Here’s what our own Nisheeth Singh had to say about the study:

As you may have read on Lead Critic today, we released our newest research regarding the impact of call frequency on sales lead conversion.

To misquote a famous author: “Elementary, my dear Watson”. Sir Arthur Conan Doyle’s written works never actually saw this phrase although the first and second parts of the phrase were seen in close association during conversations. But I digress.

As many of you opined above and is the central premise of the paper (found here), sometimes the most obvious and logical actions are never taken by lead buyers. I don’t necessarily understand why they don’t but I do revel in the fact that it means significant upside for those that choose to engage with their leads smartly.

We conducted the study based on several million leads that our clients tried contacting over a period of many months to have as diverse a data set as possible. We studied the effects of multiple call attempts all the way to 20 and I’ve published the entire results of our study below just to whet your intellectual curiosity. Some explanation is in order:

* Column 1 denotes the call attempt

* Column 2 denotes the percentage of ‘Contactable leads’ contacted – this is key to understanding the study and is NOT the same as Contact Rate. This means that the data set excludes any leads that were never contacted. This metric is a percent of the remaining leads in our study which we define as ‘contactable leads’

* Column 3 denotes the percent improvement in the ‘% of Contactable leads contacted’ metric for each successive attempt over the very 1^st call attempt

* Column 4 denotes the percent improvement in the ‘% of Contactable leads contacted’ metric for each successive attempt over the preceding call attempt

Contact    % of Contactable   Improvement       Improvement over

Attempt   leads contacted    over 1st attempt    preceding attempt

——————————————————————————

1                              39%

2                              72%                        87%                        87%

3                              83%                        114%                     15%

4                              88%                        128%                     6.5%

5                              91%                        136%                     3.4%

6                              93%                        141%                     2.1%

7                              95%                        145%                     1.5%

8                              96%                        148%                     1.1%

9                              96%                        150%                     0.8%

10                           97%                        151%                     0.6%

11                           97%                        152%                     0.5%

12                           98%                        153%                     0.3%

13                           98%                        154%                     0.3%

14                           98%                        154%                     0.3%

15                           98%                        155%                     0.2%

16                           99%                        155%                     0.2%

17                           99%                        156%                     0.2%

18                           99%                        156%                     0.1%

19                           99%                        156%                     0.1%

20                           99%                        157%                     0.1%

As you can see, the benefits of calling start trailing off pretty steeply after the 5^th or 6^th attempt, we chose to prescribe 6 attempts as the cut-off. I beg to defer with LeadCritic in that this is a very statistically relevant study with a data set this size and of this heterogeneity, at least at a high level. I do agree though that to get maximum benefit from a study like this, one should conduct the same study but specifically for their own sales team to understand the effect of call attempts on their contact rate.

Cheers!

Nisheeth Singh

Director of Strategic Intelligence, Leads360

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?

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…

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.

In an ever-changing mortgage environment, the days of printing money are over; buying and converting internet leads is getting harder and harder.  Here are the 10 things you can do to grow your company in a tough business climate using internet mortgage leads:

1. Understand Leads: Many mortgage brokers and bankers rush into buying leads without thinking their reasoning through.  Simply put, buying mortgage leads is buying the contact information of people who have expressed some interest in getting a loan.  By receiving this information you are not getting done deals delivered to your salespeople.  These potential customers are actively shopping many different loan providers and offers.  Getting the lead should be the beginning of your sales strategy, not the end.

2. Understand Lead Buying:  The purpose of buying leads should be to increase your sales flow and revenue.  If you want to increase your revenue you should have a robust lead buying program.  If you are not buying leads it should be because you are not equipped to utilize electronic leads or because you distrust the lead sources.  Unfortunately, many brokers and bankers do not buy internet leads for other reasons.  Maybe they are intimidated or have heard horror stories. Perhaps they have been burned by a lead provider in the past. Prudent lead buying isn’t rushing in blind; you must have proper planning, staffing and software to distribute and track leads to conversion.

3. Analyze the Leads that You Buy: Research shows that mortgage companies which implement standard best practices achieve a very good return on investment (ROI) on the leads that they buy.  That said, not all leads or lead providers are of the same quality or appropriateness for your business.  To be successful in lead buying you must monitor and analyze the performance of leads that you receive.  That means comparing lead providers and monitoring the quality of leads over time.  You must track which lead providers give you the best leads at the best price.  To get that information you need accurate data and reporting.  If you don’t have easy access to data about your sales performance, you need lead management software to measure your ROI.

4. Measure Lead Quality:  The simplest way to understand lead quality is that it consists of two components: contact information and an indication that this person has an interest in your product.  It is imperative to track the quality of your leads.  What percentage of leads are you contacting?  How many did you take an application on? Which converted into loans?  If you can’t answer these questions quickly for each lead provider and track their performance over time, you don’t have the information that you need to make good lead buying decisions.  These metrics can be easily obtained using lead management software.

5. Work Leads Faster: Once leads are sent out, you are in a race to contact them. Data suggests that when leads are contacted in the first 15 minutes are 50% more likely to close. That means you need to route leads to the right sales person as quickly as possible after receiving them. This can only be achieved by intelligent lead distribution software. You should consider having two teams as well, one to make initial contact and one to sell loans. This will dramatically improve the speed to contact and keep your efforts more streamlined.

6. Monitor Loan Officer Performance:  A successful lead program is only as good as the sales people working the leads. Getting good people is the first step, but ensuring that they are working leads quickly and effectively is the key. Manage, monitor and analyze loan officer performance daily. How fast are your people contacting leads?  How frequently do they disposition a lead?  How many calls are they making each day?  Are they nurturing leads? All of these questions can be easily answered if your leads are stored in a lead tracking software.

7. Nurture Your Prospects: Not all potential customers are ready to get a loan the first time you call them, but research shows that more than 40% eventually close. It is important to develop lead nurturing programs to cultivate leads that are not ready to buy. This means communicating with them regularly with relevant and useful information. Whether it is a few weeks later or twelve months, when you send emails, do follow-up calls and direct mail, prospects think of you when they are ready to buy.  A good lead management system can turn cold leads into customers for life.

8. Use Lead Management Software: The decision to start buying leads for the first time or after you’ve been burned is a big one. The mental shift required for your organization to be successful is also significant. The processes you implement must be followed by everyone in your organization for the program to be successful. Using lead management software enables you to develop a rigid workflow and track every aspect of sales pipeline. You establish an organization of accountability and make it easy for people to follow the rules that work. Without these controls in place, you cannot scale with an internet lead program.

9. Uniform & Disciplined Approach: Combining the right leads with effective technology is critical. But, without a consistent and disciplined approach to working those leads, you are setting yourself up for failure. Like most things in business the 80/20 rule typically applies. 80% of your deals are being done by 20% of your workforce. You can increase the effectiveness of your team by implementing a culture of discipline and uniformity. Implement and enforce proven processes and watch your conversion rates increase across the board.

10. Hire a Program Champion: You may be too busy steering the ship to focus on these nine commandments every day. Implementing a successful internet lead strategy requires corporate buy-in, discipline and hard work. And, if you want to move with velocity, you need a champion to manage it. Having someone in your organization that is accountable for implementing and managing your lead program will payoff in short order.