Last week’s news of Unbiased’s price increase will be a blow to many advisers and planners who use the service to generate new enquiries.
Currently, Unbiased charges a flat fee of £45 plus VAT per lead. That’s all changing though. From 7 October, Unbiased will link the cost of leads to their perceived value, with the following tiers based on the “customer wealth or value”:
- Up to £50,000: £40
- £50,001 to £100,000: £50
- £100,001 to £150,000: £75
- £150,001 to £250,000: £95
- £250,001 to £500,000: £105
- Over £500,000: £130
You’ll need to add VAT to the above amounts.
The changes represent a significant price increase for almost all new enquiries, with those valued at above £500,000 increasing by 189%.
Over a week has passed since Unbiased announced the increase, so what lessons can you learn?
1. It’s tough in the directory space
To be successful a directory needs two things more than anything else:
- A meaningful number of advisers/planners covering key geographical regions
- Enough consumers using the site to keep the advisers/planners who’ve signed up happy with the volume and quality of new enquiries.
It’s the second part that’s become increasingly tough in recent years:
- The directory market has seen multiple new entrants
- Lead generators have pushed up the cost of using Google AdWords. A quick search for “financial adviser near me” shows that lead generators, often imitating directories, dominate the paid-for search results
- Despite the increased cost of AdWords, other methods of driving traffic to directories are typically less effective.
These factors mean it’s no surprise that Unbiased has increased lead charges. It’s probably also why VouchedFor has pivoted to focusing on reviews and why new entrants (both now and in the future) are more likely to concentrate on specific niches than try to capture the whole of the adviser/planner market.
2. Return on investment is likely to fall
If enquiry quality, and consequently conversion rates, remain unchanged, return on investment will inevitably drop because of the price rise.
As we’ve said many times over the past week when advisers/planners have asked us whether they should cancel Unbiased: you have to be led by the evidence. If it works for you, that’s great. If it doesn’t (and this applies to all lead sources), make changes to improve it. If it’s still not working, walk away.
To make these decisions though, you need data, which brings us to our third point.
3. It’s never been more important to capture data for all new enquiries
We recommend that all advisers and planners collect 12 data points for each new enquiry they receive.
Recording this information for every new enquiry means you can:
- Calculate your ROI for different sources of new enquiries
- Make evidence-led marketing decisions
- Nurture prospects who don’t immediately become a client.
If you don’t have the data, none of those things are possible.
And, when we say: “every new enquiry”, we do mean every new enquiry.
Many firms only start to record data for new enquiries once the prospect has agreed to a first meeting. Some won’t record enquiries from prospects which fall at the first hurdle. That’s dangerous because recording only the “good” enquiries creates a falsely positive picture of your marketing.
Instead, record every new enquiry; the good, the bad and the ugly. That even includes the person who wants to pop in this afternoon to get you to sign their final salary transfer forms so they can take the money out to buy a caravan in Ingoldmells! You should record everything.
Only by doing this will you get a true picture of which elements of your marketing are working, and which aren’t.
4. Firms need to focus on developing a recommendation strategy
Higher conversion rates and a lower cost of acquisition mean that recommendations from existing clients will always be the best type of new enquiry. To demonstrate the point, here are the respective conversion rates for a client that we’ve just started working with:
- From Unbiased: 12.50%
- From all sources: 24.39%
- From recommendations: 38.64%
While it’s only data from one firm, we see the same story repeated elsewhere.
If you’re looking to take on new clients, start by developing a recommendation strategy. Yes, we know there are plenty of shiny new things available, but they are all less effective than recommendations from existing clients.
If you effectively develop and implement a recommendation strategy you will work more efficiently, spend less money on marketing, and be more profitable.
5. You need as much control as possible over your marketing
Unbiased’s decision to increase prices shows the importance of controlling your own marketing.
That starts by developing a comprehensive marketing strategy which will, initially at least, focus on recommendations. We’ve already explained why recommendations are the best source of new enquiry, but you should also remember that they are the source you have most control over.
Google could increase the cost of clicks. So could Facebook and LinkedIn if you’re advertising there. Legislation might change and impact other options. And, as we’ve seen, Unbiased and other lead generators can increase their prices.
However, it’s recommendations you have most control over. The actions of your business dictate whether you turn clients into advocates who will be happy to recommend you to others.
Meanwhile, how you educate clients dictates whether they actually recommend you to others. An impressive online presence helps close the gap between the number of people who are recommended to you and those who get in touch.
Only once your recommendation strategy is working successfully should you look to other tactics to bridge the gap between the enquiries you need and the number you’re getting. It’s here where Unbiased has helped some firms. That’s fine. It just shouldn’t be the place you start or where you place all your bets.
And finally, a prediction.
We believe that Unbiased’s decision to link the cost of enquiries to potential value will have a significant unforeseen consequence; the number of requests for refunds is almost certain to rise.
Why?
Because the amount the consumer enters into the online form isn’t always accurate. As Alasdair Walker of Handford Aitkenhead & Walker told me earlier this week: “A recent enquiry indicated a £500,000 investment value, however the client had mis-typed and were asking about a £50,000 bond.”
When that happens, advisers/planners will be forced to request a refund from Unbiased. We predict that will lead to a significant increase in the time advisers/planners spend dealing on administration of their account.
As Alasdair says: “I’ve tried to seek refunds from Unbiased in the past for this kind of basic issue and it has been such a headache that we have given up.”
This highlights another issue. Despite the price rise, Unbiased has continued with its unpopular policy of paying refunds in credits not cash. This has been a source of frustration for some time now, especially when credits expire after 90 days. Surely cash payments should be refunded in cash?
Questions, comments, feedback?
We’d love to hear your views on this change. Please send your thoughts to phil@theyardstickagency.co.uk or reply to this email.
Feel free to get in touch too if you’d like our help to develop a more effective recommendation strategy. After all, it’s the best type of new enquiry!