|
During the last weeks of 2008, I’ve been interviewing with a company, a new Internet Start-Up in Barcelona based on a Mortgage Lead Generation business model. In my research, I found a good deal of interesting things regarding this market that I wanted to portion in this article.
The mortgage refinancing business model
First of all, I just want to clarify how this business model works. This model comprises mainly on users filling their personal and financial selective information into a mortgage refinancing portal. Then the portal commits to send the user individualized offers (real offers from brokers or banks) to improve the actual conditions of the user’s mortgage. This service is commonly free for the end user and the value developed is clear: It fundamentally saves you a lot of time in comparing dissimilar offers from dissimilar banks that are applicable to your specific financial situation. On the other hand, what these portals get from the end user is worthful data for banks/mortgage brokers: They have a potential client fascinated in refinancing it is mortgage, all his/her applicable financial data and the permission to send this selective information to banks/brokers to obtain the best possible conditions. This data is highly priceless for these institutions…. But how valuable? Lets just make some rough calculations:
Given that the intermediate commission on closing a mortgage deal is around 1-3% on let’s say an intermediate home value of (let’s say) US$ 250.000, It means that what a broker earns on closing a mortgage deal is around US$ 2.500 – 7.500. Of course not all the leads sent to a broker end up in a refinanced mortgage, but let’s just assume that 10% – 20% of qualified leads (meaning people interesting in refinancing it is mortgage, that took the time to fill a heap of forms and questionnaires with personal information) end up in signing a new deal. This means that the greatest or most complete or best possible value of a “lead” for a broker (the same goes for a bank) would be around US$ 250 – 1500 (10% – 20% x US$ 2500 – 7.500). Anything under this, means margin for the broker. Depending on each broker’s capacity to close deals, the quality of the leads, contest and other factors, each broker would be more than willing to remunerate a % of these greatest or most complete or best possible values per lead.
Expensive Keywords
The basi thing that caught my attention was that a great deal of keywords in this industry, keywords like “Mortgage refinance”, “Credit remortgages” or “Refinancing mortgage” are amid the most eminent paying keywords in Google’s Advertising Network. What this suggest is that this market has become so competitory that has drove the price to one of the most eminent paid keywords in Internet advertising. It also proposes that at this super high price (around US$ 40 per click) the companies consecrated to mortgage lead generation still make money. Therefore, either they have an amazing conversion rate or they earn genuinely a lot for each lead they generate, either for a mortgage broker or directly to the banks.
A simple calculation would be:
If the conversion rate of these keywords is, let’s say 10% (assuming a very high rate), it means that any company in this industry will have to at least make US$ 400 (US$ 40 / 10% = US$ 400) to break even… This figure is consistent with the ones received in the firs portion of the article, where I got a possible value range per lead that went from US$ 250 – 1.500.
Opportunity for arbitrage
Assuming that the U.S. Mortgage refinancing market is already a mature market (and it’s safe to assume that after the mortgage mayhem of the last years), another essential point would be that there is an probability for arbitrage (and an probability to make a lot of money) in any market where the PPC’s of these keywords is still very low. For example, if you get the approximated cost for the keyword “Hipoteca” (Mortgage in Spanish) the CPC is still around 3EUR (roughly US$ 5). If we assume that when the market for mortgage lead generation matures the CPC will be close to what it is in the US (around US$40), it means that someone, in all probability the firstborn ones in the market that make it reasonably well, will make a lot of money. The same goes for any other market where the CPC of the main keywords is still very low.
Maybe Offline advert is the answer in the long run. As a final thought, with CPC’s at US$ 40, thousands of dissimilar websites competing in a market with not much differentiation, and a big market base of potential clients (estimated at around 45 million homes http://wiki.answers.com/Q/Number_of_Home_Mortgages_in_the_US, in my sentiment the key parts are in place to switch at least an necessary percentage of the merchandising budget to regular offline advertising. TV or radio campaigns could lead to a much lower cost per conversion.
Business Model Generation A Handbook For
Business Model Generation is a handbook for visionaries, game changers, and challengers endeavoring to defy outmoded business models and design tomorrow’s enterprises. If your establishment needs to adjust to harsh new realities, but you don’t yet have a scheme that will get you out in front of your competitors, you need Business Model Generation.
Co-created by 470 “Business Model Canvas” practitioners from 45 countries, the book features a beautiful, highly visual, 4-color design that takes powerful strategic ideas and tools, and makes them easy to implement in your organization. It explains the most mutual Business Model patterns, based on conceptions from leading business thinkers, and helps you reinterpret them for your own context. You will learn how to systematically understand, design, and implement a game-changing business model–or make an analyzation of and renovate an old one. Along the way, you’ll perceive at a much deeper level your customers, distribution channels, partners, revenue streams, costs, and your core value proposition.
Business Model Generation features practical innovation proficiencies applied today by leading advisors and companies worldwide, including 3M, Ericsson, Capgemini, Deloitte, and others. Designed for doers, it is for those ready to abandon outmoded thinking and hug new models of value creation: for executives, consultants, entrepreneurs, and leaders of all organizations. If you’re ready to change the rules, you belong to “the business model generation!”
ReviewBusiness Model Generation is a handbook for visionaries, game changers, and challengers endeavoring to defy outmoded business models and design tomorrow’s enterprises. If your establishment needs to adjust to harsh new realities, but you don’t yet have a system that will get you out in front of your competitors, you need Business Model Generation.
Co-created by 470 “Business Model Canvas” practitioners from 45 countries, the book features a beautiful, highly visual, 4-color design that takes powerful strategic ideas and tools, and makes them easy to implement in your organization. It explains the most mutual Business Model patterns, based on conceptions from leading business thinkers, and helps you reinterpret them for your own context. You will learn how to systematically understand, design, and utilize a game-changing business model–or make an analyzation of and renovate an old one. Along the way, you’ll perceive at a much deeper level your customers, distribution channels, partners, revenue streams, costs, and your core value proposition.
Business Model Generation features practical innovation proficiencies employed today by leading advisors and companies worldwide, including 3M, Ericsson, Capgemini, Deloitte, and others. Designed for doers, it is for those ready to abandon outmoded thinking and hug new models of value creation: for executives, consultants, entrepreneurs, and leaders of all organizations. If you’re ready to change the rules, you belong to “the business model generation!”
The Power of “What If” Questions
Content from writers Alexander Osterwalder and Yves Pigneur
We often times have trouble conceiving progressed business models because we are held back in our thinking by status quo. The status quo stifles imagination. One way to get over this problem is to challenge conventional assumptions with “what if” questions. With the right business model ingredients, what we think of as out of the question might just be doable. “What if” questions support us break free of constraints enforced by current business models. They will have to provoke us and challenge our thinking. They ought to trouble us as intriguing, difficult-to-execute propositions.
What if…
…furniture buyers picked up parts in flat pack form from a huge warehouse and assembled the merchandise themselves in their homes? What is mutual exercise today was unthinkable until IKEA introduced the conception in the 1960’s.
…airlines didn’t buy engines for their airplanes, but remunerated for each hour an engine runs? That is how Rolls-Royce transformed itself from a money-losing British manufacturer into a service firm that today is the world’s second greatest provider of big jet engines.
…voice calls were free worldwide? In 2003 Skype launched a service that permitted free voice calling by way of the internet. After five years, Skype had acquired 400 million registered users who collectively had made 100 billion free phone calls.
Review‘…an impressively comprehensive compendium of galore of the most current ideas concerning the structure and development of businesses.’ (Anglohigher.com, May 2011). ‘… this handbook is likely to prove an magnificent help for assessing business models’. (Anatello.com, July 2011).
From the Back CoverYou’re keeping a handbook for visionaries, game changers, and challengers endeavoring to defy outmoded business models and design tomorrow’s enterprises. It’s a book for the business model generation.
Disruptive new business models are emblematic of our generation. Yet they stay poorly understood, even as they transform competitory landscapes throughout industries. Business Model Generation offers you powerful, simple, tested tools for understanding, designing, reworking, and implementing business models.
Business Model Generation is a practical, inspiring handbook for any person endeavoring to improve a business model – or craft a new one.
CHANGE THE WAY YOU THINK ABOUT BUSINESS MODELS
Business Model Generation will instruct you powerful and practical innovation proficiencies employed today by leading companies worldwide. You will learn how to systematically understand, design, and apply a new business model — or make an analyzation of and renovate an old one.
CO-CREATED BY 470 STRATEGY PRACTITIONERS
Business Model Generation exercises what it preaches. Coauthored by 470 Business Model Canvas practitioners from forty-five countries, the book was financed and invented independently of the traditionalisti publishing industry. It features a tightly integrated, visual, lie-flat design that enables prompt hands-on use.
DESIGNED FOR DOERS
Business Model Generation is for those ready to abandon outmoded thinking and hug new, progressed models of value creation: executives, consultants, enterprisers — and leaders of all organizations.
Business Model Generation A Handbook For Pic
Business Model Generation A Handbook For Image
Business Model Generation A Handbook For Photo
Business Model Generation A Handbook For Pic
Most helpful client reviews
77 of 79 people found the following review helpful.
 Interesting, easy read
By M. Hyman
This book is very dissimilar as a business book. Instead of being filled with dense, ordinarily overly wordy pages, it is beautifully laid out, the wording is held to a minimum, and there are a large total of illustrations.
The book is concentered on ways to think of the model for your business… with some nice guidelines for structuring the thought process… as well as a bunch of examinations of dissimilar types of businesses.
It has good discussions on thinking through what is critical for the business, where the cost structures are, where the gains are, and how to coordinate and present those ideas.
It also has a number of cases studies of respective companies that changed or developed new business models, such as Amazon’s introduction of Web Services.
The book is fast to read, and there were assorted sections I bookmarked to put into use in my company, which to me is always a good sign for a book.
Where the book is missing out is that I would genuinely have liked more case studies — a bit more meat so to speak — once a company came up with the new model, how did the artifacts of the book’s discussions come into play with the execution? Did any of the proficiencies discussed aid with the inevitable pitfalls associated? What are numerous case studies for when humans tried the proficiencies discussed and failed miserably? Innovator’s Dilemma, by comparison, does a much better look at both positive and negative case studies, which may provide a lot more learning.
I also would have liked more depth on the blue ocean discussion.
Altogether though, an interesting read and a good addition to my management book shelf.
34 of 34 humans found the following review helpful.
A Good Place to Start
By Ken Rider
“Business Model Generation” is a breezy read and a well-organized introduction to assorted related topics including: basic types of business models, proficiencies and systems for generating ideas and thinking creatively regarding them, along with procedure steps for moving good ideas forward.
PROS: Anyone new to these topics would likely have to read four to six distinguished books to get the wide coverage you’ll find here. The writers have done a service for folks who want to come up to speed more quickly and each chapter has further and added references for further reading. The designers likewise is worthy of galore credit for a originative and varied layout that makes the text seem fresher and more enjoyable. You may feel good when it comes to yourself as you plow through 50+ pages in half an hour without fatigue. The bonus: this is a business book that won’t have you drowning in business jargon.
CONS: As various reviewers have noted, there’s breadth here but not as much depth on the core topics as numerous might want. Those expecting more may be disappointed and a lot of may find the title a bit misleading. Probably more precise if they called it “A *PRIMER* for Business Model Generation” rather of a Handbook. Finally, the little font sizes that a few reviewers brought up will surely be difficult to read for those with less-than-great eyesight. The tradeoff here, given the book’s open design, is that a more spectacular font might have added a bunch more pages.
68 of 75 people found the following review helpful.
 A Brilliant Book: easy and fun to read
By Michael Uschold
This is an perfectly superb book and my original and only book on business models. It is so up to date and filled with gems that I feel no need to read another anytime soon.
The book is aptly titled, being all when it comes to how to generate business models. However, you have to know what it is before you may generate it. To this end, the introductory division of the book is devoted to introducing a usual language and format for talking when it comes to business models. They introduce nine key items which serve as the building blocks for all business models. These are listed below, illustrated with Skype’s business model.
CUSTOMER SEGMENTS: Who will use the product?
1) web users globally 2) humans who want to call phones
VALUE PROPOSITION: Why will they use the product?
1) free Internet and video calling 2) cheap calls to phones (SkypeOut)
CHANNELS: How will the product be delivered to the customers?
[...] and headset partnerships
CUSTOMER RELATIONSHIPS: how will you formulate and maintain contact with your clients in each segment?
Mass customizedMass customized
REVENUE STREAMS: How is revenue generated from which client segments?
1) Free 2) SkypeOut prepaid or subscription
ACTIVITIES: What are the key things that you need to do to construct and deliver the product?
Software development
RESOURCES: What pluses are required to develop and deliver the product?
PARTNERS: Who will you want to collaborator with (e.g suppliers, outsourcing)
Payment providers, Distribution partners, Telco Partners
COST STRUCTURE: What are the main origins of cost required to invent and deliver the product?
Software development, complaint management
These building blocks are laid out on a page in a very specific way, referred to as a “business model canvas”. As each chapter unfolds, we get a clearer and clearer understanding of each building block and how to use them to create, evaluate and commune business models.
The business model canvas may be employed to describe any of a wide assortment of business models. Patterns emerge which correspond to categories of business models. For example, the Long Tail business model is all when it comes to marketing less of more. The focus is on “offering a big number of niche products, each of which sells comparatively infrequently”. This pattern is illustrated with the transformation of the book publishing industry and Netflix.
Another example is the so-called “Freemium” business model employed by Skype and innumerable other Internet businesses. This is equated with the frequent Telco model making the two models easy to compare. A similar analysis compares the established computer gaming model employed by Sony and Microsoft which competes on high performance with Nintendo’s Wii business model which focuses on casual gamers and a dramatic reduction in development costs. Visualizing these number of things from which only one can be chosen on a canvas is very powerful (much having little impact than the above lists).
The Freemium model is a particular case of a more general “multi-sided market” pattern which “brings together two or more distinct but interdependent groups of customers”. For example, Google gives away a potpourri of services to one client segment, the intermediate web user, and earn income from keyword auctions from advertisers, which comprise the other side of the pattern. As is typical with the multi-sided market pattern, the key resource is the platform which facilitates interactions amongst the two client segments.
Another major division of the book is committed to designing business models. Very explicit instructions and tips are given in the context of an overall process. Different phases include: gathering client insights, ideation/brainstorming, visual thinking, prototyping, storytelling and scenarios.
A major section on scheme includes a section on how to evaluate existent business models, identifying problems, and brainstorming in regards to possible solutions. Nintendo’s Wii is featured. One problem with the established gaming model is that consoles are sold at a loss to a comparatively little market. By eliminating the huge cost of gaming platform development and adding motion-controlled games with a family focus, the market grew much larger.
The design and layout of the book is evenly delightful. It is a cross among a Powerpoint pitch and a regular book, and is easy and fun to read.
The only negative I may think of is the binding. I don’t know the lingo, but basically, the front and back (hard) covers are not directly connected to each other. Between them are the sewn and glued subsections of the book that are ordinarily hidden. Unfortunately, the book seems to be flimsy. But this is a minor niggle.
Overall, this is a brilliant book. If you have any interest in business models, get it as soon as you can. I got mine by prospect on a recent trip to Europe while visiting a colleague. I saw that it was not available yet in the US, so he swapped me for my copy of an evenly magnificent book: The new business road test: What enterprisers and executives will have to do before writing a business plan (2nd Edition).
See all 123 client reviews…
|
