The changing face of lead generation

It was not so long ago - less than 18 months - that lead generation had a bad reputation. The finance press was full of horror stories about unscrupulous lead providers based in far flung corners of the world taking brokers' hard earned money and providing poor quality leads.

Even for the advisers that had found their way to a reputable lead provider, buying leads was perceived as something extra rather than a significant source of new business. In truth, most decent adviser firms didn't really need lead generation as many could rely on their own client banks and referral networks to generate business.

Fast forward to 2009 and everything has changed including the perception of lead generation as an industry. Most of the cowboy outfits have disappeared and lead generation is now widely accepted as a very powerful marketing tool for financial advisers. This process has been hastened by the current economic turmoil where adviser firms of all sizes are wondering where their next piece of business is coming from. At the same time more and more consumers are going online to find out about financial products and services. As lead providers connect these online consumers with the companies that can help them, naturally advisers have started to flock to lead generation.

Whatever the macroeconomic environment lead generation has been proven to work and often the difference between the successful lead buyers and those that aren't is down to the lead buyer themselves. For many companies that have used more traditional forms of marketing in the past, coming to lead generation for the first time can be quite a culture shock.

One of the key factors that determines whether a lead generation campaign will be successful is the initial commitment of the lead buyer in terms of number of leads. The reason for this is simple mathematics. For example, if 25% of life insurance leads convert on average, if you buy 100 leads it is impossible to predict whether they will be the first 25 or the last 25 so you need to receive all 100 to see that conversion rate. Committing to this volume of leads can be a significant investment for any adviser firm so the ones that are prepared to make this outlay have a larger incentive to make it work and as they have committed to more leads they are more likely to generate the desired return on investment.

18 months ago there weren't many adviser firms that either needed to or were willing to spend a significant amount on lead generation but today there are. The result of this shift is that more advisers are now buying leads in the right way and more are making a good return from their investment.

Justin Rees is head of marketing at LeadPoint UK

The views expressed in this blog are the individual's own.

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