The poster child for RFQ being service magic, with $200m revenue run rate, and there being no reverse auction player with revenues near to that.

The four key aspects of a request for quote (RFQ) business model which make it more attractive for directories than a reverse auction-based model are:

1. The known economics of the model: With RFQ, directories know what they can pay to acquire each consumer (for each combination of vertical by suburb) and thereby they are able to optimize yield and maximize margin. In contrast, under a reverse auction model it is difficult to estimate traffic acquisition costs given that job response rates are not always fixed or under your control.
   

1. Consumer Expectations regarding the ‘instant’ timing to resolve their need – consumers come to your directory with expectations that they will be solving a need in short order….that soon, they will be booking a carpet cleaner, and that is one less thing on their ‘to do’ list. Their expectations are not that they will posting a job and across the next 48 hours a number of service providers will bid on the job and they can then go through the negotiations as to when and if the supplier is available to do their work. With the RFQ model that discussion happens with 3 suppliers (once they are briefed with the data from the form) almost immediately ….suppliers know that the sooner they call the consumer the more likely they are to get the job
   

1. Disrupting the value proposition of directories to small businesses - The primary role for YPs over the years has been as the champion of the SME, now with the implementation of a reverse auction model, your message to that market is, ‘we want you to spend your time when you are not ‘cleaning carpets’ online, bidding against others primarily on price….so the net ‘message’ that is relayed is that SMEs need to ‘spend their spare time to decrease their margin’. This marginalizes the YP brand, and it will make it exceptionally hard for you to leverage existing YP sales teams.
   

1. The Perfect Match – Quotify has invested significant resources into building out matching technology that enables each consumer to find the 3 best suppliers that are right for them, based on their exact needs. For example:
   

For the consumer: I may want a carpet cleaner to arrive on time and you may just want the cheapest quote, there are many different types of carpet cleaners for each consumer – and we find the right supplier(s) for each consumer

For the supplier: We provide the supplier with only leads that match their expertise –we don’t send them jobs for work they can’t do (or where the consumer doesn’t know what to ask for). So suppliers waste less time, and are prepared to pay more for each lead because the leads match the work that they do best.

This matching works very effectively for both the supplier & consumer. With a reverse auction model the consumer may ‘win’ the suppliers that want to do the work (or those that are prepared to discount their price enough to win), rather than the suppliers that can or should be recommended to do the work based on their expertise (there is sometimes some ratings data for the consumer to consider, but the context for that consideration is usually not present)

Homesphere has a network of service providers in the homebuilding and remodeling industry and they use their platform to connect homeowners, builders, manufacturers, distributors and contractors together to obtain good deals on supplies (am probably over-simplifying here).

They recognized that in addition to helping them save money, Homespehere can also help these service providers by delivering leads to them to help them gorw their business (and increase their demand for supplies).

So at the start of January 2009, Homesphere acquired bestcontractors.com a regional RFQ player.

Other players with a large base of service providers can also sell leads to their service provider base and obtain greater share of wallet, and help them grow! Players like intuit, American Express, yellow pages, newspapers … are often looking for relevant offerings that they can sell to their base. RFQ is a great answer!

Today I learned about a nice lead generation business in Canada called HomeRenovationGuide.com which was acquired by Zoocasa (a site like homes.com or trulia, roost, Zillow …)

It looks like the story is that some smart folks at Rogers Ventures (Canadian VC firm) saw the significant monetization power of HomeRenovationGuide.com Zoocasa – you can see in the screenshot below that they are using some of the traffic from zoocasa to drive more lead volume.

I love it – “The home renovation process is a natural extension of Zoocasa’s mission of helping Canadians find the best home to suit their needs, wants and lifestyle,” said Butch Langlois, General Manager of Zoocasa. “As consumers make what is the biggest purchase decision of their lives, consideration is given to renovating or customizing their home to better fit their needs. Providing renovation guidance as part of the overall search process will enable home buyers to make optimum purchasing decisions.”

There are so many opportunities around the world for similar ‘find a home’ sites to monetize even better using home improvement lead generation. Nice thinking!! Get on board Trulia, Zillow and Roost and others!

The problem with the subscription approach is that it provides no upside for a directory for increasing its consumer traffic – and therefore other players who do have an incentive to increase consumer traffic (like yelp, google, groupon …) are increasing in relevance as yellow pages are declining.

Today, if a yellow pages directory doubles its traffic, it will not double its revenue – however, if google doubles its traffic, it can double its revenue.

Directories can resolve this conflict by introducing a pay per performance product which increases directory revenue as the directory increases the volume of traffic to its site. This is done by integrating a performance marketing offering into the paid inclusion listings – in a staged approach (vertical by vertical) without cannibalizing revenue.

We have reviewed the major models in the lead generation space and have found the Request for Quote model to be best suited to directory businesses because;

• Marketing funds can be allocated to known ROI’s because revenue is indexed to consumer growth,
  
• The additional RPS (revenue per search) allows directories to command higher ranks on Paid Search – which increases your share to the detriment of your competitors
  
• The CPL model reduces individual advertiser risk. Unlike listings, if any single advertiser withdraws they are replaced by another maintaining the RPS (Revenue Per Search)
  

Previously the addition of this ‘Request a Quote’ capability has been expensive to develop and requires unique skills to manage – with Quotify’s RFQ in a box solution, directories can simple plug and play and start capturing a new revenue stream.

With this in mind, we have recently migrated our enterprise-esque web 1.0 user experience with our latest release of the Quotify Platform – and are enjoying our cleaner, more user friendly user experience
 

The interesting learning here was that we needed to completely deconstruct the user experience and look at it with fresh eyes to achieve the simplicity. We are grateful to Christopher Ward for his relentless deconstruction, reconstruction and customer interviews to achieve our new build of the Quotify platform.

An example of his analysis is here:

Some great comments were made at leadscon about how lead gen 1.0 players are using content to drive traffic. I think that loosely relevant content sitting around lead gen forms is like trying to con consumers @jeffiel summed it up well “it’s like suddenly English majors had jobs again writing content, just so your visitors will fill out a form…” We have come far enough now to be able to do better than that!

I woke up to an email marketing message in my inbox from yelp which contained content that was rich, funny and leveraged their unique user generated content – it was a great example of the difference between web 1.0 type content and web 2.0 content.

The CEO of twilio summed up the right approach to take when he said that “the social context IS the content”. As yelp shows us, using the social context (UGC, likes, social map data…) as the foundation of a content strategy is crucial to ensure of high relevance. I read the yelp email and deleted 6 others from companies like Lenovo, Brightalk, travelzoo, Dell and a few others which were not relevant to me. I look forward to seeing more content on the internet customized for me based on my social graph.

To help me make sense of the players, I pulled together a cheat sheet summary of all of the attendees (by grabbing images of the home pages – with some help from elanceJ) I would be happy to send you a copy.

The resolution isn’t fantastic – but it’s good enough to understand who is who in the zoo. I guess you get what you pay for. Drop me an email to ben dot ross at quotify.com and I will happily forward you a copy.

My view is that all of those people (including my uncle) who have experienced compare the market once, will be looking for 3 quotes online from now on – rather than searching through a random list of plumbers and dialing 10 to speak to 3.

google and yellow pages need to deliver a better experience than that!

Ben Legg and a select group of online leaders in the directory space have seen the future for Yellow – to leverage their superior advertiser coverage to win in vertical search powered by ‘request a quote’.

Why doesn’t google take up the request for quote approach? Innovators dilemma? What do you think?