The lead generation industry is growing rapidly and advances in technology as well as new processes are providing more complex ways to generate, sell and buy sales leads. We dedicate much of our blog to exploring new technologies and the future of the lead generation industry. However, for this post we decided to take a step back and discuss a fundamental piece of the lead generation and distribution process. Today we answer the question, “What is a lead broker?”
What Is A Lead Broker?
A lead broker is an individual or business entity that buys leads with the intention of reselling each lead to their own network of buyers. The lead broker (also known as a lead aggregator) sits in between the lead generator and the end-service provider. After buying a lead, the lead broker carves out a small profit from the lead price before selling the lead to one or more buyers. This entire process takes place in real-time in the form of server-to-server communication between the lead seller, the lead broker and the lead buyer.
How Does The Process Work?
Since the lead broker needs to carve out a profit from every lead her or she buys, any lead that is bought but goes unsold is a loss. In order to determine whether they will be able to profit from every lead they purchase, lead brokers use a distribution process called ping post.
In short, ping post allows the lead broker to ping partial lead information from the lead seller to their entire network of lead buyers. If the broker's buyers want to purchase the lead based on the partial information that was pinged to them, the buyers then respond with the price they are willing to pay.
After collecting every bid, the lead broker knows the maximum price at which he or she can sell the lead. The broker can then carve out a profit margin out of that price and offer a slightly lower bid to the lead seller. If the seller accepts, the lead is bought by the lead broker and sold again to the lead broker’s buyer.
Should You Sell Leads To A Lead Broker?
If you are a lead generator looking for additional lead buyers, working with a lead broker can be a good option. The best lead brokers have an expansive network of buyers with large variations in the types of leads they accept. This gives lead generators more flexibility in the types of leads they can generate and sell.
Let’s imagine that you’re generating home improvement leads and have a network of contractors throughout California that are buying leads from you. What happens if you get a lead requesting services in Florida? None of your California contractors are going to buy your Florida lead. Normally, this would leave the lead to not only be unsold, but unserviced, hurting both your pocketbook and the integrity of your service offering. However, by working with lead brokers (and indirectly working with their large network of buyers) you could sell your leads, that would have otherwise gone unsold, to a broker.
Are There Any Downsides To Working With A Lead Broker?
Because lead brokers need to carve out a profit margin from every lead, selling leads to brokers is almost always less profitable than selling leads directly to service providers. The good news is that if your buyer network is built with several end-service providers as well as a few brokers, you can prioritize your higher-paying buyers and use the lead brokers as a fallback plan in case the lead won't sell to another buyer.
Another potential issue of working with lead brokers is stability. If a lead broker is not providing any additional value to the lead or are only re-selling leads to other lead brokers, they are operating in a 'soft spot' within the lead distribution process. The lead generation industry is so competitive and is becoming more efficient by the day that those acting simply as ‘middle men’ typically don’t last too long. Whenever possible, it is always beneficial to get as much information about your lead brokers as possible.
boberdoo has been providing technology for the lead generation industry since 2001. We have worked with many lead brokers throughout the years and we continue to evolve the way that leads are bought and sold. If you have any questions regarding lead brokers or are interested in introductions to lead buyers or sellers, we can help. Simply fill out the form below to get started!
What Are The Signs I'm Working With A Good Lead Broker?
If you are a lead buyer interested in working with lead brokers, that’s great! Lead brokers can provide you with numerous targeted, high-quality leads while allowing you to focus on closing deals rather than generating leads. However, not all lead brokers are created equal. That is why we assembled this list to give you a better idea of what the best lead brokers are offering their clients. While each of these qualities and features may not apply to you, they can still serve as a good checklist as you evaluate lead brokers and the products and services they offer.
1. High-Quality Leads
We have to start here. If a lead broker does not provide high-quality leads, then there is no reason to move forward. Some lead brokers provide a few free sample leads that allow you to test their lead quality. You can also ask your lead broker if they use leadQC or another lead scoring tool that prevents any bogus leads from being sold.
2. Web Leads and Calls
The best lead brokers provide both web leads generated from an online form as well as live phone leads. Even if you are only purchasing one or the other, it is easy to identify an expert lead broker by knowing whether they generate both web leads and calls.
3. Lead Details and Specifications
If a lead broker is offering you standard, one-size-fits-all leads, you might want to look for alternative options. You should be able to specify the exact types of leads you are willing to purchase and never buy a lead that does not meet your criteria. For example, if you are purchasing auto insurance leads, you can specify that you are only willing to purchase leads of Illinois drivers that are currently uninsured. You should also know whether the leads you are purchasing are exclusive (sold only to you) or non-exclusive (could be sold multiple times).
4. Allow Lead Refund Requests
A clear sign of a great lead broker is one that allows you to request lead refunds. The lead broker typically lists a set of circumstances that warrant a lead refund such as bogus lead information or a disconnected phone number. While this does not guarantee that every refund request you make is approved, it does show that the lead broker cares enough about their service and their clients’ happiness.
5. Many Lead Verticals
Another indicator of experienced lead brokers is the number of lead verticals they operate in. Most lead brokers start by specializing in one lead vertical and eventually expand their offering. Oftentimes lead brokers that are offering leads in five or more lead verticals are pretty experienced in the lead generation industry.
6. Payment Options
Although often overlooked, payment flexibility is a great sign of a good lead broker. Many lead brokers simply invoice their clients at the end of each month. However, if your lead broker is integrated with multiple payment gateways or even allows for trigger-based or automated re-billing, you know you are working with a veteran lead broker.
7. Lead Source Transparency
While some lead brokers keep their lead generation practices a secret, many more are happy to explain exactly how they are generating their leads such as via email marketing or paid search. This transparency gives you a better idea of not only how the lead was generated, but also more information on the types of consumers that are converting. If your lead broker will not give any information as to where their leads are coming from, that may be a red flag.
8. Strong Web Presence
Like almost all businesses, a strong web presence is a good measurement of the company. This is especially true of lead brokers that focus on online marketing to generate their leads. Think about it, if a lead broker cannot assemble a decent website for their own business, how good do you think their lead generation materials are?
9. Lead Buyer Portal
One of the best resources lead brokers can provide you is access to your own lead buyer portal. Although many buyers prefer for their leads to be posted directly into their CRM, the availability of a lead buyer portal is a clear indicator of a high-level lead broker.
10. Consumer-First Mindset
Has a lead broker ever asked you about your sales process or asked for feedback about whether or not you were able to close a sale from any of their leads? You should be happy to get these questions. This means that your lead broker is looking out for the consumer and trying to make sure their service is as helpful as possible. It is always a good idea to think of leads as consumers, not data, so any signs of your lead broker trying to improve the customer experience will only benefit you in the long-run.
11. Matching Buyer Association
Some lead brokers do a favor for their lead buyers by immediately indicating to the lead exactly which lead buyer(s) will be reaching out. This is typically done via an autoresponder email sent to the lead or can even be displayed on the confirmation page after a lead submission. By displaying your company name, your logo or any other information about your business to the lead upon submission, your lead broker is helping build a connection between you and the lead even before you make contact.
This list was meant to serve as a high-level guideline for evaluating lead brokers. It is important to remember that lead price is not the only factor you should consider when working with lead brokers.