After meeting with a group of fellow lead and mortgage industry peers I came away with a few questions that beg for answers.
Is the lead generation industry going to evolve?How will it evolve?What is a good lead?
We know that the advertising medians aren’t going to change anytime soon. The internet, TV, radio, email, and direct mail will continue to be a significant source for generating leads, but will the advertisements change?
Is the current lead generation model really helping the end consumer?
There have been brief discussions on this topic here and here, but I would like to open up the discussion again and maybe it will spill over into the forum or other posts.
First, we have to recognize what people think of as a good lead. When speaking for myself, it includes two simple factors: Valid contact information and an interested consumer. A good lead, early in the process is a lead that is open for dialog and that is specifically interested in my services. From there it is up to the processes that the company has in place to fund the loan. Hear in lies the issue, lead generation companies have two points on their agenda. One is to convert an impression (an ad view) into a completed form. The next point on the agenda is to monetize the lead to its maximum amount. This inevitably creates a system where finding a solution for the consumer gets pushed down their list of importance. Yes, you can argue that the advertisements in place and the lead sales model are supplying an avenue to a solution, which could either be lowering their payment, extracting cash out of the home or possibly just lowering their rate. However the solution of selling their information to multiple banks or brokers, more often then not is the beginning of a horrible experience for the consumer.
I am not saying leads should not be sold multiple times, but what I am alluding too is a more specified assignment of a leads to specific buyers. When implement this concept a lead generator would need to add more specific options to the lead form. It’s possible that a lead could be distributed more efficiently based on the specific needs of the consumer.
Would giving the option to a consumer to specify more clearly what they wanted lead to a better experience for them? All lead forms ask questions concerning the purpose of their loan. Is the purpose of the loan for a refi, purchase, cash-out, etc, but are those questions sufficient?
Would creating an education process within the form help?
When I think of lead generation today I imagine this: Two guys in a small cubical huddled around a single computer screen thinking of ad ideas…”Oh that’s perfect, that will get a click” they say sounding slightly mischievous. Then a few hours later I see the same two guys huddled around the same computer watching a user navigate their site and begin to fill out the short form. Their excitement builds with each field that is filled out until the users curser begins to move slowly towards the submit button. Then “click”, the two guys jump up and down and run off to sell the lead to the open market. Is this an accurate depiction? No, well maybe some of them, but it is true that many of them are solely focused on the click. Which makes complete sense do to they way many of them are compensated. This is why many new lead generation companies engage in lengthy discussions about how short or long their form should be. Many will tell you that there is a sweat science to creating a form that produces the desired quantity of leads without affecting quality. This begs another question. What if all lead providers went to closed loan fees? Would the length of the form matter as much? The overall goal would be to produce the best converting lead. The challenge here would be getting past Lending Tree’s patent on the closed loan fee model, which I assume they have in place.
Not to be diverted from my point. I think that if a consumer were able to educate themselves through the form and therefore give more information for the lead provider to decipher a correct match/s, the consumer and the lead buyer would be more satisfied.
What are your thoughts?
Will lead-gen tactics ever evolve?
I know there are a number of lead-gen guy’s that visit this site and I would love to hear your thoughts as well? Maybe I have no idea what I am talking about and need to be told that I am way off base.
We are moving completely away from buying leads to generating 100% of our requirements on our own sites and through our own marketing. There are good lead providers and bad ones, but I think the entire concept suffers from several fatal flaws.
One, the interests of the parties are not aligned. Lenders want to close as many loans as possible while calling as few people as possible. Lead generators want to get a form filled out. For 100 reasons already discussed here these differences create significant stresses on the quality of leads produced by a lead company.
Two, the whole “lenders compete” model makes some sense, but in a lot of ways it is one great PR way to say, “we’re going to sell the info you give us to anyone who will pay us for it.” While a responsible consumer should check with a couple lenders I would think calling a local one, getting a referral, and finding one online would be a better system than simply filling out one form and being inundated by lender phone calls.
Three, when buying leads there is no way to market service or specific strengths until actually calling the lead. We are in NY and we have a lot of expertise in co-ops. On our own sites promoting in NY we can advertise this. You can offer specials on your own site (fees waived), a level of specific promotion not available through generic lead generation.
Four, your marketing is the core of your business in many ways. Why not pour investment into assets you control? It’s almost like the rent vs. buy comparison we’d use with a renter. Why pay for someone else to build their marketing assets?
I know lots of companies do very well with purchased leads and have great ROI. But even in those cases, with a well developed marketing program in-house wouldn’t these companies do even better?
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Great points,
The question of why buy leads and the answers associated to it will very with each situation.
Ex. Quicken needs volume
Joe broker down the street leverages his limited marketing dollar through buying leads
A company in between these two scenarios has the know-how and the capital to be successful, maybe a company similar to yours. The most important point is know-how.
We do both.
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Great chain; good links on this topic too. I was at the same event and I too was inspired to think on this topic (special thanks to my competitor Bill Rice for his insight). There is no question things are changing; they have too. I’ve often said to our clients who care what the lead providers know or how much they charge. The bottom line is if you can close a higher percentage you’d pay more for the lead. It’s an easy math equation.
I think the “change” needs to happen at every touch point. That means lead generators, lead management providers like us, and especially the lead buyers themselves. Success with internet leads these days requires a mind-shift. Now more than ever mortgage companies need discipline in how they work leads.
The fact is most companies could never afford to market like LMB or LendingTree can. They have the economies of scale and they have a lot of smart people that will figure out how to generate quality leads. The biggest issue for our industry now is this shift from an attitude of “printing money” to “running a business”. When times were good, lead providers and lead buyers were spoiled. Now they’re both left thinking… “damn, what just happened”. It’s up to all of us to improve lead quality and lead performance.
Lately I’ve started saying: “Internet leads work if you work em”
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I just spent the entire week with numerous lead providers and my own clients and prospects (lenders). These questions and discussions were noticeably on everyone’s mind and the thoughts and perspectives were probably far more aligned than not.
From those discussion, I would unequivocally say that lead generation. lead management, and lead sales processes are and will evolve. Tight market always bring exciting innovation.
Here are a few of observations on this topic that struck me over this last week:
-I was surprised by the passion and frustration lead generators had around how leads (consumers) they generate and engage are treated–the experience they are receiving at the hand of lenders
-The general (by no means everyone) lack of focus at the lender on treating leads as customers, NOT data to arbitrarily be ignored or discarded
-The same lack of focus of lead management systems on enabling lenders to deliver WOW! consumer experiences–a major enabler of the previous bullet
-Most lenders lack of understanding or concern over how their lead providers generate consumer inquiries
-Most lead providers lack of willingness to share this information
The good news, and why I say it will evolve dramatically, is my last observations:
-Everyone was talking about related problems
-Everyone understood it was the Internet consumers’ experience that makes your wallet fatter
-A growing group of influential individuals in this market, including competitors, were willing to talk about solutions and innovations
It is going to be exciting!
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I think the idea that a lender couldn’t afford to market like the big lead providers isn’t necessarily the case. I think most lenders have the PERCEPTION that this is the case. No, a small or mid-sized lender isn’t going to buy tons of TV network advertising time. But the Internet does a lot to level the playing field between marketers.
Marketing effectively is a skill and it must be learned painfully and expensively for any organization. I just think it is a core part of the business and it is dangerous to completely outsource it.
Yes, if you need huge volume then you have to become more aggressive and sophisticated in your marketing but then you are also at a level that can justify the expense of real marketing professionals in-house.
And I couldn’t agree more on the idea that regardless of how leads are generated it is essential that they be managed properly. We went through fits initially because we used to give leads to LOs to generate additional business. They looked at them as “free” extras. If they weren’t busy they’d call, if something came up they would ignore them for days.
Now all of our leads are handled by dedicated inside sales staff. I will admit that our lead management is a work in progress but the difference has been substantial. This is an area where I suspect most lenders can generate some improvement with a modest investment.
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Today’s in-house marketing discussions are revolved around in-house marketing. I firmly believe those of us buyers who cannot respond quickly to the growing need of internet applicants will go the way of the do-do, that’s a given. Even a smaller shop can afford to have placement in key word searches and the insight provided on this website and others allows us to innovate on a faster scale then tried and true methods. I will continue to support the conversation and unlike many other buyers, routinely provide “Useable” metrics to my vendors so both parties can maximize their efficacy. 12 months ago no lead vendors would sit down and talk about generation methods and lead ID’s that convert, then turn around and ramp up the campaigns that returned max ROI for us. How many buyers out there actually will provide revenue per lead source, disclose in an non-proprietary way, what is profitible and what is not. Best practices can be improved even for those of us with small foot prints that have been using pre-sales contact teams, hot transferring organic live leads to our waiting LO’s. It all starts with open minds and open conversation. Continue to share, providers, LMS and buyers alike. Please Please Please
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Good topic – but missing a couple ideas. Lead Generators definately think about user experience and the quality of a given lead to actually turn into a new borrower for a client. Without focusing on these points, a lead generation company will have little hope building long-term customers, or giving consumers confidence to complete any length form on a mortgage-related website.
Good lead generation companies actually spend a great deal of time testing, analyzing and optimizing their websites not only to attract a consumer, but also based on what channel ads are placed (search, banners etc) and what type of messaging is put out to that consumer.
Lead Generation is not easy, and it evolves on a daily basis. Look at the companies that were the leaders in this industry 5 years ago, new players are already passing many of those companies because of evolving and focusing on the consumer experience.
With focus on Web 2.0, consumers have a louder voice on the web, and lead generation companies (the good ones) see that and continue to adapt to match the needs of consumers.
As more lenders look at lead generation companies (and lead management companies) as partners – together both can do a much better job for the consumer and for their own companies.
If a lender and its lead vendor can better share data, metrics, etc, the lead generation company can focus on the successful channels and marketing messages. If an honest lender can fund a loan to a homeowner who came through a lead generation company’s website, that is a win for the homeowner, lender and the lead gen company.
If that type of data can be shared and repeated/optimized/improved — all three parties will continue to win.
jeff b
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Jeff,
Sharing data is an exellent pass time between buyers and sellers, however it only helps you optimize your ad campaigns and there placements, which is great, but I am asking a deeper question. Will consumer track be doing the same thing year over year? If so, the consumer expierence will never change. What is consumer track doing or what could they do to improve the consumers expierence and therefore improve the buyers conversions?
Any ideas?
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I didn’t mean to suggest that a good lead generator doesn’t care about the user experience or generating good leads. I just meant that I feel that core marketing is too essential a function to any business of size to be essentially sub-contracted out. Any lender big enough (and that is not all that big) to generate in-house lead generation capability should do so in my opinion.
Even a good lead company has several disadvantages that are difficult to overcome. Just as a lender is subject to the practices of the lead generator so too the lead generator is subject to the customer service provided to the borrrower by the lender. They are makreting a service over which they have little control as far as the quality of the service.
There is little or no integration regarding special marketing. This can be a bonus program (air miles, credit to closing costs, etc) or the promotion of specific areas of strength for the lender (e.g. co-ops, no docs, etc – this also has the benefit of offering the client something other than pure bruising, bare knuckled price competition as an incentive).
I also agree that effective web marketing is not easy. However the lead companies have gotten more experienced at this. Mortgage companies that market themselves also develop these experiences and expertise. Those that just buy leads get used to cynically analyzing a new provider but they are basically where they were 5 years ago as far as marketing experitise is concerned.
I’d love to see a discussion on various promotion and advertising techniques being used by mortgage companies. We have done mostly paid search and have done fairly well with it. I’d say our lead cost ranges from $40-60 per, depending on the search terms we are using.
We are planning to expand our marketing and do a LOT of experimentation. I’d love to know what results people have had with banners, email, and other types of online ads. We’re also trying some offline promotion of our sites. I will post some results once I have them.
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This would be a good discussion for the forum.
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In response to Lead Critic – I think the process of generating leads will evolve. There are many new ways that we have to provide an upgraded service to the potential borrowers, which should translate into higher converting leads for our customers.
We are also exploring ways to tie deeper into our clients pricing and credit programs to feed clients real time rates, points, terms, disclosures, etc based on their needs and letting them choose where they would like to proceed. We are also testing different approaches to marketing, and where data is collected and how it is validated.
We have several other stratagies that we are always open to communicating with clients or potential clients — it is a little difficult to stay competitive and be a “trail-blazer” and post all our ideas on a popular site like this.
Let’s talk anytime – jbartlett@consumertrack.com.
AJINY — sounds like your company is having a lot of success driving traffic and generating leads on your site. That is great. You then know the challenges and the difficulties.
We are working with some of our smaller and medium sized clients to help them with their direct marketing and conversions as well.
Our company always seems to improve when we are helping to improve our client’s efforts – whether through our leads or through their own marketing efforts.
jeff
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