double POSITIVE Marketing Group, Inc.

This industry is 10 years old. That’s old. No wait, it’s a young industry. Either way you look at it there is agreement that this industry is changing and will look a whole lot different 5 and 10 years from now.

Look for more co-branding in the near future. Lead generators are going to have to start matching consumers with specific lenders, and introducing them with some high level information about their companies and product offerings.

How many lenders should a lead generator match a consumer with? 5? 4? 3? Can lead generators make the economics work with only 3 sales slots? Keep in mind, if a lead generator sells a lead 3 times, and lets say that 2 of those lenders pull credit on that consumer. Now the credit bureaus sell that trigger data — 5 times for each credit pull. Now the consumer may be bombarded with up to 13 calls from lenders. How long can the industry sustain that? The lenders in the room really were hurt when the industry moved from 3 to 4 sales slots for leads — about a 15% decrease in conversion ratios.

Is the real evolution of the leads industry going to a model where consumers actually sell their own information? They step up and say “Hey, I am interested in life insurance, refinance, and getting my masters degree. You can market to me, but for X dollars.”

Consumers should be able to specify that they only want to speak with one preferred vendor, period. Would a lender be willing to pay 3X or 4X for that lead? (Some lead generators and buyers are testing this right now, but the lenders here aren’t happy with the results of these programs.) They sure would be willing to test it. How about consumers specifying whether they want to be contacted NOW, or 5 days from now. How would that effect pull through? Contact rates? Lead pricing?

Leads 2.0 — the next generation of lead forms. How are they going to be enhanced? Longer forms, shorter forms? Different questions? Credit pulls? Data verification? More engaging forms for the consumer?

Atul Patel, formerly of Root Markets and LeadROI, and I were just discussing the true “future” of the industry. Consider Google’s acquisition of GrandCentral… Consumers are taking more control of the buying process, and we’re all going to be reaching out to a new generation of consumers that hide behind personal firewalls, use social networking, mobile, peer reviews, user generated content. This group must be conisidering these issues now because we’re not too far away from having to incorporate these into our business plans.

Another good session…

A DoublePositive client and friend, Noel Collins of Equity Direct Mortgage, is leading this session which is focused on best practices in lead buying. This session is the best one yet — lots of really good discussion between lenders, lead generators/providers, and lead management system companies.

So for lenders, what are the questions to ask of a lead provider? There are so many factors to consider for lead buyers when choosing a vendor.

• What methods do you use to generate your leads?
• Do you use affiliate advertising or co-registration?
• Do you have references from companies of a similar size?
• What do you generate yourself vs. what you purchase?
• Are you licensed?
• Do you have any data you can provide from your clients’ lead management systems?
• What metrics can you provide me? Contact ratios, app ratios, cost per funded loan, cost per $1000, total ROI?
• What is innovative about your company? What strategic partnerships do you have that will benefit your lead buyers (affiliates, data verification, credit bureaus)?
• What education or advice can you give a lead buyer as to how we should best work your leads?

There was some serious debate about whether these questions actually do any good For example, a lead provider is only going to give you a reference of a “raving fan,” so doesn’t that need to be taken with a grain of salt. For the lead generators (LMB, QuinnStreet, etc…), it’s important to know how the leads are generated, but that question is entirely different when answered by a lead provider or exchange.

Maybe lead buyers shouldn’t be so concerned with the absolute numbers and metrics of the lead providers and instead concentrate on improving their numbers. In other words, if a lender’s CPFL is $1800, they shouldn’t be looking for the lead provider whose CPFL is $900 — they should be looking for a lead provider whose CPFL is simply less than $1800.

There is a lot of disagreement as to what is success. What is an acceptable contact ratio? Time to contact?

There are a couple of industry groups (Online Lead Generation Association, Internet Advertising Bureau) that just don’t have wide acceptance or recognition.. But should there be? How effective would it be? Should the companies in the room today be driving something like this?

The lead generators need to be concerned with how the lender’s operation is setup to handle the leads. Do the leads go right to LO’s? Is there a pre-sales contact team that is working the leads? What are the followup methods that the lead buyer has in place to really work the leads hard?

Expectations. The lead buying process all starts with how expectations are set with lead buyers. Many lenders have unrealistic expectations, or perhaps their expectations are wrong because they are trying to compare apples to oranges. Contact rates on leads generated from affiliates, organic search, paid search are all wildly different.

The major lead buyers in the room (Equity Direct Mortgage, LEI Financial) seem more than willing to be transparent in letting the rest of the industry benefit from their knowledge on lead buying. Still, one major lead provider in the room shared a story about very large lead buyer who is having great success with their leads, but is less than willing to share their “special sauce.” Yet, so many lenders won’t share their best practices with anyone — lead providers or other lenders. Won’t more transparency in the industry help everyone be more successful?

Our friend Tom from Low.com is more than willing to have his sales team not only promote and sell Low.com leads, but they will tell a lead buyer of what other lead generators they should try. After all, that helps us grow the lead generation industry AND make our clients more successful. We do the same at DoublePositive. Like investing in the stock market, buyers need a well balanced portfolio.

WOW. This was a great session… Noel Collins was fantastic (the first one to get a round of applause). The “threesome” that can really benefit from cooperation and best practices — lead management systems, lead providers, and lenders.

No sooner had I completed my weekend post explaining Voice Traffic did I read the email announcement of the sale — VoiceStar Sold to Marchex for $28 Million.

WOW!

Congratulations to CEO Ari Jacoby (who several people at DoublePositive know personally) and the rest of the VoiceStar team on the sale.

While very different businesses, VoiceStar and DoublePositive are exactly alike in the following three ways:

1.  Software drives our respectives businesses
2.  We are in the “Live Leads” space
3.  We are both boot-strapped-then-venture-funded (congrats also to the VoiceStar investors as well).

VoiceStar is now the first official “Live Leads” company to have completed a succesful exit.

Bravo.

SPF

How do you build and maintain long-term relationships with your clients? This is the question posed to originators (with consumers) and lead providers (with originators).

If there is a constant flow of leads coming to loan officers — if they are “drinking from the fire hose of leads” — then there is little or no incentive for them to try to build long-term relationships. One way brokers can try to encourage this is to make their LO’s realize that they are essentially self-employed. Some even go as far as to have their LO’s put some skin in the game by having them pay for their own leads.

(On a related note, this is the reason why I wish more of DoublePositive’s clients would see the value of new purchase leads. There is a lot of value there if you consider the life-time value of those relationships).

Lead buyers are spending a lot of money to contact consumers, but too many spend little or nothing to keep the relationship going. Even so, aren’t consumers who failed to convert the first time just likely to go to the Internet and start their process again, even if they receive tickler emails and postcards from a broker?

See Also: LenderFlex’s on Sales Approaches

The main question at hand here is “What technology innovations will have the most significant impact on the industry?”

Lots of the discussion is about metrics, which of course leads into a discussion about technology — whether it be a CRM, lead management system, mortgage management system, other in-house solution. Lots of disparate systems, and even more disparate levels of adoption of these systems. That makes it very hard to get any true metrics as to how the leads are contacted or converting.

Which is a better metric that originators should concentrate on — cost per funded loan or ROI?

Noel Collins explained why it’s hard to get adoption of a lead management system. He explained that the loan processing system is, in fact, a lead management system — but one that is geared just for the loans in process. So, it’s hard to push the use of the lead management systems when the bread and butter is in using the system for the loans in process.

From here the discussion really went all over the place, dealing with issues of lead quality, ballparking industry metrics, lead distribution methods, subprime fallout effects.

A lot of discussion about the standardization of the consumer experience on the front end.

There are stories on both ends of the spectrum here. Of course there are stories of borrowers who are contacted by a dozen, overly aggressive lenders. Still, many agreed that the number one complaint that branded Tier 1 lead generators get from consumers is that they were not contacted by all of the lenders they were promised.

Is there anything more damaging to the consumer experience than trigger leads?

Bill Rice, of Kaleidico and our gracious host for this conference, shared with us that his numbers show that the first lender to contact is converting higher… If a lendercan get to a 5th or 7th contact then their application ratio skyrockets. The originators, however, seem to disagree with that, because the 2nd, 3rd, 4th to contact can always undercut the first lender and has the opportinity to further educate the consumer.

Todd from Airfoil had an interesting take. The folks who are on the phone talking to consumers (pre-sales, loan officers, etc…) have never owened a home themselves because most likely they are young and probably renting. But do you need to own a car to sell a car? Mortgage companies provide their LO’s a phone and a desk, but drop the ball when it comes to training.

Mortgage brokers are all fighting over the same leads… They all want the 640 FICO with 75% LTV and a $450k loan amount. So 95% of the mortgage originators are fighting over 1% of the leads. That’s not productive…

To what extent should lead generators/providers be qualifying lead buyers? For most lead generators, almost all of them only care that their lead buyer has the money to buy leads, period. While there is fraud in lead generation, there is fraud at mortgage companies, too. We all know that if a guy is fired from a mortgage company because he is suspected of fraud, he’s probably going to get hired by the company down the street and start calling the lead generators he worked with at the first company. But what role, if any, could a lead generator play in that scenario?

See Also: Improving the Customer Experience? Do We Care?
 

Monday and Tuesday I’ll be blogging the Leads2007 conference in Tampa, Florida. So many of the industry’s lead generation companies are here today as well as some mortgage lenders. Check out the full agenda at http://leads2007.com/.

In the last edition of PositiveWire, I used the term “Voice Traffic” several times.   It prompted many questions, and most of the questions had the same theme in common – what is “Voice Traffic?” I am certain we can all understand what a live human voice is, but what exactly is the meaning of the word “traffic.” Certainly, we’ve known the word “traffic” ever since there have been cars on roads (and probably even before that).  We hear the word “traffic” today continuously, but usually with respect to the car-driving patterns in most in major metropolitan areas, and unfortunately, quite often appended with the word “congestion” as a qualifier. For the past 10 years or so, however, we have heard a lot about “Internet” traffic. So, what in the world does “car traffic” and “Internet traffic” have in common?   

Hmmm…  now, that is a good question.  The answer to that question is probably the best definition for the word “traffic” in general. Here’s my theory… I believe that traffic is a phenomenon observed at the highest possible perspective, whereby the moving parts appear random or near-random in their movement, such as an Internet traffic report or a car traffic report as observed by a traffic helicopter. Drill down to any one moving part within the traffic and it is determined that movement is NOT random, but rather, driven by intent. 

Hmmm…. This is beginning to sound a lot like the Duality of Waves vs. Particles that troubles most Quantum Physicists. In other words, the helicopter flying at 5,000 feet (and reporting on the “random flows/waves” of traffic to listeners on their car radios) can drill-down to “observe” that a single person in a single car is not a random wave at all, but rather a single “particle” (or live person in this context) with a defined intent. In other words, what appears to be random (traffic/waves) is actually deliberate (intent/particles). Phone calls have historically been extremely NON-random. 

Most phone users are quite deliberate of their intent (thus far) vis-à-vis the number they dialed.  However, if phone usage ever became LESS deliberate and looked more like random traffic, advertising will soon follow.  In fact, this concept has already begun the snowball process with many adveritsing-supported tele-plays. 

Identifying and routing the defined intent of consumers on the phone for a profit is essentially “trafficking” in live human voice.  Hence, the use of the new term “Voice Traffic.” Presuming that you buy into my theory, you will probably also agree that DoublePositive understands “Voice Traffic” perhaps more than any other company. 

This is just one more step in the evolution of how Internet Traffic is monetized via online performance-based marketing. 

SPF

eStara issued a press release today announcing the launch of its Form to Phone service, which provides consumer data from online form submissions to sales professionals via phone in addition to email.  ”The solution has been proven to shorten response times for lead generation marketers and improve customer satisfaction by delivering prompt responses to online inquiries, ” the release states, and goes on to provide statistics on how Autobytel’s use of the service has increased the qualified leads delivered to dealers while improving conversion rates, in one case by 300%.   

“Time is of the essence in any sales transaction, and online merchants who are able to connect with customers while their interest is high are more likely to close the sale.  eStara Form to Phone is an effective tool for delivering timely, personalized service and tracking lead generation performance,” says eStara’s John Federman in the requisite CEO quote.

So how about this, Mr. (or Ms.) Auto Dealer–or Real Estate Agent, or Other Sales Pro:  instead of getting a phone call providing online form data, how about a phone call with the live consumer on the other end whose online form data went in real time to a call center agent, who phoned them immediately, verified their interest and qualifications, and then if appropriate, called you and personally introduced them to you?  

 Which would you prefer?  Whom should we call at Autobytel?