I read a couple of blog posts from the guys at Leads360 (Noel Collins at LeadCritic and Jeff Solomon) this morning. The premise of Noel’s post was that looking at the right data matters — Jeff’s takes it farther by noting that customers want, and I paraphrase, “answers – not reports or data.” This is insightful – business people don’t want software or reports. They want easy solutions that make their business better, make their lives better, etc. Riffing on this theme, I think the magic formula for managing any business is simplicity + good data + consistency.

Simplicity – pick the metrics that matter to your business and pay attention, very close attention to those metrics. Never pick more than five key metrics.

Good data – understand completely how you are capturing and measuring data.

Consistency – look at the data each day when you get to the office. Look at the data each week at your staff meeting. Look at the data each month as you review performance. Good habits are hard to break.

All that leads to the title of the post, run your business with a one-pager. The best general managers that I have worked with have a one page dashboard that they use to run their business on a daily basis. This works for small businesses and for large ones. I used to work closely with the team of people who ran the Disney theme parks. At lunch one day with the CEO of the business, I saw him pull a piece of paper out of his breast pocket. It was his one page dashboard. His four key metrics:

- number of visits to the park in the previous day (volume measure for his business)

- avg. wait time at the rides

- avg. spend per park visitor

- hotel occupancy rate and average daily rate

Our advice – pick your metrics, make sure you can gather the data accurately, and pay attention! Your business will be better for it.

At the risk of tooting our own horn, two influential bloggers in the lead gen space have picked up on Sparkroom. Check it out.

LeadCritic thinks that “Sparkroom Brings Analytics to the forefront” and Paul Knag is ready to hear more from us.

Cost per lead? Cost per action? Lead volume? What metrics should lenders, online ed folks, car dealers optimize against? At Sparkroom, we are quantitative performance marketers. The space we know best is online. But we are also business people. So the simple answer is that smart marketers (and CEOs) must optimize against profitability.

What does that mean in the lending world?

Optimize unit economics and then find volume. I spoke to Sean Fenlon at DoublePositive today and he reminded me that lead performance optimization is about more than cost per action (cost per closed loan in the mortgage biz). Why? Because you have to consider the operational cost of having your call center burn through a huge number of low converting leads. High wage employees spending their day dialing phone numbers is not a good use of resources; further, it drives turnover which is the enemy of every call center and every mortgage company. All that makes a pretty compelling argument for using lower wage folks to do the dialing! Enter hot call transfer — but that is for another post. The point of referencing this story is that you need to consider the long-term viability of the unit economics in addition to the volume.

What is the definition of unit economics in the mortgage industry? It is a pretty simple calculation of “revenue” – “marketing cost” per closed loan. Revenue is defined as how much cash a lender earns per closed loan on a given lead provider, filter, state, credit band, etc. Marketing cost is defined as the total costs associated with buying leads from a given lead provider, filter, state, credit band, etc. Our job at Sparkroom is to find the best performing lead providers, filters, states, credit bands, etc. — on a unit basis — and to then be able to deliver them in volume to our customers.

Volume is pretty easy to understand. Generating loans in Wyoming might be exceptionally profitable on a per unit basis but because it is the least populated state in the United States, it is likely there is not enough volume in that geography to move the needle. So you not only need to find great per unit economics but you have to find them where there is enough volume to matter.

As a bright customer of ours says, “the numbers don’t lie.” But make sure that you are looking at the right metrics. Marketing efficiency is about way more than cost per lead or cost per action.

We are going to be in Las Vegas at LeadsCon from April 2 to April 4.If you want to meet up in person, send mail to jamie at sparkroom dot com.

Today, St. Patrick’s Day, Sparkroom is doing two things. First, we are finally announcing our Series A financing from Matrix Partners. We say finally because we actually closed the financing in May 2007 and have been hard at work building an amazing service and introducing it to an initial set of customers. Nick Beim, who has been working with us developing the company for the last 18 months, joined our board in May 2007. Secondly, and more importantly, we are joining the online marketing and lead generation conversation after operating in stealth mode for the past year. In the coming weeks, we are excited to share the premise behind our company, our core values and what we hope to add to the marketplace. But first, what is Sparkroom doing?

Put simply, we are in the lead performance optimization business. We help large buyers of internet leads dramatically improve the efficiency and effectiveness of their marketing investment. We are starting in the mortgage industry and have already driven significant performance improvements for our first set of customers. How do we do it? Sparkroom Lead IQ, our hosted technology platform, closes the loop between the cost to purchase leads and the profitability of each lead source and each filter. But visibility into the data is only the first step. Sparkroom Lead Performance Optimization includes an Account Management team of lead buying and online direct marketing experts who work with customers every day to drive improved marketing efficiency.

Thanks for visiting us. More soon…

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