Coffee for Closers | Leads360 Sales & Marketing Blog 

A price has been put on the potential Fannie and Freddie bailout. The price tag could be as much as $25 billion. It is not a fait accompli, however. Peter R. Orszag, Director of the nonpartisan Congressional Budget Office put the odds at better than half that Fannie and Freddie will not use need any cash. Critics of the bailout maintain that homeowners should be the first to benefit from any taxpayer help. But if it is approved by congress, restoring confidence to investors in the U.S. and internationally is the bailout’s aim.  We will continue to closely watch the developments at Fannie and Freddie along with our mortgage broker and mortgage banker clients.

DoublePositive has announced a bevy of new products aimed at providing increasingly customized hot-transfer leads for their clients.  The new products include:

PositiveExpress ARM – Hot leads facing an ARM reset.

Name-Your-Filters – Hot leads can now be filtered on the fly just as you would filter traditional leads in Leads360.

Name-Your-Script – This is certainly the most premium hot transfer lead availible.  DoublePositive will customize the leads as well as the contact and qualification process, just for your company!

Visit DoublePositive to learn more.

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.

Image courtesy of GapingVoid 

Anyone in the “Lead Ecosystem” knows that it is a complicated world. 

Lead Providers have a complex formula for generating, pricing, filtering, and distributing leads, in addition to all the integration headaches of providing leads to customers by email, spreadsheet, or through one of many Lead Management Systems.

Meanwhile Lead Management companies have to work with the Lead Providers to make their mutual clients as profitable as possible, while keeping everything running smoothly.  Lead Management companies have to work with hundreds of lead providers, client self-generation and importing of leads,  and exporting those leads to a 3rd party software, such as a Loan Origination System or a client management system.

As convoluted as life is for Lead Providers and Lead Management companies, it’s worse for clients and consumers.

Companies that buy leads, use a lead management system, and otherwise integrate their operations with the “Lead Ecosystem” have a steep learning curve to contend with.  Companies which are used to doing in-house marketing, generating their own leads, gathering referrals, and distributing them on paper, suddenly have to contend with managing multiple vendor relationships–which are all intertwined.  Also successful Lead Buyers have to adjust their workflow and sales process to fit the requirements of working with Internet leads.  That is a lot of learning that a client has to do, before being able to reap the benefits of the Lead Ecosystem.

Consumers often have it the worst.  Consumers have little or no idea about what happens to their data when it is submitted to a lead provider.  They are often totally unprepared for the sales process which they will be exposed to, uneducated about the products which they are interested in, and unequipped to make intelligent decisions.   An unqualified, paralyzed, traumatized, frustrated, or otherwise unreceptive consumer is always going to be the toughest sell.

How do we simplify the Lead Ecosystem for everyone involved?

If you’ve been in or around the military, you’ve probably heard this before.

Improvise, Adapt, Overcome.

This has been adopted as an unofficial motto of the US Marines, and many of you may remember hearing Gunny Highway say it in Heartbreak Ridge. The Marines used to be the bastard child of the armed forces. Heck, they were conceived in a bar in Philadelphia one evening, and got Army hand-me-downs. But, they made it work, they improvised, they adapted, and they overcame to become arguably the most feared military force the world has ever seen. I’m starting to hear my friends in the mortgage industry say this more and more often these days. Improvise, Adapt, Overcome. What does this mean to you?

To me it means a lot of things. Specific to this blog, it means finding what works, and doing it until the whole notion of IAO becomes second nature. What worked last year does not work this year, and what works now is a radical departure from what worked last year, to most. What have you done to improvise, adapt, and overcome?

I can tell you what Leads360 has done. We’ve changed our entire model for the most part. We’ve brought on talent from several different aspects of the mortgage industry; those who have run successful shops, those who have worked with lead vendors, and those who have worked on the front lines doing loans. We’ve had to adapt to the current market and overcome monumental obstacles. We’ve done so and continue to do so. Understanding that you are currently doing the same, we’ve prepared a series of Best Practices for you, for 2008. We know what improvisations and adaptions need to be made in order to overcome. Give us a call, shoot us an email, or stop by the office. We want to help you IAO.

The Lead Critic made a very good post earlier this week about sharing data with your lead providers. As a lead management system company, obviously we have a good idea of overall performance. I say overall performance because it would be unfair of me to say lead performance, because a lead is only one ingredient in the mix. More on that some other time…

From 2004 – 2006 I spent my week days selling mortgage leads to loan officers, brokers, and lenders from coast to coast. I sold leads to the mom and pops shop around the corner, and to a handful of the largest direct lenders in the nation. Out of well over 100 clients, only a few of them would share data with me. How many loans have you closed out of the leads I sent you? What is your contact rate? What is your application rate? How about speed to contact, how long does it take you to respond to a lead on average? Getting an answer was like pulling teeth. I think it was a mix of “I don’t want to tell you I’m doing great because you’ll jack my prices up” and “I don’t want to tell you my metrics because I am afraid others are doing way better and I don’t want to hurt my ego.” Whatever the reason, my intention for asking was simple: With your information, I can make my product better.

It’s almost 2008, advertising online is pretty mature, and it is easy to tell what campaigns are producing quality leads, and what campaigns are not. But the only way for a lead provider to know what campaigns to target is to tell them what is working, and what is not. Just so you understand how this works, most lead providers that I know of can target a specific lead back to it’s specific source. Let’s say that a lead provider has 250 campaigns running at any time online. If you send them a list of leads that were pure crap, they can track them back to where they originated. If most of them came from a specific campaign, they can pull the plug on that campaign and end your misery.

Let’s go out on a limb and say that if you do share this information, and the product gets better, your prices DO go up. So what? You’ll be closing more loans, you’ll keep your loan officers happier and more amped to get on the phone with a lead faster, and at the end of the day your life will be easier. So you spend a few bucks extra per lead, it’s not the end of the world. When a lead provider is able to produce better leads, you’re going to win in the end, but if you do not share this information, you’re only going to shoot yourself in the foot chasing not so great leads around. The rewards severely outweigh the risks in this scenario. Do yourself a favor and tell your lead provider how you are doing. If you’ve ever filled out a survey after buying a car, a large TV, or even called one of those “How Am I Driving?” 800 numbers, you’ll know why…

Courtesy of Lead Critic, we heard that our good friends at DoublePositive have announced that they have taken an additional $4M in funding to continue to grow their business. We know that our customers have been satisfied with DoublePositive’s approach and we know that they will continue to thrive, despite the current market conditions. Congratulations!

So internet spending is still going gangbusters, including 26% rise in spending year to date…

NEW YORK (Reuters) – U.S. Internet advertising revenue rose 25 percent in the third quarter to about $5.2 billion, a new record, according to data released on Monday.

The report by the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers LLP showed online advertising revenue has hit new highs in each of the first three quarters of 2007.

Revenue for the first nine months of 2007 totaled $15.2 billion, up nearly 26 percent from the $12.1 billion recorded during the first nine months of 2006, the report said.

“The continued robust growth of the industry indicates that marketers increasingly understand and appreciate the benefits of interactive advertising,” IAB Chief Executive Randall Rothenberg said in a statement. “Marketers large and small have come to accept digital media as the fulcrum of any marketing strategy.” Click here to read the article.

This article caught our attention as internet advertising is how a lot of our partners do their marketing.  As ad spending on the internet rises, the costs of internet advertising real estate will also rise, although not necessarily in proportion.  As spending and competition for spots on wide-net popular internet sites increases, the cost of doing business for internet lead generation companies is increasing steadily, or at least for those who are dependent on banner ad and CPC expenditure.

Companies that NEED to do internet advertising are running into an ugly predicament:  more and more big companies, with large ad budgets, increasingly WANT to do more advertising.   While the internet maintains some advantages for smaller companies (hyper-targeted ads, low minimum expenditure), the prime mainstream ad spots will be increasingly eaten up by the big boys of the ad world; Toyota, GM, Ford, Nike, Honda, Apple, Microsoft, Fox, and so on.   This movement will push lead generation companies to be increasingly niche or increasingly large, or both.   Either way, it will challenge and push the industry to innovate, or else.

Our own Lead Guru has written a great post about the hidden opportunity in bad leads, over at Lead Critic.

Purchased internet leads have a bad phone number percentage that ranges from 8% to 22%. Do you just return these leads without trying to salvage a deal? NO, NO, NO. Email that borrower assuming they entered in the phone number incorrectly intentionally.

Read the whole post here.

We devote a lot of our time and resources to helping our customers get to leads faster and more efficiently than their competition. In other words, day in and day out, we help our customers do the same thing that everyone else is doing, but we help them do it faster, better, and smarter. Lead Guru brings up a good point. There is often an equal or greater opportunity in knowing what your competition is NOT doing. Leads with bad phone numbers are likely to be ignored or given lower priority than those with valid phone numbers. Thus, for any lead that is sold to multiple brokers, a lead with a bad phone number may result in a higher chance of closing a deal. As Americans increasingly spend more time online, B2C sales must adjust their workflow to reach their customers in the way that they would like to be reached.