double POSITIVE Marketing Group, Inc.

Post By
Joey Liner

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Low Mortgage Lead Pricing
Creates New Growth Opportunities

How Having Access to Cheaper Leads That Are Difficult to Convert Impacts Lead-Buyers in Need of Higher Quality Lead Volume

Summary

• Mortgage Lead prices are near all-time lows
• Low interest rate environments continue, creating higher lead volumes
• Speed-to-Lead is still a driving factor in converting Online Leads
• Sales teams are getting crushed with too many un-workable leads, affecting their spirits
• Simply buying more leads will not increase productivity
• Adding LIVE Hot Transfers and a Lead Management System (LMS) maximizes higher conversions and sells more units

Transitioning from Survival to Growth

Every mortgage company still in business today has fought through nightmare market conditions of the last couple of years to emerge as one of the savviest lead buyers on the Internet. We congratulate you all for making it through what we call “nuclear winter.”

Lead-buying as a mortgage marketing strategy is very mature. Since LendingTree entered the market in 1997, mortgage firms have understood the value of getting leads and phone calls from contactable, interested and qualified consumers who are ready to talk to a mortgage-sales professional. Today’s savvy firms are maximizing their ROI by deliberately INCREASING their marketing costs in order to improve the QUALITY of the calls and leads in order to assure that they are indeed interested and qualified. This white paper teaches you how to achieve optimal results.

Lead Pricing Drops along with Interest Rates

The mortgage industry is in better shape than it’s been since 2006. Interest rates are the lowest they’ve been since then, and will likely stay low for a while. Along with falling mortgage interest rates, lead pricing has come down. WAY down. It appears to be a perfect time for lead buyers to step on the gas and buy more leads at a lower, discounted price, and grow their businesses.

DoublePositive preferred and integrated lead providers include:

The industry is not out of the woods yet, however. Lower rates are only half the battle. The other half is having qualified buyers who can take advantage of the low rates. There still a large demographic that does not have the equity or the credit strength to qualify, which means mortgage companies must be even more precise in their lead generation efforts.

Additional challenges for inbound marketers have emerged. After the subprime fallout, a lot of states, including Maryland, where DoublePostive is headquartered, require individual licensing for loan officers. Inbound marketers now have to buy the appropriate lead flow by state. Having the right phone distribution system is critical to making sure the lead gets through to the licensed loan officer.

The biggest Risk in the Mortgage Leads Market Today

What mortgage companies are now facing is how to respond to the current favorable atmosphere for lead buying. High volume lead supply is available, but they must weigh the pros and cons of flooding their sales force with new leads. They also must consider the best approach to increasing marketing costs for the highest ROI. The biggest risk is missing out on the opportunity to grow, due to operational inefficiencies. Many sales teams spend 80% or more of their time attempting to establish live contact with the consumers/borrowers. Outsourcing this function is usually easy to justify from a total-cost-savings perspective.

The Importance of Speed

One harmful effect of inefficiency is a lack of speed. A recent Leads360 study shows that companies have nearly a 400% higher probability of closing a deal if they are able to call them on Internet leads within 5 minutes. Here is a snippet of the Leads360 study, showing the drop-off as the minutes pass:

We also know that only about 50% of the leads are contactable, 30% are interested and 20% are qualified. For the mortgage firm, that means that a loan officer must spend time calling the leads that are not hot as well as those that are hot. This becomes a Catch-22. The quality of a lead can only be determined by calling on the lead quickly. But if a loan officer is tied up, calling non-hot leads, he or she will not be able to get to the leads that would have been hot, had they been contacted quickly. Inefficiencies are costing the firm, and driving up acquisition costs. For example:

“For the leads we bought and called ourselves, our average response time was more than an hour and forty minutes. There were just too many poor leads mixed in with the good leads, and it took time to sort them out ourselves. As a result, we missed a lot of opportunity.” — Bright Green Home Loans Director of Marketing John Challis

The Impact of High Conversion Rates on Mindset

Another harmful effect of inefficiency is poor conversion rates. Because only about 50% of the leads are contactable, loan officers who call on the bad 50% will have 0% conversion rate. This drags down their overall conversion rate from calling on the good 50%. Inefficiencies are negatively impacting the loan officers’ mental state, which reduces the effective use of their time. For example:

“Our time management was inefficient. It weakened our loan officers’ sales ability, because sales is psychological. When you’re on the phone so much and you hear a lot of hang ups and irritated, negative responses, it affects your mental state. Then, when you finally get an interested customer on the phone – I don’t know if you’re in the best frame of mind to sell.” – Great Western Financial Vice President Greg Reed

The Importance of Improving Productivity

Further compounding the problem of growth is the productivity dilemma. You want to grow your company. Interest rates are the lowest they’ve ever been. And yet you know that if you were to buy more leads, the money would be wasted. Your salespeople would be overwhelmed and unable to call on the new lead volume. To this point:

“If you have a loan officer who is maxed out with the number of calls they can make per day, giving them more leads is not going to give you the outcome you want.” – Hunter Financial Group CEO Pete Sokolovic

For example, let’s say your average loan officer can handle 5-7 Internet leads per day. If you were to give him 12 leads tomorrow, because you want to grow, he will still only be able to call 5-7. Behaviors don’t change just because you want them to. You can’t just overwhelm loan officers because you want to grow. It’s not going to work.

A New Way to Solve the Dilemma

So what is the best path forward?

Increase your return by increasing your investment.

Today’s economics allow this strategy to work. Because the supply of leads is at an all-time high, it creates lower lead pricing. Lower lead pricing creates an opportunity to increase spending back to typical levels to get significantly better results.

For example, if you were spending $13 per lead, and now you are able to buy the same lead for $10, you have $3 to reinvest. Let’s say you were closing 2% and have an opportunity to reinvest that $3 to increase your close ratio by 3-3 ½ % in the same time period. Your costs will go up incrementally, compared to the amount of units that you sell.

How to Get a Better Return

This is where lead transfer companies like DoublePositive provide can help. Using HOT Lead Transfers helps mortgage firms value their time more. To take advantage of where rates are today and grow their business, mortgage firms can buy more leads and use the HOT Lead Transfer process to increase their sales team’s productivity. When they receive HOT Lead Transfers, they get the opportunity to speak to interested, qualified consumers first, before they find another solution or are contact by a competitor.

Coupled with a Leads Management Software (LMS) company, DoublePositive helps mortgage firms achieve even better results. Here’s how lead optimization works.

Work Flow for Lead

This diagram shows the path of the leads as they come in from aggregators, internal and other sources. They enter the LMS, which triggers an email to your prospect, thanking them for their interest and letting them know to expect a phone call from you shortly. The LMS also captures their data for a drip email campaign if they do not convert immediately.

At the same time, the lead drops into a lead prioritization queue, which feeds the drip email campaign. Those leads also enter to the Hot Transfer Engine, which generates a call from our call center to your prospect. If your prospect truly is interested and qualified, our call center forwards that lead as an inbound call to your loan officers.

Partners in Optimizing Your Business Mix

An LMS that specializes in mortgage consists of robust physical connections to all Lead Suppliers, combined with a proprietary Translation Engine that handles the entire custom data mapping per supply source. An LMS will be able to help mortgage firms get connected to all of their lead suppliers, overnight.

Connectivity to lead sources and the transfer of leads is where the ROI begins. But DoublePositive is not just a hot transfer company. We work together with LMS companies as day-to-day consultants to help our clients operate more efficiently and get more juice out of the leads they are purchasing each day. We know that if we do a good job, they will grow, and add more to their marketing budgets. Improving lead flow is our primary goal.

To Improve Speed

What has been the difference for our client, who said that, before their partnership with DoublePositive and the LMS, their average response time was about 100 minutes?

“The average response time is now inside of a minute. This is dramatically different, which adds a tremendous value.” — Bright Green Home Loans Director of Marketing John Challis

To Improve Conversion Rates and Sales Mindset

How big has the impact been for our client who said that, before their partnership with DoublePositive and their LMS, inefficient time management hurt their loan officers’ mental state?

“Instead of our loan officers becoming telemarketers, they are allowed now to be great loan officers, and spend more time on the phone with a warmed-up customer that’s interested in moving forward. Now they can be more energized, more positive, and sell more like a professional. And we were able to increase our conversion percentages by 20% in productivity.” – Great Western Financial Vice President Greg Reed

To Be Able to Scale

And how has the inability to scale been addressed by our client, quoted above, since entering into a partnership with DoublePositive and their LMS?

"We’ve seen our loan officers increase production 100%. If they were capped before at producing 3-6 loans per month, we’ve seen every one of them be able to double up and produce 6-12 loans per month. That has helped the loan officers make more money, and our company produce more results with the same headcount.  Marketing cost remains close, but the efficiencies you get by enabling an individual to perform twice the amount of business makes up for it, and then some." – Hunter Financial Group CEO Pete Sokolovic

A Vision for Growth

Despite the fact that industry has not completely recovered, there are more positive signs than ever that forward-looking mortgage firms are poised for tremendous growth. It helps to have better access to cheaper leads, when you add tools like an LMS and DoublePositive to the quality of the leads and drive up conversion rates. Loan officers are happier and more productive, the consumer is better served, and the mortgage firm makes more money at last.

Review

Where do today’s favorable market conditions leave the mortgage leads buyer seeking to grow? Let’s review the facts:

• Low interest rates and a high lead volume create lower lead acquisition costs
• Market conditions present a unique growth opportunity for mortgage firms
• Companies that add HOT Lead Transfers to Lead Management Tools are better able to increase speed, improve conversion rates and boost productivity
• Having happier, healthier, more productive loan officers allows companies to scale

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