The state of the lead market

Justin Rees, director of marketing and partnerships at LeadPoint (UK), provides a snapshot of the lead market

While it may seem that the summer hasn’t even arrived, September is just around the corner and many advisers will already be planning for the next few months which is traditionally a strong period for the financial services industry. For those advisers looking to lead generation to give them a boost it can be hard enough to decide which lead provider to use let alone which type of leads to purchase.

To help advisers navigate through the many options available, it seems like a good time to give a quick overview of the current financial services lead market with an insight into what advisers can expect from some of the main lead types.

&ltstrong&gtRemortgage&lt/strong&gt
Remortgage leads are still the bread and butter for many lead buyers and sellers. Whilst the lead market is certainly not as buoyant for these leads as it was a few years ago, the last 12 months has seen a slow but steady increase in demand for these lead types. Unsurprisingly, prime consumers with low LTVs are the most sought after leads and subsequently command the highest prices with £30+ not uncommon for sub 75% LTV enquiries.

Prime remortgage leads with LTVs of 75% to 85% are the next most in demand category but as there tends to be greater volumes available of these types of leads the prices are not as high. For anything over 85% prices come right down as there is little demand for these types of leads.

As the majority of remortgage leads are originated through consumers searching on Google for remortgage advice, contact rates tend to be high but the challenge remains in finding products for these consumers. On the upside, there are plenty of opportunities for cross selling into other products as all of these consumers are homeowners but may not have adequate protection. Many lead buyers use these opportunities to make their lead campaigns extremely profitable.

&ltstrong&gtPurchase Mortgage Leads&lt/strong&gt
Most lead suppliers capture all types of mortgage enquiries on the same lead forms which means even though many are aiming to generate lots of low LTV prime remortgage customers to get the best prices for their leads they are also generating hundreds of first-time buyer, homemover and buy-to-let leads at the same time.

Because of this, lead suppliers are less price sensitive when it comes to selling these leads allowing lead buyers to get some real bargains. Although conversion rates tend to be far lower for these mortgage lead types due to the nature of the current market, these leads can often be bought in real-time for just a few pounds each. All of these enquiries are from genuine consumers looking for advice so there are still plenty of opportunities for advisers if they have the right processes in place. The caveat for lead buyers is that as these leads need to be purchased in higher volumes to get the desired number of conversions, it is imperative that the right systems are in place for managing the contact and follow up processes.

&ltstrong&gtLife Insurance&lt/strong&gt
Life insurance leads still represent the best performing lead category in terms of pure conversion rates. Lead buyers of all sizes regularly report conversion rates of 20-30% from these leads meaning that they can be a very quick revenue generator. However, life insurance leads are also one of the most expensive lead categories with some providers supplying these leads for over £40 per lead. While there is a good opportunity to generate a substantial return on investment even at these prices it means it is a very expensive category to enter for the novice lead buyer especially if you don’t manage to attain the expected market conversion rates.

The advice to any lead buyer looking to purchase these leads as their first foray into lead buying is to start off with some lower price leads such as first-time buyer mortgage leads. Even if they are less likely to convert and generate a return it will give the lead buyer a comparatively cheap way to refine all their processes for working leads such as perfecting their contact strategy and practising some techniques to deal with objections.

&ltstrong&gtSecured Loans&lt/strong&gt
Four years ago, secured loan leads used to be one of the most popular and best performing categories with leads trading at more than £100 in some cases. When the credit crunch hit, the secured loan lead market evaporated and remained virtually dormant for a few years until about a year ago when demand and lead prices started to slowly creep up.

Over the last few months the demand for prime, low LTV secured loan leads has gathered pace to the extent that there is probably more demand than supply for these lead types. However, the rest of the secured loan lead market is not nearly as buoyant with much lower demand for leads with LTVs above 75% and prices are much lower for non-prime leads.

&ltstrong&gtNiche categories&lt/strong&gt
Over the last 12 months here has also been a rise in the demand for more niche lead categories within the financial services sector by more specialist lead buying firms. Lead types such as income protection, equity release and more recently commercial mortgages have all grown in prominence and are expected to grow significantly throughout the rest of the year. The other area of increasing interest for lead buyers is pensions and investment leads which are again expected to become a much larger category in the near future.