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Online Leads Dead? Not So Fast

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There was a great article on CIC last week by Spencer Rascoff, the COO of Zillow. His sensational claim being that Online Leads are Dead.

He makes some great points extolling the virtues of ‘Customer Initiated Contact’. But one thing is for sure, the declaration of the death of internet leads is a little premature. His point of view may represent an ideal for consumers. It certainly represents an idealized view of the consumer, assuming that consumer always behave rationally and in their own best interest.

One fact that technologists and efficiency aficionados tend to overlook is that people don’t always behave rationally. The more time spent focusing on the technological piece of a puzzle, conceptualizing and building the ideal workflow for a given system, the less time is taken into account how the human piece operates.

Zillow is one of the smartest tools out there in terms of empowering real estate consumers to shop intelligently. It stands to reason that the view from inside Zillow would be of intelligent consumer behavior.

But there are a whole lot of different kinds of buyers in the world. And there’s still a brisk business to be done with the guy who has money in his pocket who wants to spend, but he’s not sure on what and from whom he wants to buy.

Two Types of Consumers

Cerebral. Self directed. Decisive.

These are the individuals who shop to get maximum value.  Saving money is a priority and they don’t mind doing research in order to get the best value. These are people regard holding on to their money as an obvious and natural extension of working for it.

Perhaps at some level for such individuals, spending money is fundamentally unpleasant. Or at least to be avoided. Anyway, they want to spend as little as possible.

This is all makes sense, and reading it you may be inclined to say, “Yeah. That’s me. That’s everybody.”

But consider another type of consumer:

Emotional. Suggestible. Indecisive.

These are individuals who have worked for their money and don’t want spending it to be work also. At some level they view spending the money is the reward they reap for having spent the time earning it. They want to be a smart consumer, but at some fundamental level, the act of spending the money is a reward; it’s pleasant. They want to be wined and dined, they want to be passive, let someone else do the work.

For such individuals maybe spending money is ultimately pleasant; to be buying something, getting something, expanding their circle of stuff.

The point is that consuming is an experience that many people enter into emotionally.

Consumer Behavior

The model of shopping has been people go to stores, and look around for what they want. And they walk into different stores. Consider the brick and mortar example of a shopper at a mall. They go to the mall to buy the thing they need from Store A. After picking up the item from Store A, they wander into Store B because they like the offer in the window, or they like the look of the place, or they heard somebody talking about it. Inside Store B there could be one of two things, salesmen, who engage the potential customer or devotees of CIC, who believe that displaying the offer is enough; that giving the consumer the information he needs to make his choice. In most cases, there are salesmen; salesman who have supply and whose job it is to drum up demand.

Internet customers are not so different from regular retail customers. To say that consumers are getting smarter and that this indicates a necessary change in how supply and demand relate to each other is not exactly correct. To be sure, the internet offers unprecedented opportunities for the cerebral, strategic shopper, and it could prove to be the tool that puts shoppers in full control of their spending. But indeed, being in full control requires forethought and decisive action. The fact is that a lot of individuals do not consume this way.

Cerebral and Emotional

Successful companies manage to merge the shopping experience to appeal to both the cerebral shopper and the emotional shopper. Mr. Rascoff mentions Amazon as a rational decision model. Indeed they have tools to empower the strategic shopper but they also have business practices that encourage the more emotional/ impulsive shopper. For instance, they (and everyone else) keep your credit card on file for quick purchases. Amazon has taken this even further with their “Payphrase” which defaults to something playful and innocuous like, “matt’s gregarious sunflower”. And Amazons ‘recommendations’ are classic algorithmic lead generation.

CIC, Supply and Demand

Looking at another successful internet company that  seems to be driven by sellers reaching out to buyers, Ebay. How does Ebay work? Is it CIC? No. It’s not Buyer driven:

And let’s imagine Ebay as a CIC model:

  1. I want a mountain bike, in good shape.  I’m willing to spend about $225 on it.
  2. I post my ad on CIC-Ebay, and people who have bikes to sell come look for it.

Maybe this model would work. But the point is; it hasn’t. It hasn’t because that’s not the way shopping works in people’s minds.

Does supply rise to meet demand or is demand created by supply? Clearly supply and demand are two sides of the same coin. To think that one could exist without the other is folly. Similarly, the cerebral shopper and the emotional shopper both exist. They both exist inside a single individual. To create a tool for one of those types of shoppers is a great idea. Creating a sales strategy and process around only one of those groups, not so much.

Pass the Beans!

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  1. Great post Matt!

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