IAC falls short of analyst expectations due to LendingTree. IAC net income dropped by 24 cents a share, but excludinga few verticals (LendingTree) IAC actually beat estimates by 2 cents.

LendingTree revenue fell 41 percent to $63 million because of the deteriorating mortgage market and a decline in real- estate values, IAC said. The unit posted an operating loss of $5.6 million.

We can now have a little more insight to last months changes.

Commenting on results, IAC Chairman and CEO Barry Diller said, “With the exception of LendingTree, this was a satisfactory quarter for IAC. Trends at our businesses are good, and particularly so at HSN, where I believe that Mindy Grossman and her team have now become acclimated and are beginning to demonstrate the great retailing smarts that we knew they were capable of.”

This is from CNN Money:

TRANSACTIONS

Q3 2007      Q3 2006     Growth
Revenue  $ in millions
Ticketmaster                              $301.3       $265.5        13%
LendingTree                                 63.0        106.0       -41%
Real Estate                                    13.8         15.9       -13%
ServiceMagic                                24.6         18.5        33%
Intra-sector elimination              (0.1)         -           NM
$402.6       $405.9        -1%
Operating Income Before Amortization
Ticketmaster                            $61.9        $57.0         9%
LendingTree                              (3.2)        18.8         NM
Real Estate                              (3.9)        (6.3)       38%
ServiceMagic                              5.4          6.0       -10%
$60.3        $75.6       -20%
Operating Income (Loss)
Ticketmaster                            $54.0        $50.5         7%
LendingTree                              (5.6)        15.2         NM
Real Estate                              (4.8)        (8.0)       40%
ServiceMagic                              4.6          5.1        -9%
$48.2        $62.7       -23%

Hold on folks the ride is far from over.

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Bill Rice of Kaleidico recently posted his Lead MarketWatch widget and referenced the increase in quality (application rate) for LowerMyBill leads. He points out and he is right that there has been a large amount of LMB bashing and yes much has come from this blog, but is there really an increase in quality from LMB.

I sincerely hope that there as been an increase. Any time lead quality improves it is good for everyone, obviously. Now, I can’t tell you if quality has improved or not, but I can tell you that they are spending money on advertising. They currently are spending around $12.5 million a month on media, you can also see on this report that LendingTree is continually in the number one and two spot for ad spend. You can see past reports here.

So we know we have to take a few grains of salt with the Lead MarketWatch widget, because it doesn’t tell you the peramaters for each provider on the list. We do not know how many leads, what states and what type of lead is being used to measure the app rate, but I guess on some level you can derive some information from it. In reality, it is the only source for any transparency into the quality of lead providers, good or bad.

So with that said, I would like and I am sure others would appreciate LMB buyers to comment on the quality they are seeing. How is it? Are you seeing an increase in conversion or ROI with LMB leads.

Anybody want to comment?

(Little disclaimer for my new buyers and readers, please take the comments with a few grains of salt and research your lead providers on your own too.)

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Does anyone else find this ironic? (By no means scientific or authoritative, but ironic)

LowerMyBills’ Vendor Perspective:

LAS VEGAS, Sept. 21 /PRNewswire/ — TARGUSinfo honored LowerMyBills.com, an Experian company, yesterday with the Best in Lead Quality Award at the Online Lead Quality Summit here at the Palms Hotel and Casino. The Summit, sponsored by TARGUSinfo, is dedicated to helping companies drive profits through successful online lead generation and improved lead quality.

LowerMyBills’ Client Perspective:

Does anyone know how i can get out of my contract for lowermybills

It is in my 3rd week with them and probably over 75% have been d/c numbers, they say I have to be with them for 31 days before I can cancel and also after 31 days I have to send a letter of cancelation [sic] that takes another 31 days.

Hmmm…At the very least it demonstrates that long term, "lock-in" contracts are not trust or performance-based. And I am sure, what I am guessing to be a small account, is not threatening to impact LowerMyBills’ strategic media buy forward contracts.

I have written a number of post regarding the movement of sales reps within the lead industry. Why you ask? I find it interesting to watch and make note of these changes because where they end up says something. Do you think that the more experienced reps are going to choose a company that isn’t going anywhere or that don’t have a solid product? Of course not, they are going to choose companies that have up side potential and that sell a quality product.

The same goes for people who choose to leave. Are they leaving simply for a change or have they lost faith in the company or product?

With that said LowerMyBills “very first hire”, from what I was told, has chosen to move on. Scott Shanker, whom LowerMyBills hired from GetSmart and who brought many of the large accounts that LMB still has. Accounts such as Quicken, Home Loan Center and Ameriquest were all created by Shanker.

My team generates the majority of company revenues; also responsible for the planning and deployment of all initiatives associated with the national client base. -Shanker

Shanker has chosen to to team up with Los Angeles based LeadPoint. For LeadPoint, which practically made up of all ex-LMB employees, this is a big catch. What’s in it for Shanker and why did he go to LeadPoint. Well, I don’t know for a fact, but I would speculate that they brought him on board to whip the sales team in shape and generate sales prior to the speculated liquidation.

There seems to be an ongoing exit of sales reps and key members of the LMB team. Moral is said to be lower than normal and I was even told from a lead provider that they had interviewed everyone at LMB except the CEO. Now this was probably an over statement but apparently the resumes are out.

This is clearly a transition period for many of us and LMB is clearly included in this bunch.

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I find that so many mortgage companies sell themselves short with their email campaigns. I am not only talking about their lead-gen campaigns, but also their client retention or introduction emails campaigns.

Email can be extremely successful and very cost effective, as long as you do it right and thank goodness it is really not that difficult to do it right, it only take a little effort. The most important factor is making the email look professional and personal. The hard part is not going over board with the professional feel and not getting too personal. More on this in a second.

Not to divert the subject too much, but I want to point out an excellent email from a lead provider. First, email is an excellent tool for lead-gen if it is done right and there are a number of providers that participate in email marketing but here is the key. When vetting a lead provider, please please ask for an example of their email campaigns. If they cannot provide the examples you should question their tactics for a couple of reasons. For one, they probably have affiliates generating the email creative and those typically look something like this:

—– Original Message —–
From: Casandra
To: [your harvested email address]
Sent: Friday, August 27, 2004 9:36 PM
Subject: Re: and he said even

Fri, 27 Aug 2004 14:38:08 -0600

Dear Sir:

I hope you enjoined the last morudtgage lowban you got from our company. We strongly recommend to rece finance at 3.4 % rsyate and decrease your monthly payment, please check details below and click the necessary link. Please note since you are our previous client, you are already apzrproved and it will take less paper work to apply:

Please visit this link to apply online. Please enter your Personal Secure Code 6246 on the secure site.

Thank you.

Casandra
Personal Bromuker Group

This is Spam!

They misspell words on purpose and they probably scrubbed your email off of some website. The second, is if they cannot show you an example because they do not show “proprietary information” then hit the road, they are full of shit.

A company that shows you an email like this is doing it right. The issue here is that Adchemy does not currently participate in email marketing, but if they were this is what they would use:

This email explains to the consumer exactly what is going to happen and their is not bait and switch happening here.

If only more lead providers used these tactics. The problem is that so many consumers fall for the low rates and the “your approved” tag lines.

If you are interested in improving your email campaigns check out this blog by Jason Korte of Softvu. He provides some excellent tips and tools for a successful email campaign and more.

I guarantee you if you spent a little time on your emails and possibly even had a professional graphic designer create a simple but professional template for you, you will see a difference in your success rate.
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I understand that mortgage lead quality is an often talked about topic and I am probably beating a dead horse for many of you, oh well. 

This is my first post in some time and I need the typing time. 

Lately there has been much adieu about lead quality dropping and in particular from the tier 1 sources.  Volume from some of the tier 1 vendors has also dropped according to several discussions I have had with clients. According to my conversations with the vendor reps, this drop in volume is due to their recent focus on improving lead quality.

 Great – The lead providers that have used banner ads for these last few years have decided that a better quality lead is necessary in this market.

What if I have reconsidered what the definition of “Quality” is, should the lead vendors now perk up their ears and listen to me or any of us? In the past, I believed quality was a blend of several factors, (e.g. contact rate, transfer rate, opened loan rate, funded loan rate, and return of revenue). I used to look at every one of these categories and when the numbers were right I picked vendors as if they my date for the night. 

What if I now I think lead quality is nothing more then the right price point? 

How could I think such a thing you ask? 

Recently I have spoken to dozens of mortgage companies all looking for advice on vendor selection and management. Hey Lead Guru, what do I look for in a lead? What is the best way to monitor them and ensure ROI? 

I made my suggestions and offered solid advice (At least I thought so) but it turns out in the end, no one really considered anything other then pricing on their leads. How often I heard “Hey I just got 100 Lower My Bills leads for $8 each.”  Wow. 

So I say again, at this time I have decided that lead quality is nothing more then the right price. Buy a bunch of lower cost leads and invest your employee equity burning through those leads. 

In the end you benefit only the large providers – let’s see some more dancing monkeys and rhinos producing click throughs.  I need a new car soon so hopefully you’ll be in a position to get me a good price.

Well that is my rant for now, look for me next week same time, same channel.  Signing off,  “Cynical and still in the game”.

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Recently, Root Markets took another swing at building a direct relationship with a search engine. Last year Root gave AOL a try to no success and this past week they gave it another shot with Yahoo!. Now Root claims they are not a lead-gen company and claims this is a Yahoo! lead as they did the AOL leads, but this clearly looks like a Root lead. No matter how they want to word it Root is paying for this ad space and selling the lead.

The pitch is that the consumer is allowed to choose which banks are going to be able to compete for your business. Which at first sounds good, but thinking about it a little further I would guess that this would only benefit the well known, branded banks. One major reason why brokers buy leads from an exchange or a lead provider is to leverage their advertising expertise and ability to get in front of a consumer at a lower cost.

After seeing this ad on Yahoo, I wonder if it generated any leads? The ad in general is some what ridiculous, in my opinion. Nothing on the ad gives me the urge to “Apply Now” which brings up another question. What am I applying for, a loan? Do I have to apply to receive quotes? I find this terminology kind of strange in the situation. Maybe its just me and I am being too critical, but be a little more consumer friendly for crying out loud. Instead of telling the consumer about the ability to choose a lender prior to submitting a form, tell them why this will benefit them. I can’t imagine a consumer is going to know why this feature is beneficial to them unless they have filled out an online form before and had a bad experience.

What is Root really up too anyway? They have struggled to attract any quality leads and now seem to be only focused on grandiose ideas like partnering with AOL and Yahoo to generate a lead rather than first attracting the long tail of lead providers. Over a year ago they promised a transparent lead exchange with actionable data sources and today, as far as I know, they still do not provide historical performance data for the lead buyers. For a start up they sure do seem to act like a company that has been around for 25 years.

If in fact they are doing things and releasing new features how about a press release or two to let us know? The lack of press has also given lead buyers the impression that LeadROI has fallen off the map even though they were the first to implement an auto dialer and a pricing solution to their platform.

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Being a consumer advocate I am intrigued by the concept of advertising methodologies for social networks. I think there is grand opportunity to engage consumers more effectively within social networks.

Sales Happen with Good Conversations

Why do I think the opportunity is significant? Sales happen as the result of good conversations. And good conversation happen when you are an organic or invited part of them, not when you interrupt them.

So, then I think the answer to my next question is obvious. Do I think the advertising methodologies are the same (i.e., affiliates, display, search, etc.)? Certainly not and this goes to my ultimate question.

Does Social Network Advertising Scale?

Scaling Social Network Advertising

I guess my first reaction is frustratingly–No.

Sure, I can put up Facebook flyers and get a few clicks, or SmartHippo may refine the data I get from advertisers, and Mint may give me incremental incentives; but, nothing that inspires a lead generation platform company. Generally, I need to be a part of conversations within the network to ultimately be successful. Being a part of the conversation certainly yields me a higher conversion factor. Unfortunately, propagating good conversation does not intuitively scale.

As an individual advertiser, solving this problem is relatively easy. You simply need to release it beyond the confines of the marketing department. Your employees are already plugged into these communities. Let them have meaningful, lead generating conversations about their work.

But, how do you create a compelling advertising network or lead generation business plan out of this?

Lead Generation for Social Networks

Here are a few of the opportunities:

• Provide content

Most lead generation and advertising firms are loaded with content and content factories. Unfortunately, social networks and the groups that form within them are very typically starved for anything beyond idle, randomly valuable chatter. However, every community organizer knows the value of one or two respected members that provide well thought out, engaging, and relevant content. Be transparent and sponsor one or more of those roles.

• Provide interactive advertising games

Increasingly, with platforms like Facebook, simple, fun, and collaborative games are the rage. Sponsor or design one for your company and then release it to the wild. See Facebook Food Fight.

• Provide useful widgets

This is a great opportunity to sponsor functionality that many community organizers within a social network don’t have the capability to commission. And the big benefit is that it becomes an attractor for the community and the advertiser to get visitor loyalty and return. See Facebook Mortgage Calculator.

• Provide experts

Experts are the crown jewel of any community or social network. You ability to provide or sponsor that consensus, evolved, or sponsored expert into the conversation is again a community builder and traffic generator.

Now Scale Your Process

The key to gaining consumer inquiries from social networks is stop interrupting their conversations with your traditional methods and start building these communities to source you quality lead generating traffic.

Generate the leads from the sponsored traffic. If you become a trusted, valuable contributor to the network you will become the default provider of your service to community.

Tags: advertising, lead generation, social networks, social media, facebook, smarthippo, mint

2 days ago Low.com announced a new lead purchasing platform called LeadMatch. If you already know about this it may be old news, but I wanted to make a quick note about it anyway.

LeadMatch allows buyers to have control over their lead portfolio. If you are a leadpoint buyer I am going to assume that it is similar to their buyer interface where you can determine the filters and volume on a daily bases. I personally like features and the control they bring to the lead buying process.

The new lead platform gives brokers and loan officers real-time access to thousands of high quality mortgage leads. Users have complete control over their leads via an easy-to-use, web-based interface. Brokers and loan officers can individually define the types of leads they want and when they want to receive them. The platform streamlines the customer acquisition process by reducing marketing costs and increasing ROI.

The leads that flow through the LeadMatch system are the same quality leads that you have been purchasing in the past. The added benefit of the platform, like mentioned before is the flexability that the buyer now has.

To read a little more about it you can view the press release here. 

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In a presumed effort to improve the consumers experience Lendingtree partners with Mortech to offer the LendingTree buyers an opportunity to accurately price loans to consumers.

“Our partnership with LendingTree clearly puts us at the forefront of
pricing engine technology and services for managing Internet lead sources.”
said Don Kracl, Mortech’s president. “Marksman combines Mortech’s real-time
pricing with Merit Matrix’s industry-leading product finder and together
will provide LendingTree a state-of-the-art platform to help their lenders
close more deals.”

At this point it is not exactly clear how this will be offered to the LendingTree network but Loudoun Enswiller had this to say:

“We are looking forward to a marked increase in the speed,
accuracy and customer service tools offered by the Marksman platform.”

I think this will be a clear benefit to the network, if in fact they have access to the service but are these types of add ons in vein? Isn’t the overall lead generation model what is “broken”?

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On September 17^th the industry moved one step closer to a consumer controlled social network based lead generation process. It was more of a baby step, but none the less a step forward.

On Septmeber 17^th a company named SmartHippo released their public beta version. SmartHippo allows users to compare rates and feedback with other users that have a similar criteria.

“SmartHippo allows any individual to post information and feedback on the rate they received, and to compare rates with other members of the community with similar profiles. This lessens the chance of consumers with the same lending and risk profile getting different rates on the same loan, which can happen currently.”

“Consumers need services like the one SmartHippo has developed,” said Gary Lewis Evans, President & CEO at Bank of Internet USA. “Competition is always good, and SmartHippo’s social network will allow banks to promote products while providing consumers with the opportunity to validate and or challenge the offerings by pointing out the hidden negatives.”

The rates on SmartHippo are posted by its users and participating banks like Quicken Loans and Bank of Internet. The site gives you the ability to input your specific situation, such as credit score, equity, loan amount, etc and compare your offered rate to users rates with the same criteria. SmartHippo is also a lead generation company and if user choose they can also have up to four brokers call them. I have put in a few calls and once I receive a call back I will pass along the information to you, as far as pricing. I will also try to extract more information about their user base on the call.

As a broker you are able to post your own rates, similar to BankRate, view what rates users are claiming to have received from you and also track your competitors.

What does everyone think about SmartHippo? Do any of you see pitfalls or benefits of a platform like this?

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Recently there has been a large amount of buzz and news revolving around FHA products and guidelines. Many brokers are beginning to refocus their business and product mix with FHA products. The HUD continues to expand guidelines to be more flexible for borrowers. With all these developments happening many lead buyers are calling for lead providers to accommodate the FHA filters in their products and promote FHA products through their ads. Well it looks as though one company is answering the call.

QuinStreet will be introducing an FHA qualified lead beginning October 2^nd. This is exciting news for a few reasons. One, we have a lead company listening to the demands of their clients and two we have a company that is looking to help brokers put consumers in the best suitable product available.

For so long lead providers simply advertised the lowest possible rate and they still do, it will never go away and that’s okay. I get the feeling that QuinStreet is making the first step towards improving the consumer experience. You may ask, how are they doing that? Well they are simply offering or qualifying consumers and directing them to brokers that can best suit their needs, rather then sending the lead to a option arm cowboy that may put them in a product simply for the large payout.

I don’t have all the details regarding the leads, but you can easily give them a ring to find out more.

To find feed back on QuinStreet leads you can see my opinions and others in the LeadCritic forum. (you may have to register to see the private forum about lead providers) Although, I will tell you now that they are a recommended LeadCritic source and I am in no way compensated for making that statement. Just passing on the good news.

Kudos to QuinStreet.

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Last week I posted an article about the upcoming price increase by LendingTree and now there are some questions with regards to the posts accuracy. In fact there does need to be a little clarification.

Just for the record if I ever make a mistake or misquote information I will be the first or second in some cases to tell you that I was wrong.

So let me present the facts:

With regards to the closed loan fee and the information in question I said the following:

“Then you have the closed loan fee. This fee looks to have an average increase of about $200. This means a closed loan fee with the same loan parameters will go from about $700 to $875. (This implies a credit score of 620 t0 679.)” and a loan amount $350k and above.

I was actually given this info from a LT employee and it was wrong. I take blame for not rechecking the facts, however the actual amounts that I quoted are completely accurate for the parameters in the article. So the fact that the closed loan fee “went up an average of about $200″ is wrong, but the price of $875 is correct.

The rest of the article is completely correct. So the numbers and prices in the scenario that I showed you in the same article, which I will show you again, are correct as well.

LendingTree
cost per lead $65
success fee $850
conversion rate 6%
cost per fund $1,933
Monthly Volume 1,000.00
Number of Loans 60.00
Avg. Loan Size $360,000
Avg Points per loan 2%
Avg. Fee Income $7,200
Gross $432,000
LT Fees $116,000
Net $316,000
ROI % 272.41%

Typical Provider
cost per lead $30
success fee $0
conversion rate 3%
cost per fund $1,000
Monthly Volume 1,000.00
Number of Loans 30.00
Avg. Loan Size $360,000
Avg Points per loan 2%
Avg. Fee Income $7,200
Gross $216,000
LT Fees $30,000
Net $186,000
ROI % 620.00%

So fact is the closed loan fee did not go up. The fact also is that the increase to the Match Fee and the prices quoted in the article are accurate.

Not to deflect the inaccuracy of the previous post, but in many ways it doesn’t matter if they went up, down or sideways. The increase of the Match Fee is so much that it doesn’t matter if the they lower the closed loan fee or not. The numbers are still the same and you still need to convert LendingTree leads at 8% or higher to make sense.

Either way, I do want to apologize for misrepresenting the changes and I hope you can forgive me.

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Yesterday at the TARGUSinfo Lead Quality Summit they honored LowerMyBills with the “Best in Lead Quality Award“.

“LowerMyBills.com earned this award by standing out in a growing field of companies that are pioneering the art of generating, verifying and delivering high-quality sales leads captured on the Internet,” said Dave Wengel, General Manager of Interactive Markets for TARGUSinfo. “LowerMyBills.com nailed every criterion for the award, gleaning effusive praise from recognized lead buyers and demonstrating a high level of sophistication in its quality assurance process. Leads that come from LowerMyBills.com are leads companies can trust.”

There is no doubt that LMB help pioneer the art of of lead generation and I congratulate them on the doing so. Maybe a life time achievement award would have been more appropriate, since the actual quality of the leads have suffered since the end of last year. I must say they have also pioneered how to sell a lead 5 times, give certain buyers different prices to keep them on the network and of course make interesting, to say the least, banner ads. I am going to guess that the praise they received from the “recognized buyers” are the buyers that are receiving the low price points and therefore have a better chance of profiting from LMB leads.

I do like the idea of giving awards or recognizing the good and innovative lead providers, but minus the politics. I would love to create a LeadCritic awards for our industry, but it would have to be a peoples choice award. My concern is that many lead buyers don’t like sharing their best providers with others. Which I think is ridiculous . That mentality is completely counter intuitive to finding good sources and eliminating the bad ones. If you think that telling someone about you good lead source is going to hurt you in the long run, I must say you are crazy.

What if lead providers actually worked towards receiving the LeadCritic people choice award by continually improving the quality of their leads. Don’t you think that would benefit everyone?

So what do you think? Would lead buyers be interested in taking a survey on lead quality?

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Within the mortgage industry, the lender side and the lead generation side, turmoil is all around. We have LO’s, processors, upper management flip flopping around from company to company trying to find a stable home. This also seems to be happening in lead-gen side of the industry as well. Sales reps are moving from, sometimes older more “established” lead providers to newer boutique style lead providers. I believe many of the larger lead-gen companies suffered more damage from the sub-prime debacle and the alt-a meltdown then the smaller, newer shops. I think many of the transitioning sales reps are looking for new opportunities and a chance to convert their current client base over to the younger lead company. They obviously would not be able to do this if they moved on to an older more established company because many of their clients are already with the established company. It just wouldn’t make sense.

I am also catching wind that many feel the larger companies are loosing focus or drive to innovate and are relying on other channels to pull them through. I have been told that LowerMyBills is loosing more and more control to Experian and it will soon be transitioned into Experian Interactive.  Rumors also have it that older employees are either leaving or let go for new hires. There are a lot of new faces in the LMB offices these days.

Rumor has it that change is brewing at Low.com as well. One partner is rumored to be disgruntled and his looking to separate himself from operational decisions and could possibly be looking for new opportunities. I believe that Low will continue to succeed even through these tough times. Low continues to bring on new personnel, many from the top tier lead-gen companies and more importantly they now how to generate good leads.

If are all the rumors are true how will it effect us if at all? For the tier 1 providers will these changes equal poor quality leads? Can more interaction with Experian save LMB or will it hurt them? Can the Low.com turmoil hurt quality and the overall company direction?

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A month or so back I wrote a post about selling leads multiple times. The post revolved around a few statistics posted by Big Mortgage Leads and how I thought that leads should be converting at a higher rate then what Big Mortgage Leads (BML) posted.

Just this evening another company decided to post their conversion numbers. Now Zipsearch does not disclose the specific parameters for the reports and I would love to here what they were so that we can put them in perspective, however without knowing the parameters, the statistics look fairly attractive. I think these numbers are closer to what I would expect them to be. Based on the Zipsearch post a little more than half and in one state 3/4 of leads actually funded a loan (not necessarily by a Zipsearch lead buyer). Based on the Zipsearch numbers refinance to purchase continues to be strong.

Thanks for reporting the numbers Zipsearch. Can you please post the parameters of the study so we can discuss them a little further?

This post was down for a minute and lost all comments. Please comment again if necessary. Sorry

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Last week Good Morning America produced a piece on the subject of working on the weekends. The piece highlights Marc Diana, CEO of LeadPoint and his family.

HERE IT IS

The interesting part of the video is at the 2:10 minute mark. Marc tells is wife that “sooner than later he will be able to spend more time” with her and their son. Marc then looks at the interviewer with raised eyebrows and says “6 months away”. That statement obviously raises a few questions. What, 6 months away is going to allow him to spend more time with his wife and new son? Vacation, Holiday break, an expiration of an employment contract or a LeadPoint liquidation?

LeadPoint has always had an exit plan that included a possible acquisition, could this now be in the works?

Maybe we will find out in 6 months.

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Bill Rice of Kaleidico sheds a little more light on the LendingTree price increase and their overall goals. According to Bill’s post LendingTree confirms that the price increase was implemented to detract or force off weaker performing lead buyers. Bill also elaborates on LT’s goals of improving the consumer’s experience by using a scoring assessment they call the Net Promoter Score (NPS).

Based on Bill’s post it seems as though LT is focusing on the “Closers” on the network, which is fine from a LT point of view. This will clearly improve their network, LT customer experience and possible the buyer experience. My concern, as I mentioned in the comment on the post is that I think there is a fine line of success and failure with LT when drawing a line in the sand and saying “if you are a closer we want you on the network and if you are not we don’t want you”. The upcoming price increase pushes many new lenders or even mid tier lenders to other lead providers because of the risk. Even top producing buyers are going to feel the effect of the price increase and may choose to leave the network. I has I pointed out in the previous post a buyer MUST convert LT leads CONSTANTLY at 10% to make LT a viable option for allocating spend.

LT lead increase in my opinion was an over adjustment and may come to haunt them down the road. There new focus on the customer experience is very promising however and I look forward to see more providers take this outlook.

I would also encourage LT to focus on the education of its buyer as well. With this increased pressure to convert, via the price increase I would like to see LT implement lead buyer education program and not half heartily either. Instead of just raising prices to push under performing buyers off the network why not work to improve the network through education and possibly free tools.

I must say that it is promising overall to see a lead provider actively making an effort to improve lead quality and the consumers experience.

Kudos LendingTree.

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LendingTree does a nice job of explaining, in simple language, what is going on in the mortgage market. Is this the first step in building mortgage (lending) content directly for the consumer? C. D. Davies, LendingTree CEO and former President of Wachovia Mortgage, sits down in shirt sleeves for a very Web 2.0 style YouTube video.

This is one example, in a series, of consumer focused videos that seems to compliment a “press release glut” of consumer education content.Add to this a bit of industry comparison. Is LendingTree beginning to look

a little more like a lender

or a publisher

and less like a lead generation company?

Is this an example of an old line lead company beginning to put the consumer at the center of the mortgage transaction or positioning themselves to become the consumer’s “mortgage expert?”

BTW, did anyone notice that LendingTree misspelled mortgage in ALL of their YouTube tags and titles. I guess there are a couple of bugs to work out before they can become a true mortage mortgage expert.

Tags: lendingtree, quicken loans, lowermybills, bankrate, consumer, mortgage market

Coming this October LendingTree is set to implement their new pricing. In the title I use a couple of exclamation marks. Not because its rare that LendingTree is raising prices or the timing of the price increase but because the increase is almost triple what the price currently is now!

Some of you may or may not be aware how LendingTree prices their leads so really quickly I will explain. LendingTree charges both a front end fee and a back end fee, when the lead funds. With this price increase LendingTree will be raising their “Match Fee” (their front end fee) prices by almost 600% in some cases. Example the current match fee for a price for a lead with loan amounts $350,000 and higher is $27. Coming October it will go up to$65. Then you have the closed loan fee. This fee looks to have an average increase of about $200. This means a closed loan fee with the same loan parameters will go from about $700 to $875. (This implies a credit score of 620 t0 679.) For the people not familiar with LT pricing, prices differ based on credit score too.

Currently without the price increase LendingTree buyers must CONSISTENTLY convert their leads at 6% minimum to sustain some king of profitability. With this price increase you will now need to convert the leads CONSISTENTLY at 8% or higher to remain profitable.

Here is a little comparison:

LendingTree 
cost per lead    $65
success fee    $850
conversion rate    6%
cost per fund    $1,933
Monthly Volume    1,000.00
Number of Loans    60.00
Avg. Loan Size    $360,000
Avg Points per loan    2%
Avg. Fee Income    $7,200
Gross    $432,000
LT Fees    $116,000
Net    $316,000
ROI %    272.41%

Typical Provider 
cost per lead    $30
success fee    $0
conversion rate    3%
cost per fund    $1,000
Monthly Volume    1,000.00
Number of Loans    30.00
Avg. Loan Size    $360,000
Avg Points per loan    2%
Avg. Fee Income    $7,200
Gross    $216,000
LT Fees    $30,000
Net    $186,000
ROI %    620.00%

Buying LendingTree leads after the October price increase seem to be a risky bet, in my opinion. Don’t forget these leads are sold 4 and sometimes 5 times.

The question that needs to be answered is what the hell is LendingTree thinking?? Are they trying to loose their client base on purpose. By the looks of these price increases I would have to say YES! I can understand a marginal price increase but with this increase you would think they are trying to drive away business rather than attract it.

Why would they do this? Is LendingTree trying to decrease their network so they  can back out of the mortgage vertical? Maybe they are decreasing their network so they can funnel more leads to their direct lending channels so they can pocket a bigger paycheck? It’s also known that LT has been loosing upwards of 1 million dollars a month over the last 9 months too.

What do you think is going on?

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