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Archive for February, 2008

The Conversion Conundrum

Wednesday, February 27th, 2008

When dealing with internet generated mortgage leads, the typical agreed upon conversion rate is between 1.5% - 2%. At this rate you can and should be profitable. Of course we’ve seen many clients that are converting much lower and we’ve seen some that convert quite a bit higher. One of the unique aspects of internet leads, in particular mortgage, is that they are often generated once and sold 3-4 times. This is pretty typical and widely accepted by the market. This practice however is the root of what I call the conversion conundrum. That is, even though the industry average for a mortgage lender to convert an internet lead is 1.5% - 2%, the actual average conversion rate of an internet consumer is actually 4.5% - 4.75%. That’s a 2-3% spread in the conversion rate. The reason for that is if a consumer goes online and submits their information as a lead to LowerMyBills.com for example. That lead is then sold to 4 mortgage lenders. Only one of those four companies can actually close that lead and if you calculate the conversion rate across all four lenders, it comes out to about 1.5% - 2%. But, when you calculate the actual conversion rate of that consumer, not taking into account which lender they chose, the internet consumer actually converts at about 4.5% - 4.75%. Interesting right?

Let me put it another way. If there is a 3% gap between conversion rates as I described above, what does a lender have to do to access that increase in conversion? That 3% is won purely by the behavior of the lender. In other words, the difference between the 1.5% and the 4.5% is the activity that a lender does when they get a lead. It’s about how fast they call that lead and how many times they follow-up.  It’s about what offers they give, what the loan officer says on the phone and so on. It’s all about the behavior of the lender after the lead has been given to them. That’s 100% controlled by the lender, not by the quality of the lead. So if a lender wants to reap the spread, they need to improve the behavior. That’s where we come in. We give our clients the tools and the training to get that extra 3% conversion and squeeze out the competition.

So, when we talk to mortgage lenders about conversion, and that’s really all they care about, we typically say shoot for 1.5% - 2%. But now, we tell them there is a 3% conversion spread just waiting to be grabbed. It’s all about what they do with the lead and we’re here to help them do it.

Internet Ad Spending Boom Continues. Will There Be Lead Provider Fallout?

Tuesday, February 26th, 2008

TechCrunch points us to more news about the growth of internet advertising:

Two reports are out today on the size of the Internet advertising market. The Interactive Advertising Bureau has a preliminary estimate of $21.1 billion for U.S. Internet ads in 2007, a 25 percent increase over 2006. (For the fourth quarter of 2007, it is estimating $5.7 billion for the size of the industry, up from $5.2 billion in the third quarter).

Meanwhile, the Kelsey Group puts U.S. Internet advertising at $22.5 billion for 2007 (IDC, as previously reported, is at the high end with $25.5 billion). Click here to read more.

Many lead providers, like LowerMyBills and Adchemy, rely on mainstream internet advertising, primarily Pay-Per-Click and Banner Ads, and these mediums will become increasingly expensive in the future.  However, ad-heavy lead providers are already experts in optimizing the media and may have enduring advantages into the future as other industries and advertisers start stepping into their space.  Others, like LendingTree, that rely heavily on traditional advertising, may benefit from the migration to internet media by other traditional advertisers.  SEO-focused lead providers are relatively unaffected by this continuing shift in the internet advertising landscape.

ZipSearch! Podcast: All About Lead Management

Monday, February 25th, 2008

Leads360 CEO Jeff Solomon recently joined David Schneider, founder of ZipSearch!, and Mike Ferree, founder of LeadCritic.com and Marketing Guru at ZipSearch!, for a great podcast about the benefits of using a Lead Management System.

Lead Generation companies like ZipSearch! are increasingly pushing their clients to use Lead Managment technology to get the most from their leads. You have heard it all from us before but it’s nice to get the perspective from the Lead Generation side. We look forward to future installments in this series.

You can find the podcast with Jeff on the frontpage of ZipSearch.com this week, and it will later be moved to their archive.

Keep up the good work ZipSearch!.

Recent Market Developments

Thursday, February 21st, 2008

Wall Street started the session today racing toward gains however the latest economic data helped confirm investors’ fears that the economy is falling into a recession.  Investors were looking for data that would be help to stave off a sharp economic slowdown, and at the same time still warrant further cuts of the federal funds rate. Investors pulled the plug on trading for gains when a report from the Philadelphia Federal Reserve showed manufacturing fell more than forecasted. This manufacturing reading is the Conference Board’s gauge of leading economic indicators and it is used to predict which direction the economy is headed. It has posted its fourth straight drop.

As a result traders are already pricing in another interest rate cut, as much as an additional half a percentage point, after minutes from the U.S. Federal Reserve’s last policy-setting meeting were released indicating that the central bank will remain aggressive in regards to  fending off recession. Most economists realize the cuts to the federal funds rate take months to work their way through the economy and may not stop the economy from weakening further.

The Dow, the NASDAQ and S&P 500 all fell sharply as a result of today’s economic news. And finally for the good news, treasury bonds improved today as we see the 10yr note improved by 3.40%, or by -0.133, closing at 3.784. Of course you know this improvement will be reflected in tomorrow mornings rates. Tomorrow may be the right time to lock, however we may see things improve more as the next Feds meeting draws near and the FOMC, Federal Reserve Board, is scheduled to meet again on the 18th of March. The last meetings notes forecast for slower growth and continued risks to the economy from housing and credit markets.

Now is the time to talk up this market information using our drip marketing feature in your LMS. Also redistribute your old leads and prepare to work them with improved pricing. Realize you need to move quickly as the market has been extremely volatile and has moved as much as 9.0% and back again in a 12 hour period recently. In the last two and a half weeks the 30 yr fixed at par went from 5.125% back to 5.875%. Chances are tomorrow we’ll see 5.75% and possibly 5.625%.

As you prepare for the influx of applications be sure to contact us so we can help! Thank you for reading and have a great evening!

Project Lifeline: Savior of those to be foreclosed?

Wednesday, February 20th, 2008

Well maybe not a savior, but definitely a helping hand at least. Six major banks have banded together and put a moratorium on forclosure proceedings for 30 days to allow borrowers to work out alternative payment options with lenders. Contrary to what one would think, this is not just for ARM loan borrowers, but all kinds.

It’s an interesting concept. This also may open up some opportunity for mortgage companies to capture good business. Read more about it here.

Be The Market Expert

Friday, February 15th, 2008

Hello all. I’d like to piggyback on what Matt is saying by throwing a Wall Street spin on things. As mortgage professionals it is not only important for mortgage lenders to know who to contact and when regarding a mortgage, but once you have the ear of a potential loan client it is important to keep their interest, capture their trust and most importantly you want to be the one to close their loan instead of the other guy. By keeping abreast of market activity, economic data, and following the Ups and the Downs of our economy, you can be the expert instead of an order taker just throwing out rates.

Wholesalers will start rolling out conforming products with a much higher loan amount than the $417,000 loan amount our industry has worked over the past 2 years. This comes as part of the stimulus program recently passed by Congress and it will only apply to specific markets where jumbo loans have reigned supreme in years past. A key factor is this loan amount increase expires December 2008, so it is for a limited time only. In addition to the conforming loan increase due to the stimulus package, be aware that the Big 3 of the stock market, the Dow Jones, S&P 500, and NASDAQ indices has hovered in the same range since the first of the year. Fortunately they have not spiraled out of control nor have they gained any ground. This is due the balancing act of rising inflation, poor economic results, and poor earnings being coupled with efforts from the Federal Reserve and Capital Hill to keep our country out of recession by creating action plans, auctioning off money, working with foreclosure relief, and reducing the cost of money by cutting the federal funds rate.Realize that around the time each meeting involving a decision on the Federal Funds rate, historical data shows us that often times treasury bonds with improve which in turn will cause lower long term rates. So in a sense when the Feds do their magic the mortgage market sees a benefit. Just yesterday Ben Bernanke, the chairman of the Federal Reserve mentioned that our economy will be sluggish in 2008 not picking up until the end of the year. He and the rest of the Federal Reserve board are prepared to cut the Federal Funds rate further. With that said be on the look out for the Feds next action. As the time comes closer use the historical data to help fuel your email campaigns. When things happen like you mention in your emails, customers will be ready to listen when you begin to advise them on the right moves to make for their mortgage.

Thank you for reading and have a great weekend!

Brokers, here is a task for you this weekend…

Friday, February 15th, 2008

Hello, and welcome to Friday. [APPLAUSE]

It is President’s Day weekend. Some of you will be at work on Monday, and some of you won’t. To those of you who won’t…Lucky. To those of you who will…Smart. A good amount of people will be off work and at home on Monday. Your task for this weekend is to set up your system so that you can reach out to all of them, and I am going to tell you how.

First and foremost, you need to identify the leads in your system with a loan amount between $417,000.00 and $729,750.00 within the United States Metropolitan Statistical Area that you paid for, but never closed. With a good lead managment system, this should be easy. With us, this is simple. If you are a Leads360 client and need assistance, call us TODAY, because this is due by Monday! When you identify these leads, go back one to two months and everything previous, truncate the logs, and throw them into your shark tank. Do an email marketing blast to them talking about how they may be able to benefit from the recent change to the conforming loan amount limit and low rates. Then on Monday morning, or Tuesday for those of you who don’t like to close business, when your loan officers come in, direct them to the shark tank and all of the new leads in it. New leads in this case of course being leads that you paid for in the past but did not close.

The loan officers love the shark tank because they have a ton of new leads to call. Tell your loan officers that you have already sent an introductory email and that they ALL need to be called immediately. Our clients who do this experience a surge in applications every time, and this is without the email marketing, and messaging the facts surrounding the conforming loan limit increase. I’m a huge proponent of the KISS principal. This is a simple task that takes minimal outside of the box thinking, and it shows results.

So, brokers, this is your homework. Whether you are using my LeadManager, or someone else’s, get to work! This is due on Monday, don’t forget.

Conforming loan limit is $729,750.00 as of now…

Wednesday, February 13th, 2008

This is great news! The time is NOW to capitalize on this and close business! Call Leads360 today to discuss how our Enterprise LeadManager software will help your company close more loans. Drip email campaigns for old unclosed leads, and best practices techniques to capture new business, we can help you WIN it all. We’re fired up, and you should be too, this is good for all of us!

It’s flattering…

Wednesday, February 13th, 2008

…when your competition has to drop your name left and right, and use their version of facts to justify their claims. When I first came to Leads360 I decided to take some time to get to know the competition. A simple Google search brought many of them to the surface. One in particular actually has Leads360′s features listed in comparison to theirs. Of course, theirs is full of green check marks, and Leads360′s is full of red X’s. It’s a blatant falsehood, but the mention of Leads360 on a competitors website says something. I asked why we don’t send a cease and desist and my inquiry was met with a smile and a laugh. I guess it’s not a huge deal. I can live with it.

This morning, another one was brought to my attention. My jaw dropped. I couldn’t believe it, then again, this is business and sometimes, some companies need to…umm…reach down to a…lower level, to distract business from us.

One thing I am proud of, is the business we turn away. Yes, the business that we turn away. Not because the company is not good enough to do business with Leads360. Hardly. Because the company, we feel, is better off working with a competitor based on a full analysis performed on their operation, their hardships, and their needs. I know that our competitors read this blog (hey guys what’s up?!?!), and I know that they can name clients of theirs that we have referred over. Let’s play nice together, we’re all here to help companies close more leads and there is enough room on this mountain for more than a few of us. Just be a little more classy…I’m not saying…I’m just saying.

We’ve taken business from competitors, of course, but not by groveling and throwing out “my dad is better than your dad” schoolyard low blows. Our Sales 2.0 method assures that business won is based on merit, not Sales 1.0 tactics of deceit, and throwing competitors under the bus.

To prospective clients who read this blog, I would recommend that you do your homework. Identify your pains, and then find the doctor who is a specialist in that specific area. You can only do this by talking to all of the top Lead Management companies. My advice would be to sit back and listen to what everyone has to say, and find that one company who can cure your problem. We all do it a little differently.

To our competitors who read this blog, don’t mislead consumers about Leads360 or other companies. If you cannot win business based on what your company has to offer take that as a queue to make your product better. Don’t take that as an opportunity to create false facts about Leads360′s LeadManager. For the record, we practice what we preach, and we took those opportunities to make our product and our service better. There is a reason we are the number one LMS in the industry, and it is not because we lie to prospects to win their business.