I have long believed that TixNix can predict the strength of the economy.
Simply by looking at the conversion rate (the percent of leads that become paying customers) for the entire TixNix network, I can get a sense of how Americans feel about spending money. Since more than 95% of all drivers who receive traffic tickets will simply pay their ticket, Americans (in general) do not believe that paying money to fight a traffic ticket is something that they must do. Accordingly, there is a wide degree of flexibility around this decision that is effected by how Americans feel about their personal finances and the national economy.
Earlier this month, Ben Bernanke, the Chairman of the Federal Reserve Bank, had some positive things to say about consumer spending during the first quarter of 2009. From TixNix's perspective, the network conversion rate stayed low during the first quarter of 2009. So at least with respect our small portion of the economy, I did not see what Ben saw. Perhaps, just not yet.
What we have been through has been a very challenging environment for traffic tickets. However, I am seeing early hints of improvement. Here are some of my thoughts:
The Negatives:
- After a horrific holiday season for traffic tickets, we have seen conversion rates stabilize at about 50-60% of non-recession conversion rates.
- The number of traffic tickets issued has jumped quite a bit in the first half of 2009, which is not typical of traffic ticket seasonality.
- Although town, cities, and states are issuing traffic tickets at unprecidented rates to stabilize local economies, this hasn't meant a large increase in potential traffic ticket clients.
- Attorneys are experiencing many more free advice inquiries and fewer client conversions.
- This is frustrating, both mentally and financially.
The Positives:
- We are beginning to see conversion rates notch-up a bit around the larger cities. This is typically where we see things rebound first.
- Lead volumes are beginning to notch-up. This is predictive of the summer bloom that is typical of the traffic ticket market.
- The general consensus is the the economy is close to the bottom and will begin a slow recovery.
What this Mean Going Forward:
- This is a bit tricky since I am hearing about attorneys that are doing great and others who are still licking their wounds.
- Typically at this point in the year we would be putting in calls to attorneys to discuss increasing marketing spends to capture the summer ticket bloom.
- Given that attorney success is inconsistent right now and that conversion rates are still about half of normal...
- I recommend that attorneys hold tight with marketing spends, as we continue to monitor conversion rates and lead volume.
I will re-address this issue again once I see some changes.
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