From time to time I spend the evening playing with Google Trends and Microsoft’s AdLabs. There are a few keywords that I always check in Google Trends. The first is Mortgage Leads and the second is Mortgage Refinance.

Here is what I found: According to Google Trends there is a decrease in searches for mortgage leads. Not really all that surprising, I guess. Especially with so many brokers and LO’s shifting out of the mortgage industry.

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The first annual leads2007 un-conference has come to an end and the overwhelming response was that it was a great success.

I want to briefly recap day 2’s discussions for those of you who could not attend.

The first session was moderated by Noel Collins and discussed the lead buying process. Here are few points and key topics that were discussed.
How many leads should you purchase to determine the failure or success of a lead provider? Many people agreed that 50-100 leads over a one month period seemed to be ample time to gather enough data to judge a lead provider. Many added that it depends on the number of LO’s with the company, but all added that a 30-60 time frame is needed to gather the correct data to analyze and base judgement.
Are affiliates bad? The consensus was that yes they could be bad and typically are if they are mismanaged. Providers must be active and hands on with their affiliates to have success and minimize fraud and the overselling of leads.
What are the key questions that a buyer should ask all potential lead-gen companies? Does the company or their affiliates participate in coregistration? What methods do they use to generate their leads? Ask for references. Especially ones from company that similar in size to you. Is the Lead Provider licensed in the states that you are buying in?
The session evolved into talks about the formation of a third party organization that would evaluate and vet lead providers in the space. Basically giving lead providers stamps of approvals.

The big take away from this session was the discussion about the need for a third party organization that could facilitate the grading of lead sellers and buyers as well. Yes, lead buyers too. A number of the providers expressed the need for the vetting of lead buyers so that they too can make optimal decisions when building their client base. They would like to have an open source to file complaints about lead buyers that do not pay their bills. At first glance I was concerned that this would encourage or foster a “you complain about me I am going to complain about mentality”, but maybe this is a good thing. I think  it is only fair that the lead sellers have a place to judge or complain about dishonest buyers just like many of the buyers want a place to judge or complain about the sellers.

It has been really great to see many of the top tier sellers and buyers agreeing on such standards and initiatives. I really feel the desire to clean up the industry and rebuild its reputation from all the parties involved.

Day 2, Session 2

The topic of this discussion was titled the “Interaction between Publisher, Advertiser and the Consumer.

The general discussion revolved around ideas for improving the customers experience.
A few of the questions that were asked included:
Is the level of questioning sufficient?
Would the increase of more specific questions really improve the customers experience?
What is the optimal number of times a lead should be sold?
Should all companies be required to show which companies the lead has been matched with?

From there the discussion broke out into new opportunities to improve the customers experience. The idea of flipping the scenario was discussed heavily. For example: Based on the consumer profile banks would compete for the consumers interest. Once a bank was chosen by the consumer, based on product offerings or rates only then would the contact data be given to the bank/s. The idea of giving the consumer more control over the process was a hot topic.

Out of that discussion came the questions does the lead generation game or processes need to change to really make a difference in the consumers overall experience?

Really great discussion took place during this session again and the future of lead-gen space will surely be effected one way or another by what was discussed here.

Day 2, session 3

Thinking About a Telemarketing Front end.

Another great session that reviewed the positives of implementing a telemarketing front end to your sales process. The room discussed and reviewed the pitfalls and challenges that may arise when implementing this strategy.

Day 2, Session 4

Briefly discussed the ability to capitalize on web 2.0 marketing and lead generation techniques. Blogs, social networks, notification networks (Twitter) were all discussed during this session. The room also discussed the different experiences people had with these types of platforms and services and how they can beneficial and cost effective.

Please look forward to Leads2007 podcast which should be available in the next few days.

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Leads2007 is currently under way! Discussions between lead sellers and buyers are plentiful and meaningful. Being that this is the first conference or “unconference” of its kind No one knew what to expect. We all only hoped that there would be something to take back to our own businesses and capitalize on and from the first day alone, this has far exceeded any expectation. Those of you who were on the fence and chose to stay home are unfortunately missing out on an industry and business changing event. I do, however want to recap today’s events and discussions for you.

The first discussion involved improving the consumer experience. Bill Rice spurred discussion by first presenting a large yellow square sheet of paper with a black dot in the middle and asked the audience to tell him what they saw. The exercise encourage the people to be more observant to the whole, complete process and not just the obvious. So many times lead buyers/brokers and lead-gen companies tend to focus strictly on what directly influences profits and do not review the complete picture. Have we been throwing the consumer experience to the way side and strictly focusing on what will make us a dollar today rather than executing practices that will not only generate a sale today but also tomorrow. I think we all have to admit that we all fall victim to this on one level or another. Currently there are buyers that will distribute a single lead to multiple LO’s within an organization in hopes have increasing the odds of a conversion. On the same token there are a number of lead sellers that are strictly focused on generating the highest volume of leads and sacrifice the consumers overall experience for an extra lead sale.

Discussions included standardizing the lead-gen process, matching the consumers with the appropriate buyers and at the same time informing the consumer who to expect phone calls from, a standardize lead grading scale based on analytics and feedback and lastly, lead providers gather consumer feedback regarding their experience. Proper loan officer training was also a popular discussion.

An interesting statistic from Forrester research, via Colleen of LowLender, stated that 70% of the people that went online did not intend to complete the process online. This bring up a number of questions and concerns as well and I would love to here your thoughts on the statistic.

The second session included discussions which detailed what technology’s currently in the market place help improve processes?

Loan Management Software was the voted the most influential. Unfortunately, many LMS users are not effectively using the software or know how to implement the software properly into the business. This was expressed by a number of different lead-gen companies. The crowd voiced a small wish list that would help improve many of the current LMS solutions in the marketplace. This included a wider array of analytical reports and closed looped sales reports from lead to funded. A few of the lead-gen companies requested standardized reports.

The 3rd session discussed different approaches to maximize relationships.

This included ideas about placing more ownership on the LO’s by mandating that they pay a portion of the lead cost or even rent seats within the sales organization. Most were agreed that this was a difficult model to incorporate and expressed that this may do more harm then good. Discussions included email marketing, remarketing, the request for referrals and customer service follow up teams.

Session 4 asked the question “does technology increase conversions?”

This included talks about automated pricing engines and the appropriate ways to implement the tool. The question was also asked, “are we simply implementing technology for our own ease or is it actually to improve the overall customer experience?”

A huge discussion broke off from this topic which include the industry wide standardization of date returns and feedback delivery from each of the LMS’s to each of the Lead-gen companies. Every one was in agreement that this could benefit all parties involved and many lead-gen companies pledged their allegiance to the idea. The question still remains who will actually follow through with the coordination of the integration.

Lastly, session 4 discussed the different points of views with the lead ecosystem and brought forth the need to be aware of the different views. It was interesting to see the polar opposite views of the lead-gen companies and the lead buyers. Each demanded the other party need to improve and in my opinion both are correct. The session encouraged partnerships between the two groups rather than working against each other.

Over all the first day was excellent and informative and I look forward to tomorrow.

We will be posting podcast of a the session recaps tomorrow so look out for those. I am exhausted from today and am about ready to fall over so please pardon any grammatical errors in the post. I think by now many of you have excepted the fact that I am a horrible writer anyway so you probably have not noticed any difference anyway.

It’s official, the Morinsight Forum is live today.

I am really excited to bring this new feature to you today. My hope is that it will be a place of open discussions about lead providers, lead management, Internet marketing, real estate and much more, without all the spam.

There are currently a number of mortgage and real estate forums on the Internet, but the problem with many of them is that they are not monitored for spam comments. My opinion is that the creditabilty of the forum is lost when the spam comments enter. So for this forum to be useful each registration will be reviewed and all comments on the forum will be monitored for spam. When signing up for the blog please use your company email address and also list your company website.

I encourage everyone to register. I think it will be beneficial to all.

 Register Now.

Is the added social security number on a lead worth the extra $10 to $15?

I don’t think so.

I guess to really to answer this question we would need to ask a few questions. What type of person would put their SS# online? Is it someone highly educated in the loan process? Is it someone who knows nothing about the loan process? Is it someone who thinks that if they put their SS# on the form they will receive better service? Is it someone complete oblivious to security issues and have no idea what they are doing? Finally, is it someone more interested in a loan than someone that doesn’t put their SS # on the form?

I would have to argue that the premium or premier lead, that includes a SS #, are no better than the lead without the SS#. We tried this type of leads out and found that they did not convert better than the typical lead. In fact, most of the LO’s that received them found that the borrowers were less savvy and weren’t really aware that we were going to pull their credit. Of course you can argue that a less savvy person is an easier convertible lead, but like I said we did not see a difference in conversions. I also find it interesting that the lead provider will tell you to give these good leads to your top performers. Why would a top performer need a better lead? Our top performers can call out of a phone book and maintain a 3-5% conversion. Well, in our case we followed the advice of the provider and still did not see a difference.

Now some companies are coming out with a Credit Band lead. This is a lead where the credit grade of the lead is verified with Experian or Equifax. The providers will verify that yes this person has a credit score between 680 and 720, and yes this person has Good Credit and then sell you a good credit lead. I like these types of leads because if you are paying a premium for specific credit grade and don’t receive it or the borrower thought it had a 720 but really has a 620, your going to be upset. These Credit Band leads will alleviate these issues. I believe these leads can be sold at a $2 to $3 premium and still have value. However, it really all depends on the mortgage shop of course. You may feel that this is worth nothing because you take all credit types, but for those only buying Good or Excellent credit types this may be the lead for you.

Now back to the Premier leads or SS# leads. Have any of you had more success with these types of leads over the classic leads? If you have had success with the premier leads, was the ROI higher than the classics or lower?

This post is for my new lead buyers. You older guys should know this, if not, get you act together.

Amongst the many indicators that we look at on a daily, weekly, and monthly bases there are always others that slip through the cracks. Some lead buyers look primarily at conversion ratios, some look at cost to funded ratios, and some look at cost of origination and this list goes on and on. I came across a report from another company where they looked specifically at the conversion Application Taken to Funded. Itwas a large company too. So to say the least, I was shocked. This ratio should be looked at and should not be left out of your list of indicators, but should not be relied upon to judge the success of a lead source.
There are many reason why, but I will only mention one. A lead provider should be solely responsible for delivering a lead that falls into your filters, but they can’t be responsible for the failure or success of your processing department. However, if you see a lead provider that has an average or higher than average Contact Ratio and a below average Sent to Processing or Funding Ratio, there is something going on there. They are more than likely sending you leads that were marketed to under false pretenses or are out of your set filters. This is why all indicators are important and you shouldn’t exclude any of them.

So having said that, there are many different indicators you should look at when grading your providers, but I think there are only a few that give an accurate depiction of the actual success of the leads by themselves. The bottom line, to me, is not necessarily conversions, its cost of funded and from that you get ROI of a lead.
Example:
Lead provider #1 is giving you leads at $45 and there average loan size is $300k and a Funding Ratio of 3.5%.
Lead provider #2  is giving you leads at $36 and the average loan size is $332k and Funding Ratio of 3.0%.

Lets say we buy 1000 leads from each company:
#1 we would have funded 35 loans
#2 we would have funded 30 loans

#1 would have given us a $1,286 CPF
#2 would have given us a $1,167 CPF (even though the conversion was lower.)

Before I go any further, I am going to make two fun assumptions for the sake of simplicity. 1. We are receiving 4 points on every loan. 2. We have no over-head. (ha, wouldn’t that be nice:)

Results from Lead Provider #1 would be (Average loan amount $300k):
$12,000 gross x 35 loans = $420,000 – $45,000 (Cost of Leads) = $375,000/$45,000= an ROI of 833%
Results from Lead Provider #2 would be (Average loan amount $332k):
$13,280 gross x 30 loans = $398,000 – $36,000 (Cost of Leads) = $362,400/$36,000 = an ROI of 1007%

Now if you were strictly looking at Conversion ratios you may have allocated funds to the wrong provider. Clearly lead provider #2 had a slightly lower conversion ratio, but because is CPL was lower and its average loan balance was higher, it was able to generate more revenue for the company. I must say that most of the time conversions are in line with ROI, but in this instance it was not.

This is why it is important not to leave out any indicators when evaluating a lead source and not allow an indicator or conversion to get lost in the “mist”.

(Thanks to John Challis for bringing a great point to the forefront)

In this post I am going to continue to present statistics of Internet usage. My goal is to show you factual data of the changing market. Like I alluded to in the previous post, I think most of these facts can easily be assumed, but it is always good to back up those assumptions with real facts.

I pulled the following stats from the Digital Center .

• For the first time, the percentage women Internet users was higher than the number of men in 2006.
• More than three-quarters of Americans are Internet users; 77.6% of Americans age 12 and older go online.
• More than 2/3 of Americans (68.1%) use the Internet at home, a substantial increase from the 46.9% of users who reported home Internet use in 2000
• Among users age 17 and older, almost 2/3 of the Internet users (65.8%) consider the Internet to be very important or extremely important source of information for them. This is up from 56.3% in 2005
• The number of online purchasers rose to its highest level in the history of the study (51.1%)

The Internet was created in the late ’50′s and grew to encompass the WWW in the late ’80′s. The generation Y group,  also known as the “Net Generation” a term created by Don Tapscott in his book “Growing Up Digital” , and who are people that were born between 1980-1994, were born into this technology. This group completely relies on the Internet for it information. In fact, I would guess that many have rarely ever picked up a phone book to find a phone number or address. This group holds the availability of choice in very high regard. Don Tapscott states that “N-Geners are not viewers or listeners or readers. They are users. They reject the notion of expertise as they shift through information at the speed of light by themselves, for themselves. It is difficult to convince them that they must have anything. Other industries can learn what the software and video game industries have already adopted – make your product free to use for a limited time. If it’s use becomes integrated into the N-Gen routine, making activities faster, brighter, and easier, then the product becomes indispensable and the companies can begin to charge.”

This information establishes a new user and a new consumer you need to be concerned about when think of where your company is going to be in 5 years. Generation Y is coming to the forefront in the Real Estate and Mortgage market. These are your future customers and may even be your customers now.
I am going to leave it there for this post and will pick up here asap in Part 3.

Part 1
Part 3