This article was submitted by the “LeadGuru”, The “LeadGuru” has been purchasing mortgage leads for over 5 years and come to us with extensive knowledge of the mortgage lead industry.
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I think it’s time for the lead providers (LP’s) to bring us the granddaddy of all leads, what I’ve heard and often called LEADs 2.0. I was told once that Don Lavoie formerly of LowerMyBills.com called the next generation of internet leads and in particular the enhancement process for standard internet leads the next logical step and coined the term “Leads 2.0”. Whether or not this is true I’ve never confirmed so this is pure speculation and my personal opinion as to what I believe and demand the LP’s do next.
Currently when an internet consumer fills out an application to be matched up with a company offering services they seek, the borrower must answer a series of questions to determine who they are matched up with and then wait to be matched up with 4 or 5 bankers and brokers who will attempt to contact them. Once the buyer of the lead makes contact with the borrower they must additionally screen the consumer to see if there is a mutual need prior to continuing onto a successful transaction. The screening process is used to determine whether or not the consumer actually needs the product the buyer has and/or if the consumer is someone the buyer can actually work with. Frequently and upwards of 50% of the time, the buyer and consumer will realize that neither party can help one another.
Currently the best version of this lead matching process in the mortgage vertical is called “Real Time” lead distribution. Meaning within a matter of minutes after a borrower completes the online application the lead is sold and matched with as many buyers as possible based on the borrowers’ application. Depending on geo-graphics of the borrower and the product requested this can be a matching of 5 buyers to the one consumer.
One of the major detractors of this lead generation model is that unless it’s a long form similar to Lending Tree’s original model the application is not detailed enough to guarantee that the consumer’s needs matches with the product being offered by the buyers purchasing their information. Ultimately many requests and energy is usually spent by both the buyer and consumer discovering the negatives of these short application forms.
The lead providers or LP can minimize this lack of vertical targeting by adjusting the application to either a long or short form depending on the industry and vertical involved and data scrubbing key components that add value to that consumer’s information prior to transferring the data and voice product to a buyer. The LP should match that “Type” of consumer with the correct “Buyer”. These enhancements to the current products will increase both the buyer and consumer’s confidence and translate into a more satisfactory experience for both parties.
Here is the process and how I believe it should be carried out. After generating the electronic lead (Consumer) the LP contact team should contact the Consumer via telephone and ask a pre-set series of questions based on the industry the client is in (Buyer) to hyper-screen the initial data. In 90 seconds or less you can determine the exact needs of the Consumer and transfer the Consumer live (Hot Transfer) to the appropriate buyer (lender/auto dealership/doctors office) based on the Consumers needs. I.e. a consumer looking to purchase a home will only be forwarded to a lender that specializes in new home purchases. A borrower looking only for a prime credit 2nd mortgage will be routed to those specializing in pricing the loans appropriately. You would not want to send a perfect credit borrower to a company only specializing in bad credit as an example.
During this screening process a secondary screening should silently be taking place. The Consumers’ data should be screened against a series of title and other databases to compliment the needs of the buyer once the initial data set is generated. If the Consumer is being complimented with a mortgage company as an example we’d get the current interest rates and mortgage balances along with a fico score before transferring the Consumer. This screening and matching process of the Consumer to the Buyer can take as little as 90-120 seconds and is critical to the experience for both Consumer and buyer. This process can easily be scaled and to match with any industry.
Eliminating the typical screening process a consumer goes through (Up to 5 times when sold) and taking a more detailed approach on the first contact will increase the interest level of the consumer. Rather then 5 potential sales people fogging up the process by asking repetitive questions over and over your potential client is only speaking to your hot voice transfer sales team only once. The LP’s could possibly sell the lead one time as the elite voice product and up to 3 other times as an enhanced internet lead.
Currently there are several companies that do pre-screening of internet leads and then Hot Transfer” the client to sales teams. Parsec, Double Positive and BancTec are a few of the most prominent companies out there. The visible and obviously fatal flaw in their model is the level of questions and minimal screening these companies do. The limited screening (Micro-screening) process by these teams roots out only a small portion of non-matches’, approx 10% based on personal experience. In addition all front end services such as the lead management system, additional database screening and knowing which lead providers to buy from, etc. are not offered services.
Minimal screening in this environment is the mirror test, do they fog up the mirror? As long as the party is a home owner, interested and living in a single family residence the caller is converted into a voice transfer. In addition, this voice product is then sold to any number of clients on an order basis, meaning if you order 50 callers, you get 50 callers, not necessarily 50 callers needing your services or product.
If you take figure most good mortgage leads cost $30 – $40 and still need screening by either your pre-sales contact team or the loan officer. You can assume this lead will cost upwards of $125 – $175 when you factor in labor and total marketing costs, (LMS, lead purchase, staff salary). It’s easy to see how both the LG’s and the buyers of information can significantly increase their earnings on this new type of lead. Minimal up front labor costs and the ability to focus only on sales process maximizes your strengths and limits the negatives.
Lets get our LP’s to screen the Consumer prior to translating the lead into voice (or at the same time) and match our consumer with the client. This end user experience is exponentially valued and ultimately translates into a more robust transaction for both the consumer and the buyer of the voice product. This type of lead could range in pricing upwards of $200. Will these practices be adopted by the current providers; probably not but it’s also not the secret sauce. Internet applications according to most major surveys account for only 30% of mortgage applicant experiences. If any of us in this vertical can increase this percentage even slightly we would tap into a market share that is valued into the billions. Times of duress lead to innovation, who will be the next innovator in this space? .
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Very interesting concept. I wonder if some of this pre-screening can actually be done electronically via various data sources, like: First American, Fidelity, TargusInfo, and eBureau. Blending and appending some of the data that sits in these companies’ repositories could turn a short form into an almost exact (and often more accurate than the actual borrower provides) picture of the borrowers’ financial need. This data is generally accurate and probably cheaper than a call center infrastructure and may create equivalent results???
It might also be smoother experience for the borrower without so many hand offs–Web form, call center, pre-sales, LO, processing, and on…
I think the idea definitely has merit.
I think this may be occurring now. I know of at least one company that does this. Although, they are not specific to just the mortgage industry.
The price can be difficult to implement because many models based around leads take into count a $20-$40 price point. Obviously with these types of leads you would be able to decrease your staff and it would help increase production.
Whereas I agree that this idea sounds wonderful, I think we have to understand that once again we are talking about fictional products that as the end user we believe would increase our performance. Here is the reality. Most leas generators price their product at $30 – $40 because they sell it up to three or more times. Who out there would pay $125 for a semi-exclusive lead? The cost is deeper than you often give credit for. I will give you an example. I bid on keywords on google (like most of the lead generators also do) for my company closed and funded consulting. I have spent upwards of $300 for click through traffic. Those click throughs have generated ZERO deals or leads. Now whenever I do manage to get a solid lead it will probably cost me in the neighborhood of $500 – $1,000. Let’s pretend that my plan was to sell this lead. How much would it be worth to me to sell it only one time? SO, let’s cut the cost (especially considering most brokers try to pay little and make a lot) by selling it three times. This spreads out the cost among 3 brokers all who would pay more to generate their own lead. OK, lead generators do not pay that much, but I think you see the direction I’m going. Now let’s have a lot of fun and add to the price of generating that lead the cost of scrubbing through a company like Targus and then cross referencing IP address, physical address through title data and tax records and then put an american, getting paid no less than minimum wage (which is scheduled to increase), on the phone to verify the data, add office space, phone lines (yes you could use Voice over IP and save), medicare and taxes…the list goes on and the cost of your mythical Lead 2.0 starts to look like the price of a Bentley. Now walk outside and look at all of the brokers and loan officers and count the bentley’s. So, I think it becomes clear that once again an end user is asking for a Unicorn and trying to make them sound real. They are not no matter how beautiful they may seem in your imagination. Let’s focus on sales instead. Teach your loan officers not to be put off by “I never filled out the form” or “I already closed” If you are working with a company you trust then your loan officers are not very good at sales. Next try reminding yourselves every morning that you are in the business of mortgage sales. Then remind yourself that sales does not begin until you meet resistance. Next understand fully the 80/20 that you keep trying to do away with. If the leads were as good as you want them to be then who in their right mind would sell them to you? Also, do not confuse a sub-prime shop with someone that does not do prime or FHA for that matter. Quite frankly, ANYONE CAN DO A PRIME LOAN SO WHAT MAKES YOU DIFFERENT THERE? DU and LP take all the guesswork out everything. Another problem is the idea of working a niche in mortgages. The brokers strengths should not be the defining quality of the products offered. Bring on LO’s that work Prime, Sub-Prime, Goverment, Hard Money, Commercial, Reverse and even Jumbo. Then help make those divisions stranger. By not trying to mandate what your office can and can’t do you take yourself out of the equation and put those divisions in charge. Then as the Broker you do what the law intends for you to do. Look over the files and make sure there is no funny business going on. In short stop chasing rainbows and start working with what is real and solid. Make enough money then you can build your own rainbow.
Websterm,
I agree to an extent…first whats up with your poor CPC campaign? You may need to tweak that a little bit or possibly there is no market for consulting services in the mortgage industry, which I am sure there is.
As I mentioned there are already companies doing this and selling the leads and many of the bigger banks like eLoan, Countrywide, e-trade, etc are buying them.
Also, companies are generating these types of leads organically as well. I think LeadGuru has something here but may be a little late to the dance. Also, I can see how you would like to focus on sales, which of course is a huge piece of the puzzle, but it is clear that improving the sales process is something you make money doing, so I can see a little bias there.
We all should continue to focus on improving the quality of leads for the buyer and the consumer. The Internet experience must improve.
I do agree and like I mentioned above brokers are extremely price sensitive and it is always hard to get them to spend an extra dollar even though their return will be $20. Ask any of the CRM or LMS companies they will tell you the same.
Yes guys there are companies out there doing this already but not enough. Websterm has a point to improving the sales process and not focusing on the “Unicorn” but it sounds like he focuses on brokers and bankers are being the cause of many problems out there vs. looking inwards and generating a better quality experience for the consumer and buyer of the lead. Check out Greenwood and Hall out of Orange County CA, you will see they price this type of lead easily in the $200 range and sell it enough to be one of the largest and best providers of this type of loan. But they don’t work with smaller companies and get away with selling the lead only one time. I disagree that this is “Too late to the dance”. How many lead providers out there just got into this game a year or two ago and are still profiting. There is plenty of room out there for improvement on all sides but the post I believe was regarding improving the lead quality so all parties benefit. And that by doing so we all benefit by tapping into the larger part of the borrower stream.
Noel,
I do not place blame on anyone part of the system. Actually, I do not believe in the unproductive concept of blame. After selling leads for so many years I think I have a calouse built up so I may come off a little too preachy. I have seen too many place blame on the bat, the ball, the pitcher, the weather and even the coach, but not the swing, lack of practice or failure to focus and concentrate (or even just the lack of ability in that sport). You are right, I belive that better leads czan be generated and kept at a comfortable price for all concerned. I have seen that lead sales have dropped dramatically lately and that it has started with those that spend the most. So a more expensive lead, as good as it may be, is still a ferarri in kia market.
It will be interesting to see whose around after 12 more months. Those of us selling questionable leads for 2 years or those of us buying lead over 5 years. LOL
LOL I’d rather see everyone left after the dust settles. I’ve never seen the sales approach though of anyone in the industry bash the client base. Man that must be a tough gig to over come. I can however say that no matter what anyone’s buy order is that we’ve always paid our bills and continue to enjoy picking and choosing who we buy from and what we buy based on our needs. I hear there are many buyers out there not paying their bills. That alone speaks for what my particular company can do or not do. How many lead providers out there and the sales staff or AE’s working for them have been with the same company for over 3 years. I’m hoping many more. I appreciate the guys like Matt Tillman of Adchemy and Yung Trang (Even though he’s on a two month vacation) for having the better sense then shit talking their buyers and the competition and selling what they believe their strengths are.
Alright, Now you have to go in a negative direction. I never said anything negative about my clients. As a matter of fact I have been with my company for almost 3 years. I have clients that have been with me since day one. I have had a few scam artists try to screw us out of money. I see the same people being successful with a product over and over again that others bad mouth. Why? Because they understand the industry, understand sales, relationship building and focus on return on investment not returns. If what I say hurts anyones feelings I am sorry, but that doesn’t make it any less true. Thee are so many moving components to mortgage success that you can not simply boil it down to blaming a lead provider. Quite frankly, if your lead providers in the past have screwed you over that says alot about your objectivity to hearing that there is something you may be missing. Or maybe you just chose poorly as to what company to put your trust in. Or maybe, their product was just not suited to you or vise versa. I hear alot of people blaming the leads and few taking any responsibility. it is a generation of “my life is screwed up because of my parents” instead of “I have the power to make the best of any situation”. I am not shit talking my clients leadguru. I am pointing out a failing in the industry. I listen to everyone take shit about the lead industry and i do not condem them for thier points of view, but I believe education and perspective are vastly more important than negative attitudes and bashing someone because they make a statement you don’t like or agree with. But, you know what maybe I’m wrong. Maybe you’re right. My bringing up focusing on Relationship Based sales, focusing on building a more diverse client base, focusing on return on investment and focusing on building a referral business out of purchased leads is just a crappy thing to mention. I stand corrected. You are right. Everyone is doing everything right except the lead providers and education is not needed. I also believe the demise of the mortgage industry is directly related to mortgage leads not lying mortgage brokers that promise rates that don’t exist, put FHA clients in Sub-Prime deals simply becuase they are to lazy or cheap to set-up their FHA license or jack up appraisals for their own gain. I suppose they had nothing to do with the storm the industry is in right now and a fresh voice that simply said look at your business model and sales approach is the evil entity that ruined the party. So I thank you Guru for the education, but the condesending tone or the bashing that was totally uncalled for.
I must say I get more banter on this blog than your average soap opera. There are many pieces to the puzzle and all must be fine tuned. However I have always stood by the statement that good salesman can call out of the phonebook and create a deal. Of course this is slightly unrealistic but the it is true that a well tuned sales team and process will succeed with any lead.
Thank you Lead Critic. I also agree that the better sales person is far more effective with a high quality lead. That is why savvy brokers give their best leads to their top producers and most skilled sales people. It is not a reward, it is good business. The lead industry needs help as does the mortgage industry. This site is about us all working together to iron it out.
LOL, Love this stuff. I only express what comes across from reading your posts Web, how many times in your responses have we seen the same thing? Check them out for yourself. Either way NO offense. I don’t understand how pointing out it’s time to change the lead model is boiled down to, hey what’s your problems brokers! Get your shit together and stop blaming everyone else. I didn’t see that anywhere in the original posts. I’ve seen several times the negative tone you’ve taken about brokers as being the problem and I called you on it. Everyone in this industry realizes it’s everyone’s problem but my post didn’t address everyone’s problems otherwise it would have been a 5 page dossier and not the semi-lengthy original post I did on lead improvement. I think you’ve taken the human step and become offended, perhaps because you hear that too often in your day to day relationships with the brokers you talk to, etc. That’s understandable. but lets stick to the original topic, leads can be improved and the next logical steps would be what I believe I posted. As always I caviot that with “This is my opinion”. We can do a post on Sales teams improving, or at least another one and then banter that stuff around no problem guys. Eithe way Guru is here to hear the feedback and I am grateful for the responses I got on this posting. It’s felt like night of the living dead with the lack of responses lately and I think it’s time more of US talk.
Oh yeah, perhaps I should be cited for BUI, blogging while under the influence. LOL
Oh one other thing. This is of course the LEADCritic site so we do focus on leads and that’s not to discount the process or sales aspect.
I do not see how this opener “Whereas I agree that this idea sounds wonderful, I think we have to understand that once again we are talking about fictional products that as the end user we believe would increase our performance” was taken as negative. I think my replis sound negative because I don’t simply jump on the “yeah just fixing the leads will improve performance” bandwagon. I continue to point out that I firmly agree that there are several areas where lead quality can be improved. I just firmly believe that simply focusing on fixing the leads and forsaking all other cogs in the machine becomes a very microcosmic approach to the bigger issues at hand. Guru, If I came across as negative I can only apologize, but I stand by my statements. I do take these statements personally “I’ve never seen the sales approach though of anyone in the industry bash the client base.” and “I appreciate the guys like Matt Tillman of Adchemy and Yung Trang (Even though he’s on a two month vacation) for having the better sense then shit talking their buyers and the competition and selling what they believe their strengths are.” I did not realize that those comments were not directed personally at my comments that your post brought up. I always try to post with a tongue in cheek attitude. I have commended this site so many times for being very positive about finding answers. To find real answers though Guru you must over turn every rock and deal with all of the ugly things under them. I like to use analogies as I am sure you know by now so here is one to consider, if I made the best high performance automobile in the industry today with a kia cost and made it available to the masses the bad drivers of the world would proclaim how crappy my product was because they didn’t understand how to work it. So, you must manufacture a product that meets not only the needs, but the abilities of those consuming it. Leads 2.0 is the Bently idea of leads. It sounds great and I love them, but they do not work for masses. Let us not forget that 95% of the industry is controlled by 5% of those in it. Should lead companies manufacture for the 5% or the other 95%. Also, we rolled out a higher dollar product geared to more savvy brokers and they scoffed at the cost. Even though the ratios were considerable higher. It is easy to dream and conceive in a vaccum, but at some point a product must be road tested and then marketed. If the market scoffs at the cost or is incapable of working it then the idea no matter how good, noble or lofty must be scrapped. Go to Vegas and count the high roller tables compared to the $5 tables and then you will see the 80/20 rule in full effect. Lead sales is a business and it must be profitable for all concerned. That is my direct response (again) to your post. If that sounds bashing or negative I apologize to everyone, but I am sure that we all realize I am only speaking the truth. For better or worse. Now you wanna kiss and make up?
LOL, sounds good. Kiss Kiss.
I still don’t agree though that many won’t pay the higher costs mentioned, approx $150-$200. I speak with the providers and my peers about this and when you factor in true costs of any internet lead, (even yours) plus salaries of existing LO’s or CSR’s dialing leads, overhead and employee time the true cost of one positive lead or transfer that turns into a credit app (declined or not) is over $100. So bottom line, we’re already paying over $100 for a “Real” lead. I’m not speaking about buying 100 leads and 4-6 turn into loans. I talking about why waste employee equity on running thru 100 leads to get 4-6 loans when they can work thru 50 and get that same conversion, higher price but more effective management of staff time, etc. Borrowers talking to less companies because they were better matched and better screened to direct them to the RIGHT company the first time around. Not 4-5 companies stating they cannot be helped, try hard money. Why not route that borrower to hard money the first time? This is only one small example of how everyone’s experience would be better and down the road this borrower whether we helped them or not would be more apt to do the same process again. That would be the true enhancing the experience I was speaking of.
Any good provider with a solid product today could open this up for existing clients, “If your happy with the standard product what about one that goes thru this hyper level of screening”.
Hell about half a dozen of the providers have approached me to discuss the nature of this product suggestion and post. It’s not like it’s a secret sauce but many providers now are looking into this. Web, watch in the next few months how some of these changes will come and or be tried by providers. We all have to get better at what we do to survive this nasty ass market.
Guru,
I agree with you on the fact that that lead is sorely needed among those that already have the skills in place. My own brother is a living example of what you are talking about. He asked me the very same question “why call 100 people to close 4 or 5 deals? How do I just talk to those 4 or 5 people?” If I could answer that question I wouldn’t tell you or him and I’d close them myself, but I’m a greedy bastard. The problem the lead industry and mortgage brokers alike face is that most companies that buy leads try to buy ONE type of lead for all of their LO’s. That is death if you ask me. I have devised, for closed and funded consulting, a questionaire to help assertain what type of loan officer you are. This helps match the loan officer with the correct product, regardless of it’s price. Many of us top producers and entrepenuers tend to think anyone that applies themselves can do what we do. Or, as I have heard so often “if I can close 6 deals per month and I hire 4 people just like me and I pay them 50% then I can make 3 times the money I make now” I call this the Calculator Effect (it works much like the chaos theory). It states that anything that can be added up on a calculator can not exist in real business where people are the determining factor. So, they buy these leads (as cheap as they can get them) then hand out with blinders on and pray that their LO’s are all the same working the same type of lead. I’ll post a really great blog on this on this website and mine by the end of the week and you can tear me apart for it (God, I hope you’ll be in Tampa for Leads2007. I want that kiss, but a drink will do HAHAHA). Your closing remark is true. We ALL have to get better at what we do. The first step is understanding not just what we do, but how we do it and who is doing it with us. That is a quantum step in relationship based selling.
Guru will be in Tampa! We’ll have a drink together.