A company that does not get mentioned here as frequently as they probably should, for what ever reason, released their bi-annual benchmark study last week. I was going to cover it as soon as it came out, but I was actually going to make an effort to try and acquire the study, but did not have any luck, so this post isn’t as timely as I would have liked, but better late then never.

That said, many of you have probably already seen the press release, if not you can download it here, MortgageBot Benchmark Study. First, I love the fact that MortgageBot puts the time and effort into putting a report like this together for their clients. They have the data, so why not share it?

The report takes a look at a number of key statistics like demographic profiles, average approval rates and loan abandonment rates. Here is some of their public findings:

--  The online channel continues to generate more loans. Approximately 40
    percent of lenders take more than 25 percent of their applications via the
    online channel -- up from only one percent at the start of the decade.

--  More and more borrowers prefer the online channel. During 2008, the
    number of people completing online mortgage applications increased in every
    demographic category from 30 to 69 years of age. The "Gen X" demographic
    continued to outperform other groups, with nearly one in three of all
    online mortgage applications coming from adults in the 30 to 39-year-old
    bracket.

--  Online borrowers' household income is increasing. Despite a
    challenging economy in 2008, the household income of online borrowers rose
    to $93,717 -- an increase of 10 percent compared to 2006.

--  Today's online borrowers have increasingly solid credit ratings. The
    average credit score of online borrowers continues to climb -- rising from
    an average of 709 in 2006 to 732 in 2008.

I highlighted some very interesting points. Let me get off track just a bit. Over the last month I had a number of conversations regarding the mortgage industry and the statement that was being repeated by the different industry players was that mortgage seemed to be making a little come back. What does that mean? It meant that mortgage lead sales seem to rebounding. And these numbers support those comments, to an extent. It also backs up the fact that no matter how leads are going to be generated online in the future they are going to be generated online. Additionally you are going to have to figure the model out and learn how to work leads properly.

As much as we like to discuss the fact that the consumer is sick of the current process of and receiving 100′s of calls from pushy loan officers the facts remain that more and more people are going online for their mortgage assistance. Sure, the look and process of collecting and distributing mortgage leads may change, but again people will still revert to the Internet for information. Are you ready? Can you efficiently work internet inquiries? If not, you might want to look into it.

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Guest Post By Adrian Huth, friend and “good guy” in the industry.

Allow me to introduce myself…. I am an individual who has been in the lead generation industry going on 10 years.  I have seen the industry involve from the early days of the mortgage boom to the now recent collapse and repositioning to new verticals gaining increasing value such as loan modification and debt consolidation leads. I have seen the evolution of the search engines and SEO marketing and was there in the beginning of cost per click marketing.  I have witnessed how lead generation and lead quality was affected by the rise of the affiliate networks, display advertising, email marketing and incentivized leads.  I saw first hand how all these different types of marketing caused lead buyers to cancel and how some increased closing ratios.  Even back 4 years ago with all these types of lead generation I began to suspect that people are playing a game of buying and selling leads to each other and that everyone is becoming the enemy of the other.  Lead generation has now evolved into screwing people over and this has now become the de facto business model and state of the industry.

Price is Everything, Right?

Now lets say I’m a new lead gen company and I need to get lead buyers on board in order to get my company going.  The problem is I don’t have any trust or unique value propositions of the leads I will sell to the lead buyer.  Well what if I sell my leads less than the competition?  For a lead buyer getting leads for less than the competition must be attractive and a company just called me saying they can get “high quality” “exclusive” leads for less than what I am paying now.  Great so now I have the lead buyers on board and I need to generate leads fo them because they will want a considerable volume.  How can such company generate these leads for less than the competition and keep a profit margin of 80%?

Lets start with affiliate networks.  Hey popular network how bout you run my offer for $20 dollars a payout for a debt consolidation conversion.  Network agrees because most debt offers are at 15 or less and this sounds like a good offer.  But wait the company is selling the leads for $20 exclusive to the lead buyer so how is the company going to make any money.  Simple.  Only fire the pixel on the 4th or 5th time the lead capture form is filled out.  Also, lets double or triple sell the lead at the same time to maximize profit margins.  Then we will scrub 10 to 20% of the leads as well in order to squeeze a little more revenue out in the end.  Brilliant!

Conversion rates unfortunately probably won’t be really good though for the publishers because the same form will convert at only 5% compared to 20% of the offer paying out a $15.  To offset this lets create incentivized offers using ebooks and endorsed downloads by celebrities.  We can pull the offer once a cease and desist letter is given to the lawyers.  Problem solved and our mailers will love it as well because of the higher conversion rates.

Looks like a Debt Lead But Sure Doesn’t Smell Like One!

So I just bought 4000 debt leads and closed only 3 deals can I have my money back?  “Hi, I just received your inquiry that you are interested in consolidating your debt…  What!?  You aren’t interested and only wanted to talk with Oprah!?” I thought the lead company said these leads were generated organically? Unfortunately you paid by wire transfer so the best you can do is cancel and give to your legal department.  How do companies like this stay in business when they know you are going to cancel?  Because they know you are going to cancel and will slash and burn the next client the same way.  As long as new lead buyers fall for the cheaper leads they can count on new clients signing up for a month or two.

How To Protect Yourself

The real victim here is actually the lead aggregator.  These are the lead companies that have signed up lead buyers and instead of generating leads in house they buy posted leads from companies described above.  As most of the clients will cancel because of the quality of the leads the company is left with nothing or at best signing up new lead buyers and canceling the lead contract with said company.  At the end of the day though the damage has been done and for companies in the business for the long haul reputation of the quality of your leads can reverberate shock waves that can be hard to recover.  As for the company selling leads that will never close they don’t care because they will just change the name of the company once no one will buy leads from them anymore.  The following are steps to take to help protect yourself as a lead buyer.

1.  Ask to see landing pages.

This won’t always work as companies will frequently have multiple landing pages and domains in which they are generating leads.

2.  Show me the marketing.

If they say they generate leads from organic search ask to see what keywords the company ranks for in the search engines.  If they claim they generate leads by PPC ask to see some ads that show when certain keywords are typed.

3.  Start small.

Buy a small amount of leads at first and be responsible for checking on the quality from your sales team and if these leads are closing or simply hanging up when you call.

4.  Pay by credit card.

Though there are lead buyers out there that scam the system as well by chargeback every lead order they buy this can give you some reassurance that if a company sells you 100% bogus leads you can take immediate recourse.

5.  Ask for references.

Surely a company can give you the name and phone number of a company which has success in buying leads from them.

6.  Research the ceo and company name in Google. 

Does the company frequently come up in Google on the ripoff report or as a general quality lead business.  How many years has the company been doing business?

7.  Use a lead management system with reporting.

The more accurate the data you have on the source of what deals are closing and what ones do not only helps figure out the best place to spend your money OR more importantly where not to spend your money.

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Last post I gave a brief synopsis of the original complaint submitted by LG Technologies and also picked a few statements from Edwards Shin declaration.

One of the bigger complaints or allegations made by LG is that Shin purposely diverted payments into his own personal bank account that was supposed to have gone into LG’s account. They also claim that it is possible that LeadPoint or Marc Diana were involved with the misdirection of payments. Both Shin and LeadPoint refute these allegations in their declarations.

Shin claims that it was simple mistake due to similar username and passwords and that every mis-directed payment was paid to LG with cashier checks and that everything was made right as soon as he was aware of the error. Just to remind you, LG is claiming that over million dollars were mis directed into Shin’s personal account. According to Thomas Moyes, LG’s CFO, declaration made on 4/21 and the submission of LG bank statements, Shin did not make all the payments he claims to have made. LG bank statements show that Shin only paid back $496,679.64 out of the $1,071.679.61.

In defense of any collusion with LeadPoint, CFO Jeff Spain made a declaration recounting the happenings from their point of view. Spain claims first that LeadPoint has no control of over where payments are sent to and that is left completely up to the user. All users/clients of LeadPoint set up and have full control of their accounts via an online portal that is username and password protected. LeadPoint, according to Spain, has no knowledge of the passwords of users or have any ability to manipulate account details. With regards to the missing payments in LG’s account, Spain claims that after being aware of the situation made by LG’s CFO, Moyes, proper steps were taken to inform Shin that payments were being directed to a wrong account and that it needed to be changed. Emails submitted to the court support Spains statements. Spain also claims that he personally followed up with Shin to insure that the proper steps were made and according to Spain, Shin assured him that everything was taken care of. At that point he assumed everything was corrected.

Spain then was surprised to receive another email from Moyes stating another discrepancy. At that point Spain provided detailed payment records to Moyes of where the money was sent to.

Any thoughts on this case????

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I am going to come clean from the outset and say that, “no,” I don’t have the stones to make the call that we have indeed hit a, “bottom,” in the housing market. But I have seen a couple of things lately that lead me to believe we are at least close.

One revelation that I had recently was that consumers may have finally moved on from hoping that we will again see the market conditions experienced during the ref-boom. This dawned on me after a conversation with a client who was having particular success with a mail campaign. They attributed that success to the timing of the drop in conjunction with Bush signing into action the Housing Bill. I don’t believe that there was any correlation because if there was, we would have likely seen inquiry volumes spike in the Internet lead gen industry. But things have remained relatively flat and I think this is a good sign.

If you remember the beginning of the year when the Fed lowered interest rates for several consecutive quarters, inquiry volume and mortgage applications spiked. I think consumers still had the unrealistic expectation that the Fed rate can directly influence mortgage rates, moreover I think they unrealistically believed that the lower rates could bring back the frenzy of mortgage activity we were seeing up until a couple of years ago.

Since then we have seen even more Fed rate decreases coupled with instances of the Fed rate remaining unchanged in the face of inflation. We have also seen a major piece of sweeping legislation tailored to provide a boost to the mortgage industry. In as much time, inquiry and application volumes have remained relatively flat. I think this is a reflection of two potential things:

a) Defeat. The consumer is beaten and broken and is as unresponsive as your stoner-cousin for whom nothing would lift him off the couch.

b) Complacency. The consumer’s expectations have been re-set and they know the frenzied environment of the refi-boom is likely never to be seen again.

I believe we are seeing “B” which, while it certainly presents a more challenging arena for business growth, it is at least more realistic than consumers thinking that a 2% Fed Funds rate means they can refinance their house at 2%. Call me an optimist, but I actually think that this complacency hints at a bottom because with consumers no longer having unrealistic expectations, then maybe we in the mortgage business can get back to helping people and solving problems rather than refinancing with cash-out so that someone can finance a lavish vacation.

Another encouraging sign that I saw recently was in an article here hinting that California may be at a bottom in the realty and housing market. Like me, the author wasn’t bold enough to call an actual bottom, but he cited many indicators that provided hope.

• “A rebound in home sales as renters become home owners”
• “Stability in the pricing of Homes”

Specifically he claims, “Home ownership in California is growing affordable again thanks to reasonably low mortgage rates and the fall in home prices, fuelled by the firesale of foreclosed homes. As a result, home sales are picking up, foreshadowing a stabilization in home prices before year end.”

His argument is essentially, then, that since California constitutes 25% of the housing market in the US, as goes California, so goes the rest of the country.

I hope he is right. There is no doubt that we in the mortgage industry are looking for some wind for our sails. Hopefully this can provide a little of that. I, for one, feel that we may be rounding a corner. Any thoughts?

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It is funny how often times the simplest, most often overlooked, things are what can make us the most successful. Lead management is one of those things. Sure, some of the details can get complex, but the concept is simple. And lead management software has made the processes a snap to implement.

At the end of the day an effective lead management system is one that solves the much researched problem of efficient supply chain management.

Optimizing your lead management system, whether it is software or manual, is fundamentally a process of keeping a delicate balance of:

• raw materials or inventory (leads),
• manufacturing capacity or through-put (sales capacity–ability, motivation, and willingness to work through the quantity of leads),
• ability to be efficient with the raw material (leads) with limited waste (lack of follow-up or “single call and dump”),
• ability to match the end consumer’s demand (in this context the lender, wholesaler, or investor),
• and the ability to analyze and measure for purposes of improvement

The concept is fairly simple the hard part is implementing without making the process too complex to execute or scaling your process beyond you and a couple of buddies type mortgage operation. Those who figure it out will be the big survivors and winners in this mortgage market.

Copy of presentation: Optimizing Lead Management, by Kaleidico

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I don’t know about you, but I can feel the pressure building around the industry in more ways then one. Since Bush signed the H.R. 5140 stimulus package last week people have been waiting on the side lines for the new loan amounts to kick in. As a home owner in Southern CA I can benefit from the increase and yes I am waiting until the increase happens. It could possibly save me a few hundred dollars a month. In some instances though I feel like I am playing a craps game in Vegas.  Every week that goes by it seems property values decline more and more. Hurry up FHA!

Aside from my personal anticipation there our thousands and thousands of other home owners that will benefit from the increase and are waiting on the sidelines too. Along with these home owners there are even more brokers waiting  for the influx of traffic that will come from the change. Similar to the increase in traffic the industry saw from the fed rate cut there will be one when the loan amounts cap is raised. I think there will be a larger spike this time.

I  know many of you are anticipating the increase like I am, but what are you doing to prepare your business for the increase in inquiries? It is going to be imperative that you are ready and prepared. Is your team ready to process the many applications? Is your sales team knowledgeable with the guidelines of at least 5 specific products? Speed, product knowledge and customer service is going to be very important to efficiently close as many loans as possible.

Now we just have to wait…

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This is one of the biggest mistakes I see lead buyers making with their leads. An Internet leads, if generated with any level of integrity, is not a cold call. It is an initiated, hand waver!

Think about what a quality Internet consumer lead implies:

• There was a need
• They have done some level of research (i.e., did a search, read an email, had a discussion)
• They provided private contact information

They are asking to be called so don’t treat them like strangers–complete the experience.If you have not already read my ebook, What are Internet Leads? you may want to grab that to reinforce some of the concepts in this post.

Stop looking at a lead–that name, email, and phone number–as a complete and discrete item in and of itself. To be consistently successful, very successful, with Internet leads you need to think of a lead as one step in a complete customer experience. And if you do things correctly you, as sales, can be the very quick fulfillment of that process.

When you receive a new lead it is important that you have some knowledge of where the consumer has been and how they got to you. I am firmly in the camp that sales people show know the source of the lead. They should also be armed with a logical transition script. That transition should very simply link the sales call to the online experience the consumer just completed.

• “Hi Mary, this is Joe Banker from AAA Mortgage and I am following up on your rate inquiry from Bankrate,” or
• “Mr Thompson I understand you a looking to put your home to work for you in retirement? Did you find the information about reverse mortgages informative on the ZipSearch website?”
• “Ben, I see you found us through our partnership with LendingTree. Did you know we are one of their 5 star lenders? Can I transfer you to one of our LendingTree certified bankers?”

A quick, responsive, personalized experience will ensure that your Internet leads don’t turn into cold calls. This approach and personal attitude should extend to your voice mails and emails. Here are a few tips:

• Take sufficient notes on each attempt to leave a unique and logical follow-up voice mail
• When you leave multiple voice mails reference the number of times you have attempted and the time of your last and next attempt
• Emails must be contextual. Do not set-up mindless time-based emails that are disconnect from your call campaign

Here are a few common, but dangerous practices that will turn those warm Internet leads into instant cold calls:

• Starting your conversation off by pitching your bread and butter product when the lead tells you what they want
• Being the second or third to contact them
• Predictive/auto dialers–save these blenders for debt collectors and triggers

They leads have spent their time being anonymous and researching their needs in private on the Web. Now, they have raised their hands and said I have a question. Treat them like a person–complete the experience.

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This went under the radar a few day’s ago and I have finally got around to talking about it here.

On the 27th, the Detroit Free Press announced that Quicken Loans and RockBridge Equity Partners purchased two California companies. The first was TransUnion Title and Escrow, which will help Quickens affiliate, Title Source to increase its reach to all 58 California counties.

The second, which is worth noting, was San Diego based One Reverse Mortgage. The 100 employee company specializes in FHA backed reverse mortgages and is going to help propel Quicken into the reverse mortgage game.

“This is a great start to 2008,” said Quicken Chairman Dan Gilbert. “We plan on building One Reverse Mortgage into the nation’s premiere reverse mortgage lender by leveraging Quicken Loans’ decades of best practices in technology, process, marketing, culture and client service.”

This clearly supports the shift and the growth of the reverse mortgage. I think many of us know that the Baby Boomer generation is growing older and their parents are realizing that their SS check are not cutting it and therefore are looking for ways to cash out on there equities. I have mentioned before that I have a few friends in the reverse game and are doing very well.

Maybe more of us should be taking note.

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The Internet sales environment, which most of us are increasingly operating within, is demanding a redesign of our salesforce. This redesign is going to focus in on key new expectations of Internet consumers:

• Immediacy
• Responsiveness
• Follow up/through

Unfortunately, these expectations construct some serious challenges for the traditional retail loan officer. Most are not used to:

• Needing to be hyper-connected (telephone, cell, email, text messaging, etc.)
• Managing a deal without face-to-face contact
• Potential competition on every deal
• 100% of the follow-up responsibility on the loan officer (this client-type doesn’t call you)

Consequently, numerous challenges are created for sales team leaders and managers, like:

• Driving high call volumes
• Compelling multiple call-backs
• Disciplining consistency in sales processes
• Agent fatigue
• Lead distribution and redistribution

My “Building a Sales Team” presentation guides you through the fundamentals of creating a team that can perform and excel within this harsh Internet sale environment.

For more guidance in building this type of salesforce reference some of my past posts on Better Closer Blog on topics like Sales, Sales Teams, Salesforce.

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It’s definitely that time of year again. The NFL is drawing close to an end and my baseball stats sheets and forecasters are arriving in the mail–that’s right Fantasy Baseball is in the air!

This time of year gets me all excited about stats and predicative indicators. So, this weeks best practices post and whitepaper is in tribute to Michael Lewis’ ode to Fantasy Baseball–”Moneyball.” I am about to show you what ROI, %contact, %app, AttAR, AttCR, and many more quintessential key metrics and indicators can do to optimize your loan production.

You can get more details on setting up you leads metrics program in Kaleidico’s Internet Kaleidico Lead Metrics whitepaper.

As you will see in the whitepaper, I am a big advocate of instituting metrics in a framework designed for action. My approach starts with a few high-level defined objectives. They should be broad in scope, but specifically targeted at the top line (bottomline, expense, metrics ALWAYS get you looking at your feet and those kids ALWAYS lose).

Then from the objective, I fill in a simple matrix of  specific metrics, the levels on which I am going to analyze the metrics, indicators (where am I watching for movement and irregularity), and finally pre-defined triggers (the action).

Enjoy the whitepaper and seeing your business improve through metrics.

BTW, let me know if anyone would be interested in a lead generation (buyer and sellers) community Fantasy Baseball league. I am always game for others funding the charity of my choice!

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