Leads: The Game Changing Fundamental Tip

 

In order to grow revenue, you must invest. Investing in leads is commonplace,  however, there’s a fundamental error that the majority of businesses make when dealing with leads that’s easy to fix.

The Lender’s Dilemma

The desire to beat the competition and to gain an advantage dictates constant improvement.  It’s difficult to determine where to focus resources at any company to maximize growth – especially when it comes to leads and technology.  There are so many options that constantly evolve.  This has been referred to as the lender’s dilemma.

“Large (lenders and real estate) companies) can justify investments in technology and can hire more staff because they spread the costs across more loans. But small (companies) may only have a handful of employees doing the work, which means relying even more on technology.” Sam Vallandingham President at First State Bank said on American Banker.

Quality vs Quantity

It’s perceived that the big dogs like Quicken Loans rely on high tech over high touch.  However the call centers and facilities they’ve built can easily be measured in acres rather than square feet.  Having spent time inside – the quantity is truly remarkable. Just like the small independent mortgage or real estate company, they wrestle with efficiencies each day.

Despite their size, Quicken continues to work to increase quantity while at the same time increasing quality.

Making a 1% change in efficiency for them represents an enormous win for massive companies such as Quicken.

Heat Check

Temperature has been used to define leads since neanderthals got cave mortgages.

The perception is that the greater the temperature of the lead, the more likely that lead is to close.  Lead temperature is also frequently represented by a funnel – depicting the hot leads at the bottom of the funnel. So, the further down the funnel, the higher the temperature and frequently the higher the cost.

Ideally, we all buy very hot leads – those that just need to know where to sign – but the cost of those leads continues to climb.

According to Attom Data, 56% of agents marketing budgets are spent on buying leads.  That’s a very significant amount of the budget – yet the error persists.

Fundamental Error

From a long term business perspective, evaluating leads simply on temperature is the wrong way to measure / analyze quality / value when buying leads.  Hot leads are typically the most expensive lead and also one that has greater competition. (It’s standard practice for the majority of mass produced leads to be sold to more than one person)  Additionally, LO’s and Agents are directed to drop what you are doing and pay attention to the “hot” lead.

Buying or following up solely on heat negates the much more important aspect – the propensity to close. As a new lead, the probability of success (a close) can range from only 5-10%. (according to marketing metrics)

Ask yourself:

“What leads are most likely to close with me/my company?”

This subtle change can have profound impact on your bottom line.  We’ve heard it from our clients. Investing time and money in leads that are more likely to close is a total game changer.  

The Best Lead is the one you can close.

The probability of selling to an existing customer where you have a relationship  is 60 – 70% (according to marketing metrics). Therefore working your existing/prior client database may be 19X more likely to close than “hot leads” that are new to your brand.

The trick is to become more efficient at filtering where to reveal the most likely movers from your existing customer database.

Artificial Intelligence such as Revaluate can isolate those prospects in your database that have the highest likelihood of moving – allowing sales and marketing to work leads with a high likelihood of closing, and without the fierce competition of other brands and salespeople.

Leaving Money on the Table

For the record – I’m not telling you to saying stop buying leads – but rather that you reevaluate your priorities and analyze where your time and money are spent.  For most of us, we are disproportionately focused on knee jerk reactions to new hot leads that close at a disappointingly low rate – rather than servicing those that we will close at a much higher rate in our database.  

Revaluate helps clients nationwide of all sizes find likely mover leads in your database that are more likely to close with you than anyone else.

Learn more about isolating likely movers from your existing client database.  Schedule a 30 min call with one of our data experts to learn more.

 

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Additionally:

More Data & More Insight

When it comes to efficiency technology like AI for leads, who is investing in efficiencies? Is it really only for large residential lenders?

Revaluate has sponsored a survey asking the Mortgage industry about AI and leads.  The study results will provide actionable feedback to stakeholders (those that work with leads daily). Participation is free and Mortgage companies will receive the report conclusions only if they participate in the 2 min survey.