Lead Generation Under a Microscope
Origination NewsEven as home prices continued to rise, most lenders and brokers were getting ready for an inevitable downturn. As deals became fewer and competition stiffer, the market slowdown created a lead-generation testing ground.
Internet leads in particular came under the microscope, even as the lead marketplace expanded. To LendingTree, LowerMyBills, BankRate, LoanWeb and other established lead sources, add LeadQual, LeadPoint and HouseValues (which recently acquired The Loan Page). And to those, add brand-new players like LendingGear. As the mob of vendors keeps getting larger, how do you figure out which lead-generation providers will do you some good?
Too often, a good lead is hard to find. Mortgage professionals discovered long ago that while Internet leads were cheap, they were unreliable, offering single-digit conversion rates that did not keep pace with traditional lead sources. Three out of four mortgage shoppers on the Internet are window-shopping for rates and fees. Any interaction they make with a website is likely to be a casual exploration. You don’t have to be actually looking for a loan in order to fill out an online form. But when a prospect is ready to act, the technology is now in place to take one of those forms, place a call to the person who had filled it out, ask the right follow-up questions and make a quick hot-call transfer to a loan officer paying for that lead.
Which companies do it right? If you want to find out which lead-generation companies offer a good product, going to conferences is a good idea. Inman News’ Real Estate Connect conference in July featured an Internet Mortgage Marketing Summit, where lead generation was the primary topic. Back-to-back mortgage sessions took up search engine and portal marketing, pay-per-click, pay-per-call, lead validation, going beyond online loan applications and how to work Internet leads. Mortgage executives and loan officers had a chance to hear from the new lead vendors and take their current providers to task with complaints about lead quality.
Another option is to contact consultants that specialize in serving brokers. Jason Denio, CEO of Springfield, Mass.-based Foresite Group Inc. heads one such firm. No fan of Internet leads, he is advising loan officers to stick with their contact-management software to generate referrals and otherwise drum up new business.
“Two years ago, it was buy leads and make money,” Mr. Denio told me. “There was a big push on hot-call transfers.” He has seen a huge shift in that arena. “The companies that were buying leads are not doing that any more.” He said none of his customers are asking about hot-call transfers now. “The knock was on the quality of the leads.”
But hold on a second. Others say dismissing Internet leads can be a mistake. Domania founder Steven Kropper, now the CEO of startup BankOnRealEstate.com (stay tuned for groundbreaking announcements), has some thoughts on that. The solution to closing the gap “between crummy low-conversion Web leads and the performance of traditional off-line marketing channels,” states Mr. Kropper, is to incubate those leads. He points to LeadQual, founded by HomeGain veterans Andrew Coleman and Glenn Houk, as one of the few companies “filtering, incubating or otherwise warming up leads.”
The prevailing myth of filtering Internet leads is often paired with another myth: exclusivity, says LeadQual co-founder Glenn Houk. “There is no such thing as an exclusive lead.” Consumers ready to apply for a loan - the ones you most want to reach - do not sit around waiting for some matchmaker to find them. When Internet borrowers get serious, they want service this minute, during this call to your 800 number or immediately (if not sooner) after clicking the send button on an online form.
Speed and customization as the key factors in converting the Internet loan seekers who are actually ready to act, says Mr. Houk. Thus LeadQual finds out what the prospect wants and needs, matches that information with the criteria of the mortgage broker, and makes the hot-call transfer without first putting the consumer on hold. In effect, the broker or loan consultant becomes part of a dispersed but efficient call-center hunt group.
Since studies tell us that Internet borrowers are pleased when their initial enquiries gets an immediate response, even if the consumer is not ready to transact, the first loan consultant to respond is the one who scores that initial victory. Having done that, said Mr. Houk, the loan consultant should retain the prospect’s contact information for longer-range “drip-marketing” contacts, such as opt-in e-mail.
Calling itself the world’s first real-time lead exchange, a company called LeadPoint offers to revolutionize mortgage leads on the Internet by reducing the cost per funded loan. That company also was founded by lead-generation veterans and started trading leads in November 2004. Los Angeles-based LeadPoint has traded some 800,000 leads to date and currently trades some 2000 leads a day. LeadPoint resembles eBay in that the price of leads is arrived at in an auction rather than by signed contract. Buyer and lender criteria find a match-up on the exchange and a qualified hot transfer is made to the highest bidder.
By offering an efficient marketplace and charging a fraction of what leading competitors charge for a lead, LeadPoint offers to maximize ROI and margin for buyers and sellers alike. Having one point of access means lead buyers are not tied to any one vendor. If a mortgage lender or broker buying leads finds that they are converting poorly, the buyer can lower his bids.
The leads offered on LeadPoint are exclusive. Nevertheless, the company claims that it receives over 20 applications from sellers per day, though it doesn’t accept that many. All buyers are given a dropdown feedback box to report leads that don’t work or ones that contain incomplete information. LeadPoint ranks its sellers and says it works with them to improve performance and kicks out the laggards.
Speaking of laggards, hot-call transfers don’t turn into closed loans by themselves. The loan officer on the receiving end has to be hot, too. All sources agree that the ones who succeed best are those who make themselves instantly available to take calls at times when borrowers are most likely to call. Yes, that means working some weekend hours.
Mortgage brokers should keep an eye on a Wayne, Pa.-based startup called LendingGear.com, which connects brokers and lenders in another real-time auction environment. The LendingGear value proposition is to help brokers get accurate scenario results without having to upload loan app data to multiple AUS systems. When brokers complete a single thorough scenario form, lenders are notified by email of scenarios that fit pre-selected criteria. They then click through these notifications to place their bids. Brokers receive e-mail notifications and click through to see various offers on one page.
LendingGear president Marcus Cudd, a veteran of the wholesale lending ranks, says brokers are eager for a way to avoid the “two or three uploads it takes to get the prequal they are looking for.” Since most automated underwriting systems have a limited number of guidelines in the system and set interest rates, he notes, the conditions and stipulations returned give lenders plenty of room to back out of a preliminary decision.
LendingGear offers lenders a chance to “create profiles of loan types they are actually looking for.” Hot transfers do not turn into actual deals unless the pre-qualification process is focused on the business a lender is actually targeting, said Mr. Cudd, “and I don’t think you can completely automate that process.”
Once again, automated systems can return preliminary indications, but they can’t interrogate a prospect to turn a lead into a deal that lenders will actually honor. Just as it takes human intervention to incubate an Internet lead, it takes a live loan professional to close a deal.
About LeadPoint
LeadPoint is the world’s first lead exchange marketplace. Buyers efficiently acquire customers and sellers easily increase profits through LeadPoint’s innovative trading platform and marketplace model. The privately held company was founded in 2004 and is based in Los Angeles. For more information please visit LeadPoint on the web at http://www.leadpoint.com.
Solutions
LeadClass Quality
Quality filtering functionality that enables you to select the quality that best suits your operational needs. Click to read more
LeadPoint Connect
A new feature that enables buyers and sellers to interact across our state-of-the-art platform. Click to read more
First Call
Convert more leads with our First Call service! Click to read more