Distributing your leads based on earnings per lead allows you to route your leads by best price based on a calculation of the actual earnings you’ve received from each individual buyer rather than the static price that each individual buyer is willing to pay. This is most common when routing phone calls, but can also be used with payday leads in which a buyer can accept a lead at a static price, but then reject that lead and end up paying $0.
Because of this, a more accurate prediction of the best price for each individual lead is the average earnings per lead (EPL) that you receive from each buyer rather than the static list price that each buyer is willing to pay.
Payday leads are distributed via waterfall distribution. This means that when a lead enters your lead system, it attempts to sell to the highest-priced matching filter set. However, this lead may be rejected based on a lookup performed into a payday loan database. If rejected, the lead flows down the waterfall to the next highest priced filter set. With this setup, buyers agree to multiple pricing tiers meaning that if a buyer rejects a lead at their highest pricing tier, they may still accept and purchase the same lead at a lower pricing tier. This waterfall process continues until the lead is finally accepted and purchased.
As a lead flows down the waterfall, the payday loan database is checked for each filter set attempted. Just like repeatedly checking your credit score can lower your credit rating, these checks can actually affect the lead’s status within the payday loan database, making the lead less valuable. This means that each time a buyer offers a price and ‘looks’ at the lead’s payday history without purchasing, they are actually hurting the value of the lead. This non-buyer could potentially ‘spoil’ the lead that may have otherwise been sold for top dollar to another buyer, directly influencing the amount of money you can make on that lead.
Because of this, a lead buyer’s offered price is not the sole factor that you should consider before attempting to sell them the lead. Instead, a calculated Earnings Per Lead (EPL) for each filter set is a much better representation of how much money you have historically made from each buyer at each of their pricing tiers. This allows you to automatically calculate the order that the filter sets are attempted in order to maximize your revenue on every lead.
Payday Lead Example
Let’s say Buyer X, Buyer Y and Buyer Z each have a $100 filter set. With standard waterfall distribution, your system would locate these three highest priced filter sets and alternate which buyer is attempted first for every lead that enters your system. However, when sorting filter sets by EPL, the calculation of (total dollar amount paid / total attempts) allows your system to reorder these filter sets to maximize your profitability. Let’s assume the EPL heirarchy for these three $100 filter sets is Buyer X ($75 EPL) > Buyer Y ($50 EPL) > Buyer Z ($10 EPL). Buyer X has the most profitable $100 filter set and, thus, should always be attempted first, as long as its filter set’s EPL remains the highest. Because the profitability of a lead declines with each attempt, sorting filter sets by EPL instead of utilizing round robin distribution or manual prioritization will help you maximize the profitability of each lead.
Let’s also consider all leads that attempted to the $100 filter sets and were rejected and moved down the waterfall. Let’s say that Buyers X, Y and Z each also have a second pricing tier, but this time they don’t each share the same filter set price. Buyer X’s second tier will purchase leads for $75, Buyer Y’s will purchase leads for $70 and Buyer Z’s will purchase leads for $50. With standard waterfall distribution, Buyer X’s $75 filter set would get the first attempt, followed by Buyer Y’s $70 filter set then Buyer Z’s $50 filter set. However, with EPL distribution, each filter set’s purchase vs attempt history is referenced and used to calculate this attempt order. Let’s say Buyer X’s $75 filter set has an EPL of $25, Buyer Y’s $70 filter set has an EPL of $30 and Buyer Z’s $50 filter set has an EPL of $45. In this case, the EPL hierarchy is Buyer Z ($45 EPL) > Buyer Y ($30 EPL) > Buyer X ($25 EPL). Although it may sound counter-intuitive, Buyer Z’s $50 filter set is actually more profitable than Buyer X’s $75 filter set and, because of that, will be attempted first.
When distributing leads by Earnings Per Lead, you also have an additional filter set grouping option that gives you more control over the order in which filter sets are attempted. In our payday example above, if only filter set EPL calculations were considered, Buyer Z’s second tier $50 filter set ($45 EPL) would always be attempted before his/her first tier $100 filter set ($10 EPL). This would effectively prevent the $100 filter set from ever purchasing a lead and deprive it the ability to improve its EPL. Because of this, you can build multiple filter set groups and specify the order in which the groups are attempted.
For example, you can place Buyer X, Y and Z’s first tier $100 filter sets into Group A. You could then group Buyer X, Y and Z’s second tier filter sets into Group B. When a lead enters the system, every filter set in group A will be sorted by EPL and attempted in the corresponding order. If the lead is rejected by every filter set in Group A, it will travel down the waterfall to Group B, where each of its filter sets are sorted by EPL. With this grouping structure, every single filter set in Group A will be attempted before the lead attempts any filter set in Group B.
With the boberdoo lead distribution system, you have several lead distribution logic options. These options are available to every client and can even be customized to meet your specific needs. Visit our lead distribution logic page for more information on each of these options.
If you’d like to discuss the best lead distribution options for your business, please give us a call at 800-776-5646 or fill out the form below.