Domain work part 2 – Sales
by Mr. Sten Lillieström (LinkedIn)
When the domain name has finally landed safely in your registrar account – against all odds – are you now an investor? Not in a million years. You also need to sell the damn thing. Without sales you were only ever a collector at best.
Selling domain names on the aftermarket is not a get rich quick scheme. Very few ever sell. Most that are successful at it have been doing it for a long time, and similar to the art and craft of acquiring domain names, there are many viable strategies.
Some may want to keep their domains in a vault and only act when buyers manage to seek them out. Others may attempt to actively “flip” them as soon as humanly possible. For those interested in a more accessible and long-term approach there is a dizzying and disparate array of services that provide marketplace exposure for domain names.
If you are serious, and this goes for whichever route you choose, you will have to answer questions and make decisions on how to best optimize for performance, just like any business will.
Critical questions will knock on your door. How should the domain be presented on the ”landing page”? Should you save on registration costs and pay for that by an increase in management effort? Is it more profitable to minimize commissions than to maximize exposure? Should you price the domain or not? If you should price it – what should the price be?
You must also decide whether you should make outbound marketing efforts of your own. Something that can prove perilous in the light of certain UDRP decisions where outreach made to someone with existing trademark rights can equate to a shot in the foot. To just name a few of the deliberations required.
Historically, perhaps in part because there were not many reputable or effective services, domainers were very much the self sufficient type. Perhaps they designed a sales system of their own. One such system was the sales machinery of domain investor legend Frank Schilling, which became the Domain Name Sales (DNS) platform, which was incorporated into the Uniregistry registrar. After a protective acquisition by Godaddy, Uniregistry is now defunct. RIP.
In case you go down that self sufficient path you will have your work cut out for you.
But even though the tendency is still strong to regard any cut in sales revenue that goes to a third party as unfair, domainers today have mostly come to terms with the fact that selling domains require sacrifice. Available services are catching up with existing requirements, and even though competition leaves a great deal to be desired, the market is evolving.
Naturally, if you want your names featured where prospective buyers are, that is not going to be for free. If you want the best payment solutions of the day, it costs money. If you want someone 24/7 to manage incoming leads, purchases and deliveries, they need to be paid.
In general it is probably not incorrect to describe the two main strategies in domain name sales as ”active” and ”passive”.
Active sales involves outbound marketing of the domain names you own, directly to prospective buyers. A prospective buyer in this regard is not someone who thinks the name would fit their next venture or as a new name for their existing one, but primarily existing companies that may today already exist on a similar name. Even though it is surely successful at times, it is a very time consuming endeavor, and also a risky one.
If there are trademark rights that could have merit, actively selling the upgrade in the form of an alternate spelling or a shorter version of the existing domain name can prove dicey. It is nevertheless many domain investors idea of what domain investing is, and under those circumstances, being listed on marketplaces becomes less of a priority.
The most popular route however involves a different approach, perhaps we can call it marketplace optimization. A passive domain investor places the emphasis on acquisition, and employs external devices for the sales machinery. Call it outsourcing. They more often than not publish a set price in an attainable range, sometimes called the ”sweet spot”, to exploit the fact that this is something that simplifies the experience and process for a buyer as well, and therefore leads to higher sell through rates (STR).
For a ”passive” investor, the selection and the acquisition is where the money is made. The sale is an effect of earlier success in those areas. The services and the strategies used for passive sales are also an effect of the overall idea.
A domain investor that sells brandable names is going to benefit from a well designed placeholder logo and a set of ideas for use on the landing page, to act as food for thought and as a spark for prospective ideas about a purchase. This is not a widely offered service, and the domain investors that prefer this kind of ”merchandising” are limited to few outlets. For search keyword type names that still employ a logo, it often ends up looking redundant and cheesy, which is why most domainers with those kinds of portfolios are content with a simple and straightforward landing page.
A common denominator however is listing with the noteworthy Multiple Listing Service (MLS)-type services available. There are basically two, even though you sometimes hear of attempts to compete. They work like syndicate networks, and domain registrars can join the network at which point a listed domain will be searchable in their specific domain name registration search box. To achieve the best possible exposure it is required to list the domain at a set price.
Selling this way, either through a commission based lander or a commission based database listing, or both, you are paying a hefty price when a sale occurs, about 15-30% of the total sale will be ”lost”. At the same time it is not sure at all that the sale would have materialized without exposure, and the final piece of the transactional puzzle, the payment handling and the domain transfer often requires negligible effort on part of the seller when employing third party vendors.
For the more self-made domainer men or women that go the full mile themselves, the transaction becomes more of a final hurdle. Domain name sales in this category often end up using a so called escrow service, so that both buyer and seller can rest assured that the other parties end of the bargain is upheld. Typically, an escrow fee is around 3%.
Negotiation is also a critical skill for a domain investor. Even if there is a set price, buyers will often attempt to bargain. To know when to hold and when to fold can tip the scales and mean the difference between bankruptcy and profit.
Either way you cut it, successful domain name investment is a demanding enterprise. It is also an enterprise that it is publicly acceptable to ostracize and penalize, often based on bias and ignorance. More on that in the next article of this series ”What do you mean domain investing?”.
Previous Articles in this series: The Legacy Idea | The Brandable Idea | Domain work part 1 – Acquisition
About the Author: As the founder and CEO of Next Venture, a domain acquisition brokerage and naming firm, I help entrepreneurs and businesses find and secure their desired brand names on the internet. As a consequence I also operate a portfolio of domain names that serve as viable naming options in different niches and industries.
About the Author: As the founder and CEO of Next Venture, a domain acquisition brokerage and naming firm, I help entrepreneurs and businesses find and secure their desired brand names on the internet. As a consequence I also operate a portfolio of domain names that serve as viable naming options in different niches and industries.