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Six Figure LeadGen Part IV: Business Models

Discussion in 'Making Money' started by kboxer7, Dec 1, 2012.

  1. kboxer7

    kboxer7 Senior Member

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    Six Figure LeadGen Part IV: Business Models

    First of all, if you have not already I suggest starting with reading Part I, Part II and Part III of my LeadGen series. They were
    meant (loosely) to be read in order to fully understand the model and system.


    [FONT=&amp]Part I: http://www.blackhatworld.com/blackha...selection.html[/FONT]
    [FONT=&amp]Part II: http://www.blackhatworld.com/blackha...giveaways.html[/FONT]
    [FONT=&amp]Part III: http://www.blackhatworld.com/blackhat-seo/making-money/490417-part-iii-6-figure-lead-gen-biz-even-more-lead-gen-methods-examples.html[/FONT]

    Now, onto the business models. These vary highly in complexity and income potential. I do have my preference but which is right
    for you will depend highly on your personal skill sets, legal and regulatory restrictions where you reside, and income goals.


    1. Run of the Mill Lead Sales:

    The simplest of models. You own your own sites, landers, PPC/CPV and media campaigns outright. Leads generated through your
    marketing techniques are sold to individual companies/agents for a flat rate that is typically based on the following:


    - Niche
    - GEO
    - Age of lead
    - Data fields included
    - Exclusive, Semi-exclusive, or Non-Exclusive

    The Good:
    - Get paid in advance for campaigns
    - You are solely in control of the business and own your own data
    - Depending on contracts, data collected can be used by you for backend promotions

    The Bad:
    - Dealing with multiple clients
    - Client invoicing and tracking (collection in some cases)
    - Limited income potential per lead


    2. Rev Share Deals

    You build your own sites, retain ownership of all proprietary data and assets. Leads are provided up front at no cost to agents/companies.
    Payment for leads is contingent upon a lead ?closing? and a sale being made. Typically you would want to negotiate a tiered system and
    a performance chart detailing payment per item sold and also an increasing commission structure as volume of sales reaches certain benchmarks.


    The Good:
    - Potential for recurring/residual income deals
    - Better opportunity for increased value per lead
    - Can kill lead flow and traffic for non paying clients
    - Large deals may warrant branding of sites/landers to customize marketing campaigns thus resulting in a higher ?close rate?
    and conversion of visitor to lead.


    The Bad:
    - Relies on performance of the agent or sales team
    - Payments are more sporadic and revenue can go up and down
    - Payments are NOT in advance and you front initial costs
    - Trust factor and tracking leads to close
    - Legalities/regulations may be a limiting factor



    3. Hybrid Model

    Ok, this model is really only worth it when one or more of 3 things happen:

    a. You have large lead volume and quality in a niche where you would bank HARD if it were not for regulations
    restricting you from ?rev share.?


    b. You have an existing contract with a killer sales team in a niche and want a bigger piece of the pie.

    c. You want to upgrade from a local deal to a district, regional or national deal in a highly regulated niche where ?creative? contracts
    might not be the best route if you plan on expanding and specializing.


    If any of the above apply to your situation you may want to get licensed as a broker in a given industry. Take real estate for example.
    You can get your brokers license (not agent but brokers) in xx months and for minimal cost. This often allows you (depending on the industry)
    to structure any kind of a rev share deal you want, hire your own sales teams or agents ?in-house? OR develop a real ?partnership? with an existing
    agency as an ?in house? marketing team for a percent of the profits. You also may option to form a wholly new company in which you handle
    marketing and the broker handles the rest of the business as they were before you came along.


    *I did this in the insurance industry (life and health) years back


    The Good:
    - Astronomically higher conversion rates
    - Highest revenue potential
    - Greater control
    - Possible tax benefits
    - Specialization typically leads to cost reduction and better efficiency

    The Bad:
    - Higher risk (payroll, industry swings, liability, insurance, etc)
    - Jointly owning property (intellectual and real)
    - Cash flow and profitability can fluctuate
    - Often limited geographically
    - An ?Exit Strategy? may be harder to execute


    Where to start?

    My suggestion is to take inventory of your abilities, skill set and aspirations as well as any compliance and regulatory restrictions in
    your given industry. For most if usually makes sense to start with model #1 and work your way up from there. It?s the least risky, and less
    financially intensive to start with.



    The Million Dollar End Game:

    The aforementioned business models are simply a means to an end. In all business ventures I look for a few key things:

    a. ROI (can I get good enough margins)
    b. Liquidity/Demand (can I sell the item/service thru multiple channels and to multiple people/entities)
    c. Ability to Automate (software or by hiring it out)
    d. End Game (Sell out, License for a royalty, etc)


    YOUR GOAL IS TO BUILD AN ASSET THAT CAN BE SOLD!!!

    Let?s take a look at what I?m talking about?..Markets that I suggested people target in my earlier threads (Part I-III) outline
    industries that are sales driven, lead hungry, and know the value of each lead as well as the lifetime value of each closed sale/client.


    Think: Real Estate, mortgages, investment, insurance, law, business solutions, etc

    We are talking about niches where individual businesses are spending 5 figures or more per day in Adwords for a ?click? not even a lead.
    Go see how much a click goes for in those niches. Now how many clicks does it take to get a lead? Start doing the math and you?ll
    begin to realize the value of the model.


    Real World Example:

    A recent client of mine is a gold investment broker. His average cost per click on Adwords is $8-$14 per CLICK depending on his keyword.
    Let?s be conservative and say he gets clicks for $9.00. Let?s also PRESUME he gets a 5% close rate to an actual lead form submission.


    100 clicks = $900.00 and 5 leads

    His close rate is 15% on new leads, with each deal brining in $4000 minimum (up to $15k+)

    If I bring him even 30 leads a month

    30 x 15% = 4.5 sales

    4.5 x $4000 commission = $18,000

    This means my marketing campaign + landers + sites etc is worth on average $18,000 per month being CONSERVATIVE.

    This little 30 lead per month setup is worth: $216,000/yr

    My goal then is to SELL this asset for x-xx month?s worth to the client. I might even place a contingency that I be hired on after
    purchase to ?maintain? the system for an extra kickback of 5% of net commissions for example.


    The point is, in these niches dropping that kind of money for an ?in house? lead gen system is chump change and the right buyers won?t even flinch.

    Now, I don?t mean to paint this as a ?easy? scenario. You?ll need good leads, consistent sources plus some backups for market fluctuations
    (even if you have to have other lead brokers as a last resort to buy from), and making these kinds of deals is not a cakewalk. But if you provide
    quality, consistency and have a legit track record these things become easier and easier.


    Start small, fail, learn, reinvest in yourself and the biz?..and keep the end game in mind as the destination.

    Advice on Preparing for the End Game:

    *Keeping in mind the goal is to sell the assets

    a. Focus on making transfer to a new owner simple
    - Godaddy (I know we hate them but transferring is easy as pie)
    - New autoresponder acct for each set of campaigns
    - New G-analytics or other analytic acct for each set of campaigns

    b. Maintain whitehat practices (SEO and otherwise)

    c. Consistent color schemes and branding as well as clean and professional site designs.

    d. Wordpress or custom CMS are favorable
    - Reduces ongoing costs and headache for non-tech savvy buyers

    e. Always use contracts, always have them attorney reviewed/drafted, and ALWAYS use Escrow or another form of protection
    before blindly transferring assets.

     
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  2. hitman247

    hitman247 Executive VIP Premium Member

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    Thanks/Rep for the time you spent on this coupled with sharing. Excellent work.
     
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  3. suga051982

    suga051982 Regular Member

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    Ok, so now I totally have to go back to the drawing board. LOL. Oh well. But I can say that I have a few ideas that I can put into place. Just have to think a little more.
     
  4. gordongekko

    gordongekko Regular Member

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    This is quality work.
    Well done.
     
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  5. audioguy

    audioguy Power Member

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    Good to see you're back to share more. Just curious the other day about this, after looking at my subscribed thread. :)
     
  6. therage

    therage Senior Member

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    I hate to go into a CPA network and just rely on leads to generate sales. We all KNOW that above 70% is fake or dead leads, and the rest will result in less than 5% sales. With spending around $5 total for the basic CPA lead, you can calculate how much you will lose with this method. As for pay per sale, the returns might be high if you get a dishonest affiliate, but that should only account for 12% of your total sales each month. If it is higher than that, well then you need to talk to the CPA manager in charge of handling customer service for you. Still you can expect around 5% traffic to generally turn into a sale for you, and depending on your method you might want to perform on a pay per sale basis. A higher incentive % fee (some people demand 75%) per sale is totally respectable depending on the amount of work and sales created.

    I am currently running a few offers in the CPA market. I tried and learned from lead gen, and I collected information from others from lead gen. We all love it when WE are the ones signing people up for the advertiser, but to get that done to us and count on it leading into a sale later is another story. Hope this post helps someone else that may have some questions about lead gen in the cpa networks.
     
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  7. schwagoo

    schwagoo Jr. Executive VIP

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    Fantastic share man
    +rep
     
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  8. suga051982

    suga051982 Regular Member

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    kboxer7,

    If I become a real estate broker in Arizona, does that allow me the option to broker deals in Massachusetts? Is it the same for other broker licenses?

    Thanks
     
  9. kboxer7

    kboxer7 Senior Member

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    Thanks hitman!

    Much appreciated. I'm open to feedback or suggestions on topics to further enhance this series if you think of any.

    Regards,
     
  10. kboxer7

    kboxer7 Senior Member

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    Don't go completely back to the drawing board :). Your original ideas in the PM were on point.

    Regards,
     
  11. kboxer7

    kboxer7 Senior Member

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    No. The general rule of thumb in these types of niches (insurance, real estate, etc) is that you need to be licensed in each state you do business in individually. Sometimes states do have reciprocity, where a license in one state grants you the license to do business in the other, or just simply take an extra exam to do business in that state.

    I'd look up state specific requirements where you plan to do business if I were you, talk to your local colleges that offer certification and/or call up a professional in the field and do some Q&A.

    Bests of luck!
     
  12. suga051982

    suga051982 Regular Member

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    Well, I thought more about it and I have spoken to some agents to garner interest. They are ready to go to say the least. I don't have a website or a lead to boot, lol. Neither do I have a contract or even know how to structure the contract to make sure that i get paid.

    Im ready to finish when you are, lol.

     
  13. kboxer7

    kboxer7 Senior Member

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    Thanks Gordon,

    Hit me up with any requests on future installments.
     
  14. kboxer7

    kboxer7 Senior Member

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    Thanks. I try to throw in some specifics and examples where appropriate. That said, I also want to encourage others to think outside the box I"m drawing :). Let me know if you have questions or suggestions for future installments.

    Regards,
     
  15. kboxer7

    kboxer7 Senior Member

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    Seeking feedback on topics for the next installment........and as always looking forward to continued discussions in the first 4 threads (Yes I check them regularly :))

    Ideas include:

    - Additional info on contracts (clauses, regulations, etc)
    - Where to sell leads (besides the obvious)
    - Host and Post setup
    - Sales techniques and training (one of my fav)

    Any thoughts are welcome.
     
  16. albaniax

    albaniax Elite Member

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    Thanks for taking your time so far to publish some great informations. Took me at least 1 hour to write down some notes. Some of these may have an impact at how I realize my upcoming projects.

    Looking forward in what you have to say :)

    Some of my projects base currently on developing mobile apps around searched niches & using domain authority of big site's to rank keywords with On- and Off-Page SEO in a semi-automated, cost-cheap way.

    Focus is 50% on building communites with high value on the social aspect (Affiliate for Online Shops, Newsletters with CPA, later direct deals with companies) & 50% on generating leads for clients, whereas your information gave me a whole new perspective on the lead-thing, or let's say, a couple of more then one :)

    Let's put a specific question in the round, to get this going more practically.: "How would you sell leads to a local jewelry?"
    In Example: By offering: "Get a xx$ off coupon for your first buy if you subscribe to our Blog/or follow fanpage (even better, install facebook application)"

    Based on your experience, what would work even better?

    kind regards,
    Albaniax
     
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  17. kboxer7

    kboxer7 Senior Member

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    It's Friday night so I'll give you a short answer now and come back to this for a more in-depth answer when my mind is a little clearer :).

    So, for a "local" jewelery store we know that their customer base is typically going to be within xx miles of the store. For local I like to leverage other local avenues to supplement my online efforts (especially if the local client is not in a highly populated city where search/social traffic is small).

    With that in mind:

    Ask yourself who buy's Jewelery:
    - Spouses, boyfriends, women in general, etc.

    Ask yourself where you can "intercept" these people:
    - Women: salons, shoe stores, clothing stores, etc
    - Spouses: flower shops (buying for wife, etc), court (marriage license), Card stores, etc.

    In leveraging offline partners you want to intercept your demographic at a point in time where they might also be interested in your products as well. In the examples above (not the best ones I might add), you are intercepting the buyer at a time when they may be vulnerable or open to also looking into jewelery for their significant other. To that point, partnerships for referrals with the jewelery store and those other shops/stores might be a great thing for you to facilitate and set up.

    The coupon is a good idea. In lead gen your goal is to get the contact data and/or get the prospect in the door. That is YOUR job, NOT closing the deal. With that in mind you might want to convince the jewelery store to give away a free "chocolate box" or "free 15 min massage coupon" or whatever to go with the flowers they just bought for their gf or spouse or whomever if they visit the jewelery store.

    That gets them in the door so the jewelery store clerk/sales team can talk to them about jewelery.

    I know that did not directly answer your question about what you can "give away" online to encourage people to subscribe to your list but this could also be used as an "online" incentive as well......and frankly my mind is not operating on all cylinders tonight :)
     
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  18. Colonel Tuxedo

    Colonel Tuxedo Newbie

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    Hey kboxer,

    I've been reading all of your lead gen biz threads and have learned a ton, both from what you've said directly and from researching ideas that have been sparked by reading your threads, so first I want to thank you for taking the time to post quality information based on your own experiences.

    Similar to your background, most of my professional experience is in sales, sales management, marketing, and finance (although I've logged less time than yourself). I feel like the sort of business you're describing fits perfectly with my skillset, and I've started researching local markets here in my city. The plan is to pick two local niches to start with, develop sites tailored to each niche, and use a mixture of SEO (since that's what I'm most familiar with) and some of the paid advertising techniques you've mentioned to get my traffic. Ideally, the goal is to start generating some cashflow with these small niches as quickly as possible so I can reinvest and expand to more and larger niches (and learn more as I go).

    You asked for ideas on future subtopics for this series - as someone new to the lead gen game, I have a few questions that I would love to hear your thoughts on:


    • Are there any Wordpress based landing page templates, lead gen themes, lead gen form plugins, etc. that you recommend or use regularly? Or do you use custom pages built by designers?
    • Are there any resources/books/courses/tutorials on increasing lead gen form conversion rates that stick out in your mind as being exceptionally useful or comprehensive? If someone said they wanted to spend one full day improving their knowledge in this area before launching a new project, what would you tell them to read/study?
    • How can I find quality online lead brokers to sell leads to initially? Are there any specific ones you recommend? I know this depends on the niche, so if you need specifics I can shoot you a PM if you're open to that.
    • What about finding quality CPA networks? Do you have any specific recommendations or ways for finding profitable opportunities?
    • Can you elaborate a bit more on how you use media buys to drive targeted traffic? I have zero experience with this technique but it seems like it could be profitable if done correctly.
    • You already mentioned that your next post in this series will include some sales techniques, so I'm looking forward to hearing about those too. Coming from a sales background (before getting into SEO), I have some ideas of my own, but obviously it will be really helpful to gain some insights from your perspective.

    On an unrelated note - I assume from your username that you're into kickboxing/martial arts? Did you ever compete? I competed in NBL and NASKA for several years so I was just wondering if we've ever crossed paths at a tournament somewhere.

    Thanks again for sharing your tips. It's hugely motivating.
     
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  19. kboxer7

    kboxer7 Senior Member

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    Lots of topics to cover here. I want to answer each one with a little depth so I'll get to these as time permits. It's Sunday so I'm in and out online today.

    As for the username, you are correct! I both competed and taught competitive kickboxing for a number of years in the Midwest. I fought under the USKO (United States Kickboxing Organization) as well as in the IKF (International Kickboxing Federation). Good times haha. I still practice (mostly on my own) but would certainly like to get back into it before I'm too old lol.
     
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  20. smartguy

    smartguy Newbie

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    Kboxer7- First off- thank you for the very generous share of info. In the part 3 thread you mentioned a platform you were developing - similar to hubspot but with more tools such as sms- can you elaborate- is it available? I see huge potential for something similar to Mike Koenigs instant customer software and mojo video matrix software all put together- combining email, video email, text, video text, voice blast, direct to voice mail, regular mail all in one CRM package- Please share your thoughts