As for the marketing costs for a shared lead model, you make an interesting point. But I have to think that if you have sales and marketing costs to sell a lead once, the incremental costs to sell that lead additional times, once you already have those costs, would be marginal.

As for the value proposition you mention, “When lenders compete, you win,” I agree that that doesn’t exactly position the lender in the best light. As you said, it does marginalize and commoditize the role of the originator. But to be fair, there is one company that genuinely positions their marketing in that manner exactly. But also to be fair, it would be naïve to think that consumers are not going to comparison shop.

Even the organic leads you mention, that “lenders of significant size,” generate are going to generate leads that are exclusive to that lender, but I would bet that still a significant portion of those exclusive inquiries will shop the loan before locking with anyone. Moreover, I would also argue that the most successful component to those organic leads is not the exclusivity, but the brand awareness that comes with them. After all, those with enough size to either generate the leads in-house or be able to pay an agency to do so, are likely to be household names. Otherwise they wouldn’t be able to afford it.

Ultimately I am not disagreeing that rates can play too much of a role in advertising within this industry. I think they do. But invariably the shops that are the most successful are the ones that train their LO’s in solution selling, not rate baiting. So at least, it is a two way street. But thanks again for the great input.

First, the $75 vs. $25 analysis doesn’t take into account the marketing and sales costs to sell the leads to 2 of the 3 lenders. I have no idea what the costs are to maintain sales forces, advertise, etc. in order to sell leads to mortgage companies, however it must be substantial. Selling to one buyer would reduse these expenses so price point equivalency would be less than $75.

Second, a lender of significant size can generate their own exclusive leads by running their own sites or contracting to a marketing/advertising firm to do so. I do not understand why more companies do no do this. Yes, it requires skills and resources, but it is a CORE resource of any lending business.

My biggest reservation on the lead provider marketplace is that it markets exclusively based on the concept of price and savage competition between the lenders. No premium is placed on honesty, reliability, customer service…at least not in the advertising. Yes, a reputable lead provider will screen lenders to a limited extent but the “when lenders compete you win” thing is the heart and soul of lead provider marketing.

I am not advocating lender who are not competitive. I am saying, especially in light of the state of the market and the numbers of people in unsuitable mortgages, that the industry actually has something to offer besides rate. Honesty, integrity, skill, experience, service, willingness to spend time with a client, all matter and the marketing message should reflect this.

I am not even sure the client is well served by this system. It enhances a commodity point of view that fixates people on rate and on whomever is the least expensive by an insignificant margin. We all know how easy it is for lenders to mislead clients as to overall costs.

Our firm runs a lot of newspaper ads. Prominent in all of them are our best rates, of course. But we also promote more things about ourselves – our history, honesty, and experience.

I think lenders are surrendering too much of their marketing effort online – and this will cost them in the long run.

Nick, since my experience is primarily with mortgage leads, there is no doubt that the mortgage product was top of mind as I wrote this piece. I agree that debt settlement leads do lend themselves to exclusivity, but I believe that would be the exception and not the rule. Moreover, as demand continues to increase for debt settlement leads, it is highly likely in my opinion that lead generators would move toward a shared lead model in order to capitalize on the demand.

Paul, I do agree with your analysis, too, but I don’t think it is the same thing about which I was writing. I was talking more about the lead buyers that want leads right in the filter “sweet spot,” the same leads everyone else wants, but want them exclusively. The premium required to get these leads exclusively would be highly unlikely to pan out from an ROI perspective. There are always going to be opportunities on the periphery of demand, in fact that was the topic of my last post, “Hit ‘Em Where They Ain’t,” in case you missed it, link here http://tinyurl.com/56c5bl . I agree that that is a very opportunistic area to operate for those equipped to do it.

“A Lead Buyer,” you too bring up a great point. Due to triggers there really isn’t an exclusive lead anyway, at least not after one pulls credit.

Debt Settlement candidates don’t shop around for debt settlement customers, it’s that simple, thanks for clarifying our industry for us….

After the first calls they realize each company is the same, each “DS” company settles for the same amount and credit card companies settle for the same interest rate regardless of what organization calls them. there are no distinguishing factors.

So in the DS world, I agree that shopping is not a factor, but in the other verticals clients do shop and don’t always realize 1) What they’ve done, 2) What they really need from a lead buyer calling the lead.

I wish I was a Debt Settlement insider. Don’t you?

What you say makes sense for mortgage leads. To some extent the consumer wants their lead to be sold several times. As LendingTree puts it, “When banks compete you win”. But I don’t think multi-leg leads make sense in all markets.

If I am an individual that is heavily over-indebted with credit-card debt and I fill out an online form then I don’t want debt settlement companies to compete over me. I want someone’s advice on how to fix my debt – it is simply way too complicated for me to compare the promise of one debt settlement company over another.

I have noticed that the large and more successful debt companies have begun to migrate more to a genuine exclusive lead model or have chosen to self-generate their leads to guarantee exclusivity.

I believe that to determine whether a vertical will end up as a multiple-leg or exclusive lead market you need to determine what the consumers in those verticals *really* want and need.