 改善, it’s a Japanese philosophy focused on continuous improvement. It’s a philosophy that LeadPoint embraces as part of a continued effort to enhance the quality of leads that flow through our market. In keeping with this philosophy, over the last few months we have been improving the measurement protocols used to evaluate each lead that lead sellers submit to each LeadPoint market.  Our efforts were rewarded with some eye opening results.

Online lead generation is inherently a numbers game. Visitors click on an ad. Some of them fill out the form. Others leave. Some visitors convert to actual sales and others don’t provide their real phone numbers. This disparity is the backbone of lead gen.

Some sources have always provided better results than others. We’ve worked diligently to improve our ability to grade leads and sellers effectively.  We’ve learned a lot, some of which we suspected all along and some of which surprised us greatly.  The most shocking discovery was the level of energy some companies will exert to commit what is best described as nothing other than egregious fraud. Our new market monitoring processes have allowed us to quickly identify and remove these bad actors and to refund affected lead buyer funds in a timely fashion.

As a by-product of our efforts and innovations, we have been able to ensure that both valued constituents of our marketplaces can continue to thrive. Our lead buyers can buy with the assurance that they are purchasing a “top shelf” product that yields industry leading conversion metrics. This renewal of confidence in the market resulted in our trusted, quality marketing partners once again capturing top returns on their marketing dollars.

Standing at the doorstep of an exciting 2009, LeadPoint reaffirms its pledge to practice a quality focused Kaizen in our pursuit of attaining market Nirvana, a trading platform where both sides of the model achieve a state of blissful return on investment.

LeadPoint believes there is a transition occurring within lead generation.   This transition is similar to the transition of large media conglomerates generating most web content to regular citizens using wiki, blogs, videos and other tools to generate web content. Today what is termed “Lead Gen 1.0” is characterized by large, single-vertical aggregators who take the lion’s share of the profits that a lead generates as it travels from consumer to end user.  Examples of “bigger/older” companies are particularly visible in the Auto Purchase and Mortgage leads categories.

Another characteristic of “Lead Gen 1.0″ is lack of transparency around the disposition of the lead. Very little information is shared back to the actual lead generator about what leads were valid, how many were sold, how much they were sold for, etc. Often, all a lead seller gets is a check 30-45 days after leads are sold.

Fixed pricing also characterizes “Lead Gen 1.0″ companies. Pricing of leads to the end user is typically flat, based on the last Sales Rep negotiated contract with pricing to the Seller fixed.  Quality and lead types having no impact in the equation.

Finally, “Lead Gen 1.0″ is plagued by quality issues. Many “Lead Gen 1.0″ companies simply do not have state-of-the-art automated systems to track, rate and discipline the hundreds of affiliates that pass leads through their system. These companies’ primary source of lead quality feedback is from angry customer phone calls.

Because of these and other issues, understandably a transition is occurring to what LeadPoint terms “Lead Gen 2.0.” As opposed to “Lead Gen 1.0″, a smaller, more efficient lead marketplaces that serve multiple verticals is emerging. No longer do sellers who want to sell mortgage leads, auto leads and debt leads have to go to 3 different vendors, sign 3 different contracts, and deal with 3 different account managers. Another benefit of serving multiple verticals is the economies of scale these exchanges can reach. As a result, they can often charge much lower transaction costs to buyers and sellers than “Lead Gen 1.0″ companies.

Another benefit of “Lead Gen 2.0″ is greater transparency.  Any seller or buyer can see exactly what they sold or bought, when they did it, how much it sold for, plus, in LeadPoint’s case, hundreds of other metrics to help them refine their marketing strategies. Market forces of demand and supply, powered by bidding (think ebay), drive pricing, not negotiated contracts and fixed pricing.  This enables buyers pay more for more valuable leads and sellers who generate those leads to get a true market value for their effort.

Finally, Lead Gen 2.0 resolves many of the quality issues associated with its predecessor.  By only allowing the most high quality sellers into the marketplace and working with buyers to provide feedback, companies like LeadPoint are able to track the quality of every seller in real time, often allowing us to address quality issues before receiving buyer complaints.

At the Affiliate Summit last week, many lead sellers were interested in understanding some of the best practices that LeadPoint sees around generating leads. While not an exhaustive list, below are a few things we have observed our most sophisticated sellers doing:

1. Pick an aggregator that gives you the tools and reporting that enable you to understand exactly what is happening. You need to measure your ROI and adjust your marketing plans accordingly. To do that, you need real-time, 24X7 reporting tools, that give you insight into what is really going on.
2. Pick a partner that can help you leverage your strengths across multiple verticals. If you are good at Paid Search in Mortgage, why not use those same skills in the Autos or Student Loan Consolidation verticals? You’ll make more money plus you will diversify your risk if one of the verticals you’re in suffers from seasonality or enters a soft period.
3. Pick a partner that helps leverage your customer. Every lead generator should be cross selling other relevant products to their customers after they have submitted a request for a quote on your site. If a consumer requests a quote for refinancing their mortgage, maybe they also need help with credit card debt or student loan consolidation? Build and nurture your database of these consumers. It’s an asset. Send a consumer an email promoting extended auto warranties 3 months after they submit an auto purchase lead. Pick a partner where you keep the consumer data and the consumer is not forced to leave your site after hitting “submit”.
4. Pick a partner with low transaction costs. You are generating almost all the value. Some aggregators take anywhere from a 40% to 70% cut of the total lead value. In a world of ever increasing media costs, that kind of tax makes it tough to be competitive. There are lower cost options out there; try and leverage them.

With the emergence of “Lead Gen 2.0″, lead gen has improved for everyone.  Buyers are getting more of what they want for the price they want.  Sellers are getting better insight into what is happening and are selling leads at prices traditionally only lead generators with their own direct networks of buyers were getting.  Just like Youtube is rocking the world of traditional video, “Lead Gen 2.0″ is rocking the world of Lead Gen providing significant profit opportunities.

Excerpt: LeadPoint answers the question of “how to protect customers from fraud” by taking the unheard of action of indemnifying buyers against potential exposure from leads purchased through our market.

The impetus to bring LeadPoint to market was a goal to innovate the world of lead generation by providing more value to the companies doing the heavy lifting:  those aggregating eyeballs and those acquiring customers.

It has been a challenging journey bringing the model to market, ensuring we address all the issues in an efficient manner.  The company has put an extraordinary emphasis on the black cloud that is raining on the click world and is imminently moving towards lead generation— fraud.

The question of “how to protect customers from fraud” is a challenging one.  As a company we have worked diligently to create systems and processes to ensure the integrity of lead flow through the LeadPoint Lead Exchange. But hey, the FBI system gets hacked every once in a while, so can our system provide 100% protection? Unfortunately the answer is no, but generally 99% is good enough.

We thus rolled out the platform, but continue to address the 1% which our technology can not address. As a company we take the most aggressive stance possible through a business component:  indemnification. Our contracts indemnify buyers against potential exposure from the leads through our market, achieving our promise that every exchange is protected, as well as fair and equitable.

Many stringent legal teams of buyers on the exchange have said that LeadPoint has the most favorable buyer contract out there. I’ve been told “indemnifying buyers for consumer and/or FTC action is unheard of.” Well it was, but no one operates like LeadPoint.

Two years later as a company we find ourselves in the situation where a consumer has filed a complaint against over a dozen lenders, two of whom are participants in our exchange. So LeadPoint stepped up to defend and indemnify these two buyers and is conducting its own investigation through SecureRights, our consumer protection arm. We have protected our buyers and have engaged the consumer to clear the matter. It is my hope, that the black cloud dissipates prior to reaching our doorstep; it appears that it may.