I am frequently on the phone with lead buyers discussing how to work leads. The range of competency is pretty wide, especially between different verticals. Mortgage lead buyers have a hand up on most other verticals, from what I have seen. It wouldn’t be fair to assume that all insurance lead buyers don’t know how to work leads, but many mortgage lead buyers would be shocked at hear what suffices for the insurance lead buyers.
I spoke with a buyer of insurance leads that simply sends an auto response email to each lead and then waits for a phone call or an email response. I specifically told this buyer that if a mortgage guy heard you say that he would drop dead from laughing or crying, one of the two. What if this guy actually called the leads????? Holy Cow, having experienced both sides of the table, nothing surprises me anymore.
Let me get back to the point I wanted to discuss. To do that I need to reference a conference phone call I had with a few lead buyers. For the record, the group of men were buyers of mortgage leads. The discussion revolved around sets of expectations they had for buying and working Internet leads. They were not necessarily far off from what I thought they should be but they were a little higher then I would have set, especially for a new lead buyers. I wrote a post some time back about What a New Lead Buyer Should Expect and if you are a new lead buyer it may be worth a look. It does miss a few different ratios and percentages, but covers a the basics. One percentage that came up in the conversation was contact rate. This group was concerned by a number of things, but there contact rate was the most concerning to them. As a group they were experiencing a 40% contact rate, in which this was experienced in the first week or so of receiving a lead.
I mentioned that this wasn’t horrible, based on my experience and in many cases fairly normal. And there presents the ultimate question of this post. What is the industry benchmark for the key indicators like contact rate? Granted, I believe it varies based on different circumstances. For example, the number callers being analyzed and the product they are selling will play a part in the final results, however I think it would be extremely useful for the industry as a whole to have these types of benchmarks available.
The Marketing Sherpa comes out with a number of annual publications that discuss numerous types of benchmarks and are very useful. The companies that would be able to come together and present this data would obviously be the LMS companies. It would take at least 3 of them to come together to have a solid batch of data to be valid. Statistics from just one, in my opinion would not be significant enough and even slightly bias. I can easily see it turning into a sales pitch if the numbers were separated out and focused on the specific LMS and I don’t think that would be creditable or beneficial.
These numbers would be very interesting. Over time we would be able to determine the health of the industry based on annual trends. I would speculate the contact rates, conversion rates, etc have declined from 2003 or 2004 do to the lack of loan options, the credit crunch, etc. It would also give companies accurate numbers to compare against. There are so many companies that are working in the dark, so to speak. They don’t know who the good lead providers are, they don’t know the basics of calling leads and they also don’t know what their proper expectations should be.
So what do you think? LMS companies, what do you think? I would even recommend placing a fee for the report.
Vote for if you would pay for a report like this —–>
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Bang on post. What if there were industry benchmarks on contact, app and close rates? What if there were industry benchmarks on the cost per lead, cost per closed loan, revenue per closed loan and marketing ROI? What if you could cut those metrics by state, loan amount, LTV, FICO band and requested loan type. What if a lender could predict performance from a lead source before having purchased those leads? What if a lender could see areas of opportunity? Lead volume and availability that match that individual lenders’s sweetspots?
To do this well, you need more than contact, app and close rates, you need the costs on the front end and revenue on the back end.
These are problems/opportunities that I think about every day. Stay tuned.
Jamie,
I wasn’t thinking about Sparkroom and the data that could be provided there and it sounds like tou may have something up your sleeve. I think it would be very possible for you guys t head the initiative, however it would still involve the LMS companies that have the data share.
I look forward to hearing what you come up with!
One common denominator I find working with many clients is each one defines “Milestone’s” differently. What one person calls an application is different than the next person/shop. How do you think aggregating this data across competitive companies could easily be resolved? Why do you think a large database of clients and standardized “Milestone” reporting is biased or non-relevant? “It would take at least 3 of them to come together to have a solid batch of data to be valid. Statistics from just one, in my opinion would not be significant enough and even slightly bias.”
Noel,
The milestones are fairly similar and LMS companies should not allow people to use Contact or Application Taken for anything other then what it is.
I don’t think a large database of clients would be biased or non-relevant, however if it came from one company, no matter how large, I don’t think it would hold as much credibility and especially if that company put together the report themselves. That would be considered PR piece, just my opinion.
If 360 is thinking about putting their own report together, it would be interesting to see, but it wouldn’t not be held in the same regard as a third party controlled, industry wide report. That would be as relevant as a Fox News generated political poll or the LeadCritic Playoffs.
Yeah I agree on the playoffs part, not so much on the Fox News Opinion poll aspect. I think you miss the product offerings of an Enterprise level LMS in the opinion that no client should be able to change what is important to them. The ability to customize and measure any field, metric or milestone according to clients needs is available in the best enterprise LMS systems. Remember some LMS companies service many industries and not just mortgage or insurance lead providers. The client could be selling annuities and measures an application completely different then a mortgage customer.
After your 15 months lead buying experience are you telling me you never had a mortgage vendor ask you, what exactly application means to your company? Does it mean you pulled credit or simply qualified the lead”? Lead vendors know and knew that every customer was different and called application something else and that is why they asked.
I know some customers who only measure submitted loan packages versus applications, why – they only want to see the positive result of applications. Bottom line, it would require any LMS firm to review the client’s milestone settings to determine what is being measured, then standardized for industry use.
Also how would you compare what each LMS system measures to begin with, I think readers of the site have seen some people monitor applications but don’t define what product, state mix, client size, merits measuring. More defining by an organization would be required before any LMS could state they could pull reports that compare to peers reports.
Probably one reason LMS companies have not come up with an industry standard. And would that standard benefit the lead buyer, lead seller, LMS Company, or everyone? What if one LMS companies product always reflected lower numbers then a competing product? Should that lower the industry standards you are speaking about? Would you penalize the companies with the better performing product for the sake of “Unbiased” opinion? Do you penalize a student in your class because he next to the kid that doesn’t study?
I think a better offering would be to have each LMS company standardize how the data is measured and then report those numbers through a 3rd party service. Then a customer or lead provider could decide which practices, software services, etc. produced the best results and view LMS standards versus a truly immeasurable “Industry standard.”
Unless you simply want a vanilla “Industry Standard”, which any good lead company could give you. The range these days for contact rates is 40-60% and applications (qualification, not credit pull rates) = 20-35% depending on the quality of the organization. Conversion rates are hitting around 1.5 – 3% again dependent on skill level. This would be for refinance, Fair, Good, Excellent and for outbound LO originated phone calls.
This is an interesting debate that I am catching the tale end of. There is certainly a lack of consistency between what one mortgage company versus another calls an application. This variation is also apparent, but actually not quite so bad, in the other major verticals that Leads360 services (i.e. debt, insurance and education)where application is also quite often referred to as “qualification” (a much better description in my opinion).
There are definitely sampling issues. Even if all LMSs offered up this aggregate information (providing they actually had permission to do this from their clients), beyond being affected by the different capabilities of the various LMS systems, you’d also miss out on the low application rates and conversion rates that companies that don’t use an LMS typically have. From what I have seen somewhat anecdotal this is a huge difference.
Selfishly, I’d love it if I could know for sure how the application and conversion rates of my customers compared with my competitors, especially our ugliest competitor email and excel. Although assembling the later would be almost impossible.
I’d also love to know what people think application rate should measure. I don’t think we need a third party organization to determine this. Why not set up a poll? The largest percentage of our mortgage customers believe that it should be “the point at which a potential customer has been contacted and provided enough information to determine that they qualify for an available loan product”. If they don’t qualify then this does not count as an application. This is actually a stage before taking a credit pull or submitting a loan package… What do you think?
Thankfully contact, conversion, and ROI are all a lot more standardized and obvious!
Boy, a number of questions to address here. I will make the answers as short as possible.
You two (Noel and Nick) would know better then anyone the discrepancy between the interpretation of specific disposition names, so I will give you that every day of the week.
Noel, your point about different verticals…of course your not going to measure or compare a debt company against a mortgage company, etc. That simply wouldn’t be logical.
I am also impressed that you know the length of my employment…actually I am little scared.(I see your point in bringing that up though
Frankly, to answer your question I do not remember if any provider asked me, I am sure they did though.
Your comment: “Also how would you compare what each LMS system measures to begin with, I think readers of the site have seen some people monitor applications but don’t define what product, state mix, client size, merits measuring.”
Answer: Dispositions would need to be defined, which I think is the major problem, right?
Regarding penalizing the “student”.
The Marketing Sherpa benchmarks different ad sizes click through rates, of course there is a slight variance because the ads placed are slightly different, but based on the sample size it brings relevance. Remember this wouldn’t be a Leads360, LeadsROI, ClickPoint, MortgageBot or Kaleidico advertisement so no one company would benefit. It would be an industry standard and yes confirmed vanilla numbers would seem to be more useful in this case then risking number that may or may not be completely accurate.
I could tell you the average click through of a Google text ad, but I like to have that number verified with statistics. Your ranges are typical and exactly what I would expect as well, but it would be nice to narrow those ranges and have them be validated through facts that are public.
Nick,
You bring up an excellent point about all those buyers that do not use LMS systems. Many of those people do not use any type of tracking. Unfortunately those numbers would probably not be valid or included and leave out a large portion of lead buyers.
I also think it would be an amazing sales tool to have a success or failure comparison between the LMS companies. I am not totally convinced that there would be a large discrepancy in either direction, however that is just a guess though. That is only from my experience of using two different LMS at a time. Noel would also know being that he used Lead Mailbox and now sees the same dispositions in Leads360 and would possibly be able to compare.
Regarding the definition of Application Taken. I think I agree with you and as I mentioned you would know more about what the majority thinks then me, but I would agree, however not sure if a credit pull happens before or after an application. IN our company we would pull credit prior to sending an application…I guess that proves your point about the need to standardize the process.
Aside from the hurdles (and there would be many) and debates over who would be involved, I still think it would be great to have and still believe that it should involve multiple sources.
Just my critical opinion though.
I wonder if anyone else has any thoughts?