Lead Bid Attempts to Switch Up 3rd Party Leads

Last week a call came in from Lead Bid, Inc. after being re-directed to me from one of my dealer clients. The sales professional on the other end of the line attempted to sell their service for providing third party leads The offer was similar to the famous travel website, www.priceline.com. You name your own price for third party leads.

On the call, we walked through their website to educate me on how easy it is to adjust the price per lead. By default, the demo suggested that you could win 3rd party leads for $15 per lead plus eliminate the middle man so the cost-saving potential would be huge! Feel free to bid as much as you want, you are in control. If you occasionally find your dealership overwhelmed with too many leads there is no penalty to shut down your flow of leads for an any amount of time. This sounds great, right?

Without trying to destroy anyone's new business model, here are a few things to be aware of prior to signing your name on the dotted line. No good business concept comes without possible drawbacks. Here are a few things to consider when you examine this potential source for third party leads.

1. Fine print shows a monthly membership fee of $149 a month just to be eligible to receive even one lead.

2. There are no guarantees as to how many leads you will receive. (Less leads will raise your cost per lead when you consider the amount that must be added. Here is your true lead cost formula.

($149/number of leads) + Lead Bid= Total Expense per Lead)

Consider if you only receive ten leads at fifteen dollars per lead. ($149/10) + $15 = $29.90 per lead. $29.90 is an expensive lead name on today's market. If you receive one hundred leads the membership fee is more palatable. ($149/100) + $15 = $16.49 which is a pretty good buy on a third party lead. Sure you could bid less and hope you still receive a heavy lead volume, but a lower bid suggests you will receive less leads or lower quality leads.

3. What do we know about the quality of leads that you will receive? Will the quality of lead decrease as your bid decreases? Lead Bid's competitors will lower the quality if you request more leads by going farther away from the dealership.

4. Will each lead really only be sold to one buyer? We really can't be sure that the lead originator will only sell to one vendor. This remains to be seen.

5. The following is from www.leadbidinc.com: “Our lead dispute platform enables buyers to return leads to sellers that are deemed to be unusable.” This sounds great. Are there really no rules? Someone needs to define the word, UNUSABLE.

Conclusion

In the end, perhaps this service may be worth a look. In the presentation, they claim that there is no contract and you can cancel at any time (good idea to review this section of the contract). How can dealers looking to really ramp up their lead count go wrong? A third party lead is a third party lead. If you try it and aren't happy with the results, drop them. If you have personal experience with this lead provider, I would love to hear from you.

Jason Mickelson
President
Auto iLead

www.autoilead.com

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Comment by Bobbie Herron on March 5, 2014 at 1:48pm: Has anyone used them recently that woudl be willign to provide feedback?

Comment by James Bunting on November 17, 2012 at 3:14pm: Hi Jason,

We've recently begun a trial period with Lead Bid. I hope to have my mind changed within the coming weeks, but I believe at this stage that we won't be using them much longer.

Whenever we start using a new lead source, I work the first batch of leads myself. It's the only way for me to get a real flavor for what we're dealing with (unless I'm willing to wait 90 days to crunch the numbers.) Plus, I'm just not comfortable telling my team to accomplish something that I don't have personal confidence in. Point being: this is a hands-on experience I'm talking about.

It is true that Lead Bid is very liberal in its return policies, but at the end of the day, a dealer isn't looking for a great return policy - it's looking for deals. Among the 20 or so leads we've received so far, I've only been able to verify a few as genuine. I've had 2 leads come in from what appeared to be previous sales or service customers; upon further communication, it became clear that these customers were victims of malicious data mining - the names, addresses, occupations, SS#s were cobbled together like some kind of frankenstein credit application. Needless to say, I worked hard to smooth over the concerns of those customers, and while I was happy to do so, that was time I should have been spending selling cars to people with credit scores in the mid 500 range.

My gut says that the headache is not worth a savings of $7 per lead. The reason I started working with Lead Bid was because I was concerned that the regular secondary finance sources we were using were "holding out on us," that is, only feeding us enough decent prospects to keep us hanging on. Given what I am seeing with the quality of leads coming direct from unverified lead generators, I'm coming to admit that I was probably mistaken.

If things turn around in the coming weeks, I'll drop another comment in this thread. Otherwise, take note! It would appear that lead aggregators provide a valuable service!