A skip trace enrichment resale that a 41 percent connect rate ate in six months

This one is worth studying because everything about it looks reasonable until the match rate gets measured. The idea: wholesalers a marketing operator already serves keep complaining that their phone numbers are bad. The operator has a pipeline of them, so builds a thin enrichment product. Upload a CSV of addresses, get back owner name, mailing address and up to three phone numbers, scored. Priced at $99 a month for 500 lookups, $0.14 each after that. The operator is not the data source. Wholesale data is bought from two providers and stitched together, and the stitching is the actual product: dedupe, phone scoring and a clean CSV out. Spend in a case like this: $27,400 all in. Of that, $19,000 goes to a contract developer over four months, $3,800 to data credits during testing, the rest to the site and a lawyer for the terms. Peak is 14 paying accounts, so $1,386 MRR. Then churn. Monthly churn runs 20 to 24 percent for three months straight, and every exit interview says the same thing in different words: the numbers did not connect. Measured properly, which should happen in week two, the picture looks like this. Across 6,100 lookups the providers return at least one number on 63 percent of records. Of those numbers, the ones customers actually reach a human on come out around 41 percent of records. Competitors sit somewhere similar, and they are priced so that 41 percent still works for the buyer. At this price it does not, because the buyer compares the product to his old provider and not a single record has been made better. Only the CSV got prettier. What to do instead: buy 1,000 records from three providers first, hand dial 200 of them, and only write code if the stitched match rate beats the best single provider by ten points or more. That test costs about $400 and two weekends. The version above costs $27,400 to learn the same thing.

2 replies

laurenkim53 PF4APRO 14

Match rates run worse than 41% in rural counties. Half the owner records are a trust or an estate and the mailing address is a PO box two states away, so any product priced on finding the owner's cell falls apart the moment the county stops being suburban. The CSV cleaner arguably had more standalone value than the enrichment layer, since nobody sells a decent parser for handwritten era records. Probably a market of eleven people though.

laurenkim53 PF4APRO 14

mikeoconnell7 SO3CPRO 12

Thatch, the match rate was probably not the real cause. You were a reseller of two upstream providers, which means your ceiling was always their data and your only defensible piece was formatting. Twenty percent monthly churn on a $99 tool usually means the buyer never had a switching cost. No workflow lived inside your product, no history, no team, no notes. They uploaded a CSV and downloaded a CSV, so leaving cost them nothing. If the phone numbers had been 60 percent you would have bought yourself maybe another six months and the same ending. The version that survives is the one where the calling actually happens in your tool and the outcomes get recorded, because then their eighteen months of dispositions are hostage. That is a much bigger build than $19,000, which is its own argument for not starting. Your $400 test is the right test. Add one more: ask three of them to prepay a year at a discount before you write any code. If none of them will, you have learned the same thing cheaper.

mikeoconnell7 SO3CPRO 12

A skip trace enrichment resale that a 41 percent connect rate ate in six months

2 replies