Conversion Ratios Part 1

We have arrived at Part 4 now, and hopefully this has proven to be helpful to some of you. If you haven’t noticed, one of the key things that I am trying to accomplish is shatter the myth that costs equal ROI. Costs are a component of ROI but if that is all you are tracking then your efforts are extremely short-sighted. My focus for this piece will be the coveted conversion ratio, the second component of my three key pieces to ROI: Costs, Conversion Ratios and Income.

There isn’t a great deal to say about conversion ratios. The concept is pretty simple: The higher the better. If you remember, I referenced an equation in my post on Part 3 about the cost per funded loan:

Lead cost / conversion ratio = Cost per funded loan (CPFL).

So naturally, the higher your conversion ratio, the lower your cost per funded loan will be; it’s pretty basic math. The most important thing to know about conversion ratios is that there is no ROI component with which you have more leverage than with conversion ratios. I think this was also demonstrated in my business case in my follow up to part 3.

What do you need, a refresher course?
It’s all ball bearings these days!
In this post I will list some key best practices to delivering the best conversion ratios, but I have a feeling if you read this blog regularly that I am not going to share anything you don’t already know, but to paraphrase Fletch, we all can benefit from a refresher course from time to time.

I am a professional sales person. As such there is one word that sends shivers down my spine. That is: micro-management. As much as I would hate to be micro-managed, I am afraid that the single-most productive practice for managing a lead campaign is to micro-manage the hell out of your loan officers. It pains me to say this, but it is true.

The leads are your investment and you need to manage them accordingly. If you have a money manager, it is likely someone with years of experience and various industry-specific certifications. You trust this person to manage your nest-egg because you are comfortable with their vast experience and qualifications. I am not attempting to belittle the typical loan originator, but I think it is safe to say that they don’t have the same level of experience or industry certifications as someone with whom you would trust your retirement income. You hired this financial advisor because you know you don’t have to micro-manage them. If you can’t say the same for your loan officers, don’t assume that your, “marketing investment,” is safe. Be certain that it is.

You need to relentlessly track:
- Calls

• Average time from lead receipt to 1st contact (needs to be within first 15 minutes)
• Number of attempts per lead
  • Each unique lead should receive 3-5 attempts per day until contacted
• Average call times
  • If you are not seeing call durations long enough to at least take an application, then something is wrong
• If you don’t have the means to track this information, move to IP telephony right now so that you can

Basic Lead Best-Practices that will improve conversion ratios include:

1.  Use a Lead Management System.
   1. If you are huge and can develop your own, so be it. If you are not huge, don’t waste time, money and resources to re-invent the wheel. I can assure you (regardless of your size), you are not likely to be able to create something better than what already exists in the marketplace.
2. Ideally, no more than 5 leads per day, per LO
   1. That’s right, I said it. A guy that sells leads is telling you not to buy too many.
   2. Fact is, not only will the LO be responsible for the 5 leads they received today, but all of the subsequent follow up on the leads that they received yesterday, the day before, etc.,
   3. If the pipeline is too big, then they do not call the leads enough, opportunities fall to the floor and you are wasting money. Keep them hungry and make them work for their opportunity.
3. 3- 5 calls per lead, per day, for the first 5 days until consumer is contacted
   1. If no contact is made in this time but the contact information is valid, lead should be put into a tickler to be contacted at: 30 days, 45 days, 60 days and 90 days. Recycling your own leads is one of the most profitable, and under-utilized, ways to best leverage your investment
4. Utilize a “front-line,” of tele-marketers to do the calling. Let them pre-qualify the leads then transfer to your experienced loan officers.
   1. Rarely do your closers also have the ability to smile-and-dial. Let your closers do what they do best, help consumers find a loan. This will improve their experience, your ability to retain top talent and ultimately your conversion ratios.

Like I said in the opening, there is nothing earth-shattering to share with respect to improving conversion ratios. If you are not doing at least some of the things above, then I am afraid that you are painfully behind the curve. For my next post I am going to stay on the topic of conversion ratios, but actually offer a contrarian example of when higher conversion ratios actually cost a client money. Stay tuned!

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