LEADCRITICSelling Leads Multiple Times?
Filed Under: leads2007, Lead Generation, Mortgage & Real Estate, Lead Providers
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I came across a post today by big mortgage leads that listed a few statistics from a survey they had completed. It stated that “44% of the leads closed loans or were in the process of closing a loan within 90 days of filling out the form.” This is an extremely low amount and raises some questions. The most important question is and the only one I really care about is what happened to the other 56%?
I have never purchased leads from Big Mortgage Leads but I am going to assume that they sell there leads up to 4 times. If this is correct, are the four buyers so incompetent that their combined effort can not close or take an app on more than 44% of the consumers that filled out the form? I guess the answer could be yes, but I don’t think so. Here is my two cents: I really think that the consumer is getting turned off by the influx of brokers calling them at least 3 times a day and end up putting off the refi until they find a reputable local bank or broker. I have to believe that the consumers interest level was in fact high enough for them to put their personal information online, so I don’t think it would be fair to say that more than half of the consumers were just not interested.
When LMB began selling their leads 5 times most people instantly saw a decline in conversions. I now question if a lead sold 4 times is too much as well. Stop and think about it. Do people really need to have four brokers or banks calling them? No, I believe they really only need two and maybe 3 max. Anymore than 3 becomes an overload on the consumer and inevitably creates a poor experience for them. These leads receive so many calls that they can’t even remember the companies that called them. The same post claims that 52% of the leads could not remember the names of lenders who contacted them. You mean that after all the calls and emails they still cannot remember our names? Is it because we aren’t stating our name during the hundreds of phone calls? Are we not sending them hundreds of emails with our company names included? Of course we are, but quadruple those numbers and depending on if any one of those buyers are reselling the leads or pulling credit and creating a trigger lead, the lead could end up receiving a hundred of other emails and calls from another handful of companies.
I filled out a form almost 4 weeks ago and am still receiving 4-6 calls and emails a day. These consumers are getting obliterated by brokers and banks so much that they cannot decipher which company has called them and may even put off the refi altogether. Do you think they will go back online the next time they want to refinance? I don’t think so.
I believe that the leads are being sold too many times. No real revelation there, but when are the lead providers going to think about building a customer experience that will beg the consumer to come back use the service again? In the next few years, instead of advertising rates, I envision lead companies advertising the experience and customer satisfaction they will receive. Why? Because people are going to be fed up with the process and your 5.5% 30yr fixed ad is not going to pull them in.
I can only hope that it never gets to that point and lead providers start focusing on the consumer experience. This is going to increase conversions and repeat customers and lead buyers for that matter. But who am I fooling, we only care about today’s profits not tomorrows, right.
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webstertm | Jul 19, 2007 | Reply
This has to be the most insane post I’ve read in a long time. “what happened to the other 56%?” I’ll tell you. One, yes the lead can be sold a few times to many, but even when they are not oversold they get overdistributed by Brokers trying to squeeze every penny out of each lead. I know of several clients that distribute the same to multiple loan officers in their own office and attempt to create a feeding frenzy (this is unproductive in my mind and probably leads to them seeing even less performance out of the leads). Two, It’s the internet and people can fill out a form in seconds. They often fill out more than one and even more often put in thier beliefs and expectations not actual facts. Third, not everyone that buys leads should be working in this industry. Lead providers do not qualify their clients for knowledge and sales ability (or personality for that matter). I think 44% is obsurdly high and that company is fluffing thier numbers. Imagine for one second that most brokers are seeing approximately a 5% closing ratio on their internet leads. No let’s assume that the leads are sold an astounding 5 times. No matter how you slice it that’s only a 25% closing ratio. 44% is completely bogus or let me guess, these are those fictional exclusive leads right? These leads came from the same guy that sold Jack his beanstalk beans right? Someone, somewhere filled out only one form to get help with the largest investment in their life and then wait paitently by the phone for that one call from that one reputable mortgage broker that they were randomly assigned to via the WORLD WIDE WEB. Am I missing something here? My estimate is that overall approximately 15 - 30% of the leads provided from any reputable lead company go to the closing table. That’s a real number. Now let’s discuss something a little more solid than exclusive leads and astronomical closing ratios, does anyone know where I can go to purchase a unicorn?
some insider | Jul 19, 2007 | Reply
What would be more telling about this statistic is if they could say that 44% of the consumers that funded a loan did so as a result of their inquiry with Big Mortgage Leads. My assumption (and I haven’t seen the study) would be, and please correct me if I’m wrong, they probably just pulled title information on consumers that both funded a loan and made an inquiry via their platform but there is not necessarily any correlation as to whether or not the funding was as a direct result of their inquiry with Big Mortgage Leads.
That said, I did have first hand experience with a major lead provider moving from selling leads 3 times to 4 and in my experience, there really was no drama that entailed. Of course, at that time, the lead market industry was much younger, we were still within the refi boom and there weren’t as many unethical companies in the industry yet, as there are now. That said, I think the difference between 3 and 5 is really insignificant. What is significant is that since the vast majority of the companies that sell internet leads buy leads from other sources (be it an affiliate or another unethical lead company) and the consumers that somehow get caught up in these lists get churned like an old pair of sock in a washing machine. Like Lead Critic’s example, their information can end up getting bought and resold dozens of times over years, literally. The net result of this, then, is the lead industry as a whole get a bad name.
I think the key, is to follow the great points in the previous post as to how to shop mortgage lead companies because if a company can’t satisfy every condition noted, then you are simply setting yourself up for disaster.
Lead Critic | Jul 19, 2007 | Reply
I believe that these numbers are taking into account any closing or app from any broker or bank.
I am just suprised that less than half found what they were looking for. I would think this number would be slightly higher.
Of course lead buyers work the hell out of the leads and that supports my point that I am also siprised that many of the leads cannot recall the name of any of the companies that contacted them.
Noel | Jul 19, 2007 | Reply
There are going to be changes in the near future to avoid many of these issues, I think the better focused lead sources might incorporate some type of ID assigned to the buyer, and inform the borrower not to talk to anyone but the ones with the ID’s assigned. And/or better branding of our names by the generator such as emails with our logos, etc. need to be more efficient. Only then will some of the calls, lack of knowing who we are, ect. diminish. Of course someone can always start up another company and only sell the lead 1 time for the appropriate price, do you think that lead would sell?
Avi Fischer | Jul 19, 2007 | Reply
I agree with webstertm. The 44% number is likely an inflated figure. There is good economic literature on the excess of choice producing paralysis, and it is possible that the impact of increased lead distribution could increase the amount of paralysis at some exponential rate. It is certainly possible that there is a “golden rule” to lead selling which produces the maximum closing rate, however good data seems to be hard to come by in this industry. I think if a “golden ratio” could be found by lead providers they would likely adhere to it because in the end they care about happy customers. Increasing the distribution of leads to the point that closing rates fall drastically is a losing proposition for the lead providers in the long term. I am sure this will come up at Leads2007.
jthompson | Jul 19, 2007 | Reply
yes it would sell Noel–3 times the price but well worth the quality–in my humnble opinion.
greg
Lead Critic | Jul 19, 2007 | Reply
Good point avi.
Any thoughts or speculation on how to increase the number of conversions and decease the paralysis? Would it include selling the leads less?
BigMortgageLeads | Jul 19, 2007 | Reply
Thanks to everyone who read our survey and commented on the results. To help illuminate some of the numbers, we’ve posted some additional details at http://www.bigmortgageleads.com/blog . Looking forward to continuing the discussion.
Roxy0916 | Jul 19, 2007 | Reply
This post was clearly written by someone responsible for generating leads, but has never had to work the leads. How about some accountability on the way the leads are generated?! When will the lead providers stop telling people that rates are 40 year lows, fixed 30 year loans at 3%, etc. How much of this breakdown in trust is from the false advertising that lead companies are running. Stop setting the borrowers and the brokers/banks up for failure and advertise with integrity. That alone would be a huge step in the right direction. And come on, people are going to take the lowest rate and the lowest price every time. I don’t care how sweet and caring you are on the phone. Let’s not kid ourselves, if it weren’t the driving force in business decisions we wouldn’t have call centers in India or tire factories in Mexico.
webstertm | Jul 19, 2007 | Reply
Let’s clear up a few things. First (Roxy0916), I have first hand experience working, generating and selling the leads. Second (Avi and thanks for your support), I know that the innate fall out ratio of many brokers is much higher than they let onto. Third (Noel), There is no way possible in a capatilistic country to brand a lead and tell the prospect to only do business with the people they are assigned. If a lead company could do that then the price per lead would be around $3,000 since it would then become a sure thing. Which I am sure some people could mess up anyway. Fourth (Roxy0916), even when a company doesn’t advertise rates and terms so many unscrupulous companies do that the prospect becomes confussed and of course repeats whatever may work in their favor such as “I’m already approved” or “how about that 3% rate?” Fifth (everyone basically), the reason you have call centers in India and Mexico is because brokers are cheap. They want to get high quality data that will lead to high closing ratios where they can net $5,000 or more per closing and only pay $15 per lead. So, when they are out there shopping by price the unscrupulous companies hear their cry and give them the price they want even though it will not produce the results. Pay too much for a lead and you get nothing and pay to little and the company has no incentive to not sell it again. Lastly (basically everyone again), Paralysis is a natural part of business. Especially the mortgage and real estate world. I hear insane claims every day from my prospects that they close 80 - 90% of the apps that they take. I can assure you one of two things. Either they A. don’t take a lot of apps or B. are lying. More than likely it’s both. Leads will always have a bad rap because the one deciding if they work or not is the broker. Explain why I have clients that close a ton of my product and have been with me for over 2 and half years and others that get the exact same product and couldn’t close a door much less a loan. It must be the lead, it could never be the broker
Noel | Jul 19, 2007 | Reply
well i can say the post was not written by a lead source generator but a true user, however all valid points, love the unicorn part. That’s why marketing personel have jobs, to distinguish the bogus providers from the solid performers. thanks for the laughs all
Noel | Jul 19, 2007 | Reply
Juicy Leads, yes you can sell a branded product, Lending Tree does it all day long, clients clamor to do business with them, even with their intrusive big brother setup and silly product requirements So that claim doesn’t go far. Most buyers who have any savvy don’t purchase aged leads, dated product or batched leads then hope to have 80% funding rates out of apps taken. Just plain silly. Every shop is different and assuming that lead providers sell leads to small broker shops where the lead goes directly to a sitting sales member who can either dial it or not, obviously the results can vary, probably with most saying the leads suck. Not many end users provide useful metrics, that’s why the best of us develop relationships with our providers and provide metrics to VP’s or above and not just metrics but metrics that mean something, think Revenue per lead/loan, revenue to return ratios, etc. one reason our lead channels succeed is our vendors actually use our metrics to optimize our accounts. Next
Roxy0916 | Jul 19, 2007 | Reply
My comments were toward the person that wrote the original post, which I don’t believe was you webstertm. But could you be anymore slanted in your response? What brokers are you dealing with that cry if they don’t pay $15 per lead and expect $5,000 per deal? I suggest you fire your brokers and deal with people that understand good business. I have lived by the fact that not every dollar is a good dollar, and its something I instill in my team.
Don’t break your back or waste your time with brokers that expect unrealistic price points and profit margins. As a broker my expectations are to fund 4.26% of my leads, because that is my rolling average based on all of my lead sources. I don’t think that is unrealistic or to much to ask for. I constantly fire the companies that deliver under performing leads. Why am I going to waste my time trying to drive the price down for leads that are not converting. I don’t care if you sell me the lead for $5, a bad lead is a bad lead at any price and no matter how cheap the lead is, I have wasted my money.
Furthermore I don’t bother my lead sources with the amount of money I need to make per deal because its not their issue, its my issue. If my guys can’t make the money we need to make, then its a training issue, not a lead issue.
I still have a very hard time believing that the post was written by anyone that is currently selling leads in today’s market. I played little league baseball, but I don’t go around calling myself a short stop.
Roxy0916 | Jul 19, 2007 | Reply
I forgot to mention that I ride a unicorn to and from work every day.
Noel | Jul 19, 2007 | Reply
The post was written by a “Buyer” of leads, anyone who has visited the site and knows this forum, etc. would know that. Roxy we pay very close attention to the revenues per loan/lead source as many people fail in this industry because they only look at cost per funded loan by source. What does it matter if my shop only funds 55 loans from Source X and we spent X amount = $2200 per funded loan. What if I made $8200 per loan, easy number to figure out the revenue/return ratio. Would you call that a bad lead and just remove that provider, maybe. Anyone with any sense of this market and background in marketing analyzes channels and not just providers. Maybe I’m speaking out of turn because we have a budget and 17 suppliers and over 29 channels from those suppliers and are not just buying leads from 1-3 companies for a few guys here and there. But i could be speaking out of turn as well, Someone let me know. Thanks all.
Lead Critic | Jul 19, 2007 | Reply
I think people are misunderstanding each other here.
First LeadCritic is written by a lead buyer
The post about the stats is obviously written by a seller, Big Mortgage Leads.
The point of the post is to spark discussion about how we the industry can improve the customer experience and at the same time improve conversions.
Any ideas…Noel suggest buyers and sellers should be more open to sharing data, which I agree. Roxy thinks better advertising may help…any other ideas.
Webster, any ideas??
Noel | Jul 19, 2007 | Reply
well enough said, good moderation Lead Critic.
webstertm | Jul 20, 2007 | Reply
LeadCritic, I think you know I have ideas and no fear of voicing them. The overwhelming problem inherent in this or any other system is that it is impossible to regulate. For example, it is illeagle for any company to advertise rates and terms if they do not hold a mortgage brokers license. Yet this still happens. There is no way to know if you are working with that company or not because if you ask for sample advertising they will provide bogus ads. When you hear from the prospect about the questionable advertising they will claim it was the other bad guys out there. The only effect regulations comes from you buyers out there. Send the message by sending your dollars to the right place. By only the data that works for your company. Research the companies fully and remember that online bashing is so common that is hard to put any weight on. I read in discover recently about the negative effects of the anonimity of the internet and how it brings out the worst element. Consider what you hear and HOW it is said. Does the person that is blasting away sound like someone you would want to speak with for more than 5 seconds? If not, chances are they’re just venting. Remember heraclitus says “A dog barks at what it does not understand” Usually the internet and chat rooms are full of barking dogs.
All that being said LeadCritic I want to commend you on running a positive discussion group. I have linked to your site from mine and I will share that page with you outside of here as I am not advertising just complenting.
webstertm | Jul 20, 2007 | Reply
One more thing (and I apologize for being long winded)
Noel, you’re right I do need to work on eliminating some clients, helping some grow and finding better suited clients. I am faced with the same issues that most brokers are faced with. Sometimes you just close the deal even if you not really fond of the client. Add to it that some of the biggest pains in the you know what have turned out to be the best clients after they put me through my paces. This forum seems to be made up of the better element than I have seen as an average in the industry. Roxy, I am slanted because I believe in my products (well, mostly) and I love what I do. And I asked where I could buy the unicorn, but I see you just want to rub in my face your cool form of transportation. I’ll settle with a winged horse as well
Avi Fischer | Jul 20, 2007 | Reply
I think there is significant room for consumer education to improve leads. The more people know what they want, and what they can reasonably afford, the less chance that they will suffer from paralysis. If people can be educated through advertising and marketing by lead generators they will come into the buying process with much more confidence and knowledge. That confidence will allow them to better know who which lender is giving them a solid deal and help them pull the trigger quickly and help them promote referral business to lenders or providers. I think one reason why Lending Tree and LMB have been successful is that they have been able to position themselves in the market as a consumer advocate. Essentially “we help you get the best loan”. The more that promise comes true the more referral business they will get. The more confident and good leads they produce the more happy home-owning customers they will have, which will produce many new good leads through word of mouth. Finding innovative ways to educate consumers would be my long-term focus if I were a lead provider. One important aspect of that is simply accessing potential customers which is greatly added through “breakthrough” advertising. Simple plan: 1. good ads to grab attention. 2) Use attention to educate. 3)Use education to create better leads. 4) Sell better leads, make more money. Rinse/Repeat
Avi Fischer | Jul 20, 2007 | Reply
I just wanted to ad that Edmunds does a great job of using the education model in the automotive industry.
webstertm | Jul 20, 2007 | Reply
Avi, I like you, but it seems that your rose colored glasses are getting in the way of you understanding the inherent problem with your scenario. LMB and Lending Tree only generate what they generate because their collective ad campaigns are insanely high in terms of dollars spent. They do not educate and they don’t care to. In fact Lending Tree is facing several lawsuits because they have a mortgage company and they cherry pick leads to close themselves. Some advocate huh? I do think that consumers should be better educated, but that will be the death of brokering. Here’s why with one good portal anyone can broker their own loan and I see that being the future anyway. Not one broker has anything to offer, in terms of products, that no other broker within a stones throw of them offers. And comparing the ethereal data world to the tangible automotive world is a serious leap of faith. Guys remember the best loan officer doesn’t always get the deal, nor does it always go to the best deal or rate. It almost always goes to the best sales person. If you don’t believe that then please explain Ameriquest (or New Century) to me. Education is important, but you’d have to find the Chic-Fil-A of lead generation.
Lead Critic | Jul 21, 2007 | Reply
Webster,
There are already website portals that allow the consumer to price and lock their own loan with out the assistance of a loan officer. The broker will never go away and I say that even though I am a proponent of fully automating the loan process and have written about this in a few other posts. People will always need or want the option to speak to a live person.
Education is one piece to improving the process. The other piece is the aggregation of multiple data sets from multiple companies in hopes of having a large enough base of data to share with the open market. The Marketwatch widget does this on small level and a number of inefficiencies. The other key is people speaking out about lead providers that are good and bad. Buyers need to be vocal about their complaints. Being vocal about the industry and voicing your opinion, right or wrong, is a start. Then standardized regulations would be nice as well.
Lead Critic | Jul 21, 2007 | Reply
…I am still trying to figuer out the chic-fil-a reference…lol
Paul Knag | Jul 21, 2007 | Reply
LC, I agree. I think, Webster has been smoking the funny stuff. I had to Google “Chic-Fil-A” but still don’t get it. Maybe he can explain it to me in Tampa.
Your post is on target to the points
1. Presuming we’re including any lender; 44% is far to low a rate an application/serious intent level for a consumer who has gone to the hassle of filling out a mortgage lead form and raised his hand as being in market.
2. The overwhelming response that will be received on certain lead types is enough to put off many borrowers from using the internet to transact. They will retreat back into anonymity and financial services lead gen will be held suspect by them in the future until the model changes.
3. Marketers, you need to improve the customer experience. Figuing out how to do this, will make you the next Matt Coffin/Doug Lebda.
The current lenders compete/you win/fill out the form model will not last much longer.
webstertm | Jul 23, 2007 | Reply
It must be my thought that everyone has the same restraunts that we have here. Chic-Fil-A is a very religious company even though they are int he business of making money they still manage to put their employees and their customers before the company. Bascially, you can rely on Chic-Fil-A to do the right thing at all times with little to no regard for profits. They are a rarity in the industry of fast food and I was implying that we would need a company of that caliber to start making significant differences in the mortgage industry. I guess I’m just a misunderstood genius HAHAHA
Lead Critic | Jul 23, 2007 | Reply
Lol