Our CEO, Chris Rodde, shares some valuable insight, particularly in the senior living vertical, on starting a lead generation business with DomainSherpa.com. But these insights can be applied to any vertical, and many of the tips shared can be utilized by any startup entrepreneur. Here are a few of the musts to get you started:
- Conduct market research. If you plan on pursuing a specific business model in a given vertical, it’s imperative to research the competition and uncover an unmet need. It’s true that you don’t have to reinvent the wheel, but some of the most successful startups have attributed their success to taking a different “spin” on the wheel (pun intended).
- Know — and capitalize on — the individual skillsets of your partners. SeniorHomes.com was founded by Chris Rodde, Jay Goldstein and Tom Blumer, each of whom had prior experience in the lead generation industry in different capacities. Part of what has made SeniorHomes.com so successful is that each founding member was able to bring his own unique background and skillsets to the table, and each member did what he does best. The result? An incredibly productive, functional team.
- Contracts, contracts, contracts. No matter what business you’re in, you know the importance of a contractual agreement. Chris talks about how contracts were developed for more than 2,300 senior living communities to create a win-win for both parties.
- Pricing: The one area many entrepreneurs struggle with. How do you set a price per lead? And how much revenue will each lead produce? Finally, how do you ensure the leads you deliver are quality, making them more valuable to the customer?
- Marketing and SEO: Both are incredibly important for the success of any venture, particularly a web-based business, such as internet lead generation. SeniorHomes.com generates more than 200,000+ visitors per month, thanks to a solid marketing and SEO plan.
- Where do we go from here? There comes a point in each business venture where things start to get stagnant. But if you have a plan for long-term growth, you’ll already know where you’re headed. Chris talks affiliate partnerships as one way to continue to grow a lead generation business and boost revenues.
Determining a profitable lead generation niche
One of the most important market research aspects that should be accounted for before considering entering any vertical in the lead generation industry is the lifetime value of a customer: In the higher education vertical, for instance, a single customer (an enrolled student, in this case) would provide a college or university with anywhere from $10,000 to $60,000 over the student’s education years. So paying a nominal fee for a lead is often well worth it to colleges and universities. In other words, as long as the conversion rates (number of leads purchased to number of students who actually enroll) are decent. Rodde suggests the following industries as good candidates for lead generation:
- Adventure travel
- Cosmetic surgery
- Real estate
It breaks down like this: Most companies, whatever the vertical, must dedicate a portion of their profits to marketing. So if they’re spending 25% of their profits (not net sales, but profits) on highly-qualified leads, without having to dedicate a lot of time and money to “traditional” marketing methods, it makes sense. Still, companies — senior living communities, universities, and so on, still must have admissions representatives capable of closing deals once a lead is received.
Beyond doing your research and undertaking thorough planning, you’ve got to have the right people in place. As Chris, Tom and Jay quickly realized, it was beneficial to get people involved who had different skillsets. Chris and Jay were the marketing and business guys; Tom is a developer who had participated in several successful startups prior to getting involved with SeniorHomes.com.
Start small and prove your model
When SeniorHomes.com first launched, we had listings in only two states: Washington and Oregon. By starting small, building out the development work necessary for the primary search platform, and allowing Jay the opportunity to go out and secure business, SeniorHomes.com was able to really test out its business model on a small scale for six to eight months.
The challenge in this case is that with a directory that’s live and recently launched in only two states, there’s no real proof to demonstrate to potential customers that it’s worth listing on the site. But with lead generation, it’s a win-win situation; there’s no startup or signup cost for communities, they pay only when they receive a qualified lead.
Want to know more about internet lead generation and how the founding members of SeniorHomes.com built the company from startup? Chris talks more about marketing, SEO and SEM in the full interview. Be sure to check it out at DomainSherpa.com.