AftermarketDomains

Marketing

Historically marketing has been divided into four areas. These areas are product, price, placement (distribution), and promotion. For aftermarket domain names the product is stocked and distributed by the two sections of the open exchange. Price is also usually set by the domain owners and not by the sales agents. This leaves promotion as the key responsibility of sales agents and lead generators.

Sales Agent

The activity of being a sales agent can be defined as "the conversion of sales leads into domain sales". It is easy to confuse the generation of leads with the actual conversion of those leads but they are very different activities. Sales agents are responsible for handling reactive domain sales (9.1) activities. Once a lead has been generated the sales agent:

• Displays domain stock for sale
• Qualifies the potential buyer
• Generates interest in buying a domain
• Negotiates offers
• Collects funds
• Accepts commission rates
• Manages transfer of domains for the buyer

The Sales agent's primary job is conversion of sales leads into domain sales

Stock Filtering

The first activity that a sales agency has to participate in is the preparation of stock for display. When a sales agency works with separate stock control and distribution facilitators there is very little that is required to do to prepare stock. The only real requirement is to set their preferences with the distribution facility of what stock they will accept. This may include filtering by:

• Category Legality
• Trademark
• Length
• Word count
• Price
• Search values

Example Filtering Parameters:
Categories: all, not adult, not gambling, Filtering: trademarks, spelling, Word Count: less than 5, Length: less than 35 characters, Pre-Processing: only

If the sales agency is going to attract and process domain stock themselves, they will need to perform all of the activities detailed for the stock control and distribution facilitators. However, disintermediation of these facilitators is an act of market share aggression and will undermine the open exchange system.

Displays Stock

In most cases displaying domain stock is done on marketing websites. Occasionally there may also be other direct promotion of domains using other forms of media. Websites are primarily composed of four different components:

1. Presentation layer (how it looks and is presented to the user),
2. Technology (navigation, programming),
3. Content (domain stock and information), and
4. Service (human element).

All of these components with the exception of service can usually be sourced by distribution providers. Once an agreement has been made with a distribution facilitator, an aftermarket domain sales portal can be constructed and online within a few days. This ease of development clearly indicates that displaying stock is a threshold technology that is easy to replicate and holds little inherent value to the consumer.

Sales Agencies that have fully automated systems offer little human value.
They are a threshold technology business unless they offer -
Proactive Growth and Human Services

Accepts Commissions

In an open system market there is a need to establish what commissions are acceptable to the sales agency. Domain owners and sales agencies can both set whatever value they want to achieve on either side of a hand shake arrangement. The parameters need to be set for each domain accepted into inventory.

A typical commission configuration would look something like this:
Minimum Price: $500, Maximum Price: $5,000, Minimum Commission: 15%: ($500 - $1,999); 12%, ($2,000 - $5,000).

This commission structure would only accept domains priced between $500-$1,999 if the minimum commission was 15% or higher and 12% for domains prices between $2,000 - $5,000. If a domain owner was willing to have a domain sold for 18% for either of these groups, the commission received by the sales agent would still be 18%, not the minimum set by the sales agency.

The purpose of this rule is due to the ordering algorithm. Net profit is considered as part of the ordering algorithm and therefore increases distribution to domains with a higher profit projection. Sales agencies do not work on a flat commission for all domains in an open system, therefore the domain owner needs to have the capacity to give incentive to the sales agency on a domain by domain basis.

Quality Leads

When sales agencies receive leads from lead generators the leads can be qualified in three principal ways:

• Self-qualification of the user as they navigate through the domain sales portal and then eventually try to buy a domain or leaves;
• Human Involvement when a person becomes involved in the sales process as a sales agent with the intent of converting the sale
• Financial Qualification is when the potential buyer is required to submit financial details (i.e. credit card) before any offer can be made.

Research Domains

Some domain marketers are now offering research assistance as part of their sales process. This assistance may or may not have an additional fee attached to the service. The role of the agent in this activity is to actively match the needs of the buyer and the domain stock that is available. If done correctly, this process can be very powerful in eliciting domain sales and offers great value to the process.

Increasing Interest

Part of the sales process is getting the buyer to emotionally commit to making a domain purchase. This can be accomplished using a variety of techniques including:

• Offering support material
• Human contact
• Testimonials
• News articles about domains
• Discounting domains
• Flexible price points
• Other techniques

Sales Agencies convert leads into sales - the interactive value they offer is the
measure of their true worth in the process

Negotiates Offers

In some cases where domain sales agencies allow the "make offer" pricing strategy they may become involved in the negotiation of the price with the potential buyer. Alternatively this communication could be automated and forwarded to a domain broker or the domain owner themselves. One drawback of this approach is that the "hot lead" can become stale very quickly. The domain owner could also choose to negotiate directly with the potential buyer (disintermediation) to avoid paying the sales agency commission.

A better approach is a system in which a waterline price level is set for each "make offer" domain. The potential buyer may then be up-sold to a price higher than the waterline. In these cases a special commission rate may need to be included. One such commission is the "upside split" where sales price minus waterline price is evenly split between the domain owner and the sales agency. This is highly appropriate because the sales agency had to provide real value to increase their commission.

Collect Funds

Although the processing of the financial transaction for domain purchases may involve an external finance clearing house, for many buyers the sales agent will be considered the first point of contact for financial issues relating to the domain purchase. The sales agent is also the first point of fraud protection and has the opportunity to shield finance facilitators from potential harm. These activities directly circle back to the value sales agencies can provide by qualifying buyers before purchase.

Buyer Transfer

The domain sales transaction is not yet complete once the buyer's commitment and funds are received. The transaction is completed when the new owner receives total access and control over the domain. Just as the stock control facilitator is responsible for releasing the domain on the buyer's side for transfer, the sales agency is responsible for ensuring the buyer receives the domain in order to complete the transaction.

What is currently known as escrow is likely to be split into the three functions in coming years:

• Domain transfer request
• Financial exchange and
• Domain transfer release

These will be handled by the sales agency, finance clearing house, and stock control facilitators accordingly.

Lead Generators

Lead generators are responsible for creating proactive domain interest resulting in domain sale leads. The leads that are generated can range from unqualified to being so strongly qualified that the sales agency just needs to complete the transaction.

Proactive lead generation is the lifeblood of domain sales (see Proactive Development). Without lead generators the industry must rely on the reactive model (see Reactive Sales) currently employed by domain sales portals.

• Domain marketing is expensive
• Very specific and limited consumer group

Aftermarket Domains = Niche Marketing:
Domain marketing is expensive, specific and has a limited consumer group

Marketing Is Expensive

Most online marketers understand and consider Internet "traffic" to be the livelihood of any Internet business. Lead Generators are no different and attempts have been made to expand online marketing to generate more domain interest. Unfortunately, many of these efforts have failed.

The primary reason they have failed lies in the fact that they are under-funded. The amount of profit that is left over after all of the costs of running the business (in particular their marketing costs) has a very thin margin. This margin doesn't provide them with the funds required to increase marketing exposure levels. Without increased marketing exposure the aftermarket domain industry can not grow to be robust and vibrant.

The only way for the marketing exposure to increase is by insuring that the marketers are appropriately compensated for proactive marketing. Proactive marketing is the most underappreciated and under-funded of any of the aftermarket domain sales processes. FabulousResearch.com estimates that less than 2.5% of all aftermarket domain sales revenue is spent on proactive marketing. Approximately five times that amount (12.5%) of domain sales revenue will be required to build a vibrant market.

These costs can be recovered by initially increasing all domain sales prices by 10% to ensure that proactive marketing costs are covered. However, the real value is achieved through the exposure that results from increasing the volume of proactive marketing. This should lead to a rise in domain sales, domain demand, domain valuation, and domain portfolio valuation.

Mass Marketing

The domain marketing solution detailed in the preceding paragraph seems to cover the breadth of the domain sales marketing dilemma. However there is an overlay of context that is required to understand the nature of lead generation for this industry.

Not everyone wants to buy aftermarket domain names. It may seem of the surface that most businesses (or individuals) in the world would like to own domains that interest them. However most of them do not want to pay the amount of money that is required to buy most aftermarket domains. Typically aftermarket domains have an average sales price over $1,000. This is in strong contrast with consumers being able to register new domains for a $8.95 cost. Most consumers do not understand the difference in value between domains until they have a need to improve their brand through a better domain. Meaning, until they have already established an interest in buying a domain, it is difficult to generate an aftermarket domain sale.