Stoffer's Soapbox

5 Keys to Success in a Hot Transfer Environment

Bill Rice is hosting the Leads2007 conference in Florida in mid-August (I'm 90% certain I'll get there). I am looking forward to speaking with other companies that are using an upfront telemarketing team (or the lead vendor Double Positive) to transfer hot leads to their sales team. Despite all its advantages, a hot transfer environment does make lead allocation a much more challenging task. After implementing such a system, I have laid out 5 Keys to success below:

1. Beware the Inverted Pyramid. In a traditional push system, where reps are assigned leads, many companies assign the most leads to their highest performing reps and the least to their lowest performing reps.It is easy, in a hot transfer environment, for this to become inverted. Your worst reps likely have the lowest average handle time and, if proper controls are not in place, will take the most transfers. I challenge each of you using hot transfers to stack rank your sales force by conversion rate - I'd bet your top performers take the fewest transfers and your low performers are burning through leads.
2. Avoid "Cherry Picking" by Setting Clear KPIs for Management and Sales Reps. The sales team is likely used to getting judged on absolute number of sales -  in education, the metric is enrollments. I cannot stress how important it is to change this to reflect conversion rate - otherwise, the incentive is in place for a sales rep to take as many transfers as possible and "cherry pick" the easy sells
3. Mandate that low performers take only a prescribed number of transfers per day. If you have the technology for intelligent routing, build this into your business rules; if not, at least put manual rules/processes in place
4. Aggressive performance management. By design, each lead is more valuable in a hot transfer environment (you probably pay 3-4 times more per transfer than you do per lead). As such, your low performers in this environment are far more harmful to your bottom line than bad performers in a traditional push environment. So make a quick call on letting people go - if it is clear someone, once fully trained, will at best be a mediocre performer, let them go quickly
5. The corollary to aggressive performance management is aggressive and constant hiring. Aggressively recruit top talent constantly, from staffing agencies, competitors, local universities and elsewhere in the local business community. And make sure you have a rigorous hiring process - this is not just using a behavioral profile to screen upfront, but also encompasses the interview process as well.  As an example, when I hire admissions advisors, they have three interviews: (i) standard behavioral; (ii) a roleplay over the phone using a sample call flow and (iii) they get 20 minutes to prepare a ten minute presentation on a topic of my choosing. If they pass these three tests, I'll put them out on the floor for a half hour next to one of my best reps so they can see what the job is like (also, it''s amazing what candidates might say to someone they view as a peer).

I'm curious to hear from others their experiences in implementing hot transfers - lessons learned and pitfalls to avoid.

Branding in For-Profit Education

In the traditional direct response business of for-profit education, companies have increasingly taken the leap to more branded advertising (e.g. UOPX branding the Cardinals stadium) in order to differentiate themselves in a competitive marketplace. There is a great article in Harvard business Review this month that sheds some light on the issues our industry will face as we move toward a greater brand spend - titled "If brands are built over years, why are they measured over quarters."

As for-profit educators move toward a marketing model with increased branding dollars, they will initially have trouble meeting the major sales goal they are traditionally measured on quarterly - conversion rate of direct marketing leads.  In the short term, for every dollar of spend taken away from direct marketing, operators will need to increase the expected conversion rate of their sales force to meet sales goals. There is no reason to believe this is possible - and it is likely that an increased focus on branding will have a negative short term impact on financial results. So, similar to a traditional CPG brand, where there is a tradeoff between promotional spend and branded advertising spend, for-profit educators must balance the long-term benefit of branding versus the more short-term rewards from increasing the lead buy.

Here I ponder two big questions: (i) will for-profit educators be able to make the right short-term/long-term tradeoffs as they allocate their marketing spend between branding and direct response marketing and (ii) will the companies that have recently gone private - Laureate and EDMC, have an advantage as they will be able to make long-term investments without quarterly Wall Street scrutiny.

I'll end with an interesting quote from the article- which speaks to managerial incentives and how the decisions made today will affect our industry in the many years to follow: "The use of short-term sales data as a yardstick for brand performance can interact in unfortunate ways with the tenure of a brand manager—which is typically quite brief, often less than a year. Any brand manager who takes a long-term perspective—investing in advertising or new-product development—is likely to benefit the performance of subsequent managers, not her own."

Evolution of Online Advertising

Check out this great post from Sean at Double Positive on the evolution of advertising online - Sean discusses the evolution from CPM to CPC to CPA in this post. I am sure his next post will speak of Cost per Transfer - as this is the basis of Double Positive's business model and an emerging trend in outbound consultative sales.

One interesting theme Sean discusses is the rapid growth of lead aggregators like Lending Tree and Advertising.com - he writes, "Lead aggregators essentially disintermediated the advertisers’ brand from the user UNTIL the lead was sold to the advertiser." I would ask: Did these aggregators also reduce the ability of online advertisers to craft a unique brand identity?

In online education, some companies give these lead aggregators 75%+ of their overall media spend.  If you look at the landing pages for several different schools, they have no differentiation in messaging. Check out this Classes USA landing page for Kaplan -  it has a stock photo in the upper left corner that could be used for any other school and the first paragraph reads: "If you want to begin a career in accounting, the Associate of Applied Science in Business Administration/Accounting will give you the credentials you need to achieve your professional goals."

If I go to 10 other schools, their Classes USA landing pages sound essentially the same. So a customer's first interaction with the Kaplan brand gives that customer no differentiation and no reason to choose Kaplan. Not an ideal state of affairs for Kaplan and other education companies. I think what you will start to see is Kaplan and others asserting more control over lead aggregators and more tightly controlling the image and messaging potentially customers see when they hit those landing pages.

Generational Disruption in Media

Rajil Kapoor of Mayfield has a great post on Generational Disruption in Media, where he speaks of how "the services that appealed to one generation (e.g. those of us in our 30s like Yahoo, hotmail, etc) tend not to appeal to a new generation (e.g. those in the 20s or teens like MySpace, AIM, etc)." This is a great follow-on to my recent post hypothesizing that the "Webkinz/Club Penguin" generation will not be satisfied with MySpace and will want a web experience that is fully immersive by nature.

Ning - building social networks around your brands

I don't know how I missed this one months ago but a colleague of mine today pointed me toward Ning, the latest project from Netscape co-founder Marc Andreesen, which allows anyone or company to set up a social network with all the latest bells and whistles virtually for free (see article in Information Week). Ning has 61,000 social networks in place, ranging from individual sites to powering social networks for CBS TV shows.

With minimal set-up costs, Ning makes it that much easier for any B2B or B2C facing company to use social networking as a marketing tool. GM has had a great deal of success with its FastLane blog -  why wouldn't it, for example, build a social network around its brands - for example, a social network for Corvette owners.

Of course, the hard part is still building a vibrant network, but at least the toolkit now comes virtually for free.

Calling Internet Leads: How Often, How Much

There is a multi-billion dollar market in Internet lead generation for big ticket item services (mortgages, education, etc.). So you would think someone would be able to tell me the optimal strategy to reach these leads. I have talked to virtually every large telecom equipment vendor, publicly traded outsourcers, a boatload of consultants and a number of software providers and no one can give me a simple answer to two not so simple questions:

1. The holy grail would be a one size fits all answer to "what is the optimal strategy, across channels, to convert leads in a consultative inside sales environment?"

2. Clearly, there is no holy grail answer possible as each company and industry and consumer segment has its own characteristics. So the next question is "what approach or methodology should I use to arrive at an answer?" Surprisingly, no one has given me a good answer here either.

The easy answer is to focus on telephone contact only,  act as a telemarketer and just dial the heck out of leads until you reach 70-80% list penetration, rest the list, and then dial the leads you could not finalize again a few months later. But, as a consumer, would you enroll in a school that dialed you twenty times and never left a message (for me, that twentieth dial would be a big "place me on the Do Not call list").

A more intelligent telephone strategy would be to figure out, based on lead characteristics, what are the best times of day to reach a consumer. There are global and segment-level optimums and this is a very attainable strategy.

The best strategy would be to reach the customer through the channel they want to be reached and when they want to be reached - this could be via an active channel like via outbound dialing, IM or email campaigns or a more passive relationship-oriented channel like an RSS feed or school-sponsored portal.

Easier said than done - has anyone had any success in a consultative sales focused organization optimizing lead conversion, in the long run, and across channels?

Marketing Education: Inside out or outside in

There are two extremes as to how market a school, which I'll call "inside out" and "outside in." "Inside out" is to build an incredible reputation, open the doors and select which students you want to come in. "Outside in" is to spend direct marketing dollars to buy Internet leads and reach out to potential students via either inside sales or fields reps. Inside out requires a larger investment in business development and career services while the outside in model requires more investment in upfront marketing and admissions.

A great example of "Inside out" marketing is the Parsons School of Design in New York. In addition to the publicity from Project Runway, Parsons lures students with the opportunity to work with some of the premier design firms in the field. A list of projects on the Parsons website includes designing a new watch for Fossil, designing a line of accessories for Vespa, working with Chanel, Hermes and Saks. This pdf is an impressive summary of the opportunities Parsons gives its students. With these opportunities, students flock to Parsons without a great deal of marketing investment on Parsons part.

The alternative means of drawing in students - the "outside in" model - is via direct marketing and lead gen. A school runs local TV or engages lead vendors for Internet ads, generates "leads" and then calls those leads from a call center. Speed to contact and the skill of the admissions advisor are primary differentiators under this model. From 2000-2005, this market was dynamite for the for-profit early entrants into the online post-secondary education market.

Schools never fall strictly in the camp of "outside in" or "inside out". Even Wharton visits dozens of cities around the world each year to recruit students. But, as the market continues to become more competitive, for-profits can no longer rely too heavily on the "outside in" model. You see this with UOPX buying naming rights to Arizona Stadium, UTI's partnership with Nascar and other industry players increasingly trying to differentiate their brands. A generic IT/business program and a killer direct marketing model is no longer enough, unless it is paired with true brand differentiation.

Multi-Channel Marketing in the Education Sector

David Baker's White Noise blog has a great post on the lift from multichannel marketing efforts. It describes the "stacking effect", the combined effect of layering multiple channels to influence consumer behavior (either online or offline).

The for-profit education sector enrolls the bulk of its students from calling leads generated via direct marketing - the bulk is the Internet but other channels include TV, outdoor, radio, newspaper, etc. It is tempting to evaluate these channels in silos - for example, a TV ad campaign in a local market might have a ridiculously high cost per lead of $1,000 - but did that particular campaign cause a lift in that market's conversion of Internet leads?

We need to avoid the tempting trap of analyzing advertising sources in a vacuum - it is easier and less time consuming but will likely to poor decisionmaking, as illustrated by an example cited by David - "For a large company, a recent study looked at multiple touchpoints leading to a conversion. When looking at click data alone, we saw that when users clicked on only one channel they had a conversion rate of 4.7%. When they clicked on two channels, their conversion rate almost doubled, to 8.5% -- and when they clicked on three channels, their conversion rate almost tripled, to 11.5%. (Channels included search, display, email, affiliates, portals, and two additional industry-specific channels.)" 

Benchmarking Lead Conversion

There is a great site, Lead Marketwatch, that tracks conversions in the mortgage industry - a service I wish were available in the education vertical as well. The site allows mortgage companies to benchmark how they are doing versus other buyers of similar leads. The LeadMarketwatch site is brought to us by Bill Rice and his team at Kaleidico, makers of the icoSales lead management software. They aggregate conversion data from icoSales clients - which includes major mortgage companies nationwide. One thing I would like to see is more lead providers - the biggies are here, but it would be great to see all the small to mid size providers as well!

7 Day Application Rate
Lead Provider	Current	Change	Previous
Lending Tree	7.69 %		5.80 %
Loan Web	5.77 %		5.05 %
Lower My Bills	3.30 %		3.30 %
Low.com	3.19 %		2.41 %
Lead Point	0.73 %		0.37 %
Beta Version 0.3

30 Day Application Rate
Lead Provider	Current	Change	Previous
Juicy Leads	20.51 %		19.23 %
Lending Tree	6.45 %		6.16 %
Loan Web	5.13 %		5.28 %
Lower My Bills	4.58 %		4.63 %
Low.com	3.54 %		3.37 %
NexTag	3.26 %		3.26 %
Prospect Zone	2.56 %		1.69 %
Lead Point	1.53 %		1.50 %
LoanApp	0.00 %	-	0.00 %
Beta Version 0.3

Marketing 2.0: Education Providers Need to Get in the Game

This post from Andrew Chen, an entrepreneur-in-residence at Mohr Davidow, explains what he calls "10 obvious strategies" to acquire users. These strategies are not so obvious to marketers outside Silicon Valley. To illustrate, I challenge you to go to a marketer at any post-secondary online education provider and ask them the top 10 ways they drive potential customers to their website. It would be buying from lead vendors, adwords buying, email recircs and - I'm drawing a blank. They don't even have 10 strategies. Any for-profit educator that formulates a strategy to successfully leverage social networking, blogs, and Internet viral marketing tools will zip away in a Ferrari, leaving their Model T driving competitors in the dust.

10 (obvious) strategies to acquire users

1. Email/IM features for invites and content
2. Blog/MySpace widgets
3. Auto-invite for email, social networks, etc
4. Auto-embed for blog widgets
5. A/B tested signup pages
6. Smart adwords buying
7. Viral referrals
8. SEO/landing page generation
9. Push through RSS/Email, etc.
10. Reduce user "drag" through the entire funnel