double POSITIVE Marketing Group, Inc.

I saw this story come across my inbox today and I had to chuckle. Two of us from DoublePositive spent the last 2 days locked in a room with many of the biggest mortgage lead generators, leab buyers, and service providers that touch the mortgage leads industry. The Leads2007 Conference was a great meeting and we talked about many important issues facing the mortgage leads industry — arguably the largest and most mature online lead generation category.

We’re not an “association” per se, we’re just a bunch of companies and individuals concerned with sharing true best practices. We talked about how there have been a couple of failed attempts at organizing lead generators in the past, such as the Internet Advertising Bureau’s Lead Generation Committee and the Online Lead Generation Association. Neither of these associations seems to be creating much noise (the last OLGA blog post was over a year ago).

But today the IAB released this report on Lead Generation Data Transfer Best Practices. The report proposes a standard on the transfer and receipt of data between advertisers and lead generation service providers. Ok…. I guess we need that. Standards are good.

But while the IAB is talking about things like SSL encryption and  XML schemas, we spent the last two days talking about things that will really help the industry — things like improving the consumer experience, lead buying practices, sales approaches, and innovations in lead generation. 

Yeah… Leads2007 rocked! XML schemas… not so much.

This came out of one of our sessions this morning. There was a lot… and I mean a lot… of discussion about how damaging trigger leads are to our industry. They have become the major reason why consumers are “crucified” these days, being bombarded with dozens of phone calls from an initial lead form submission.

Check out StopTriggerLeads.org.  It’s a site that helps inform consumers about what trigger leads are all about. There is some good content there that lead providers can also use to help use to educate their clients as well. 

Check out this video. What obligation do lenders have to tell their consumers what will happen when a consumer’s credit is actually pulled???

This industry is 10 years old. That’s old. No wait, it’s a young industry. Either way you look at it there is agreement that this industry is changing and will look a whole lot different 5 and 10 years from now.

Look for more co-branding in the near future. Lead generators are going to have to start matching consumers with specific lenders, and introducing them with some high level information about their companies and product offerings.

How many lenders should a lead generator match a consumer with? 5? 4? 3? Can lead generators make the economics work with only 3 sales slots? Keep in mind, if a lead generator sells a lead 3 times, and lets say that 2 of those lenders pull credit on that consumer. Now the credit bureaus sell that trigger data — 5 times for each credit pull. Now the consumer may be bombarded with up to 13 calls from lenders. How long can the industry sustain that? The lenders in the room really were hurt when the industry moved from 3 to 4 sales slots for leads — about a 15% decrease in conversion ratios.

Is the real evolution of the leads industry going to a model where consumers actually sell their own information? They step up and say “Hey, I am interested in life insurance, refinance, and getting my masters degree. You can market to me, but for X dollars.”

Consumers should be able to specify that they only want to speak with one preferred vendor, period. Would a lender be willing to pay 3X or 4X for that lead? (Some lead generators and buyers are testing this right now, but the lenders here aren’t happy with the results of these programs.) They sure would be willing to test it. How about consumers specifying whether they want to be contacted NOW, or 5 days from now. How would that effect pull through? Contact rates? Lead pricing?

Leads 2.0 — the next generation of lead forms. How are they going to be enhanced? Longer forms, shorter forms? Different questions? Credit pulls? Data verification? More engaging forms for the consumer?

Atul Patel, formerly of Root Markets and LeadROI, and I were just discussing the true “future” of the industry. Consider Google’s acquisition of GrandCentral… Consumers are taking more control of the buying process, and we’re all going to be reaching out to a new generation of consumers that hide behind personal firewalls, use social networking, mobile, peer reviews, user generated content. This group must be conisidering these issues now because we’re not too far away from having to incorporate these into our business plans.

Another good session…

A DoublePositive client and friend, Noel Collins of Equity Direct Mortgage, is leading this session which is focused on best practices in lead buying. This session is the best one yet — lots of really good discussion between lenders, lead generators/providers, and lead management system companies.

So for lenders, what are the questions to ask of a lead provider? There are so many factors to consider for lead buyers when choosing a vendor.

• What methods do you use to generate your leads?
• Do you use affiliate advertising or co-registration?
• Do you have references from companies of a similar size?
• What do you generate yourself vs. what you purchase?
• Are you licensed?
• Do you have any data you can provide from your clients’ lead management systems?
• What metrics can you provide me? Contact ratios, app ratios, cost per funded loan, cost per $1000, total ROI?
• What is innovative about your company? What strategic partnerships do you have that will benefit your lead buyers (affiliates, data verification, credit bureaus)?
• What education or advice can you give a lead buyer as to how we should best work your leads?

There was some serious debate about whether these questions actually do any good For example, a lead provider is only going to give you a reference of a “raving fan,” so doesn’t that need to be taken with a grain of salt. For the lead generators (LMB, QuinnStreet, etc…), it’s important to know how the leads are generated, but that question is entirely different when answered by a lead provider or exchange.

Maybe lead buyers shouldn’t be so concerned with the absolute numbers and metrics of the lead providers and instead concentrate on improving their numbers. In other words, if a lender’s CPFL is $1800, they shouldn’t be looking for the lead provider whose CPFL is $900 — they should be looking for a lead provider whose CPFL is simply less than $1800.

There is a lot of disagreement as to what is success. What is an acceptable contact ratio? Time to contact?

There are a couple of industry groups (Online Lead Generation Association, Internet Advertising Bureau) that just don’t have wide acceptance or recognition.. But should there be? How effective would it be? Should the companies in the room today be driving something like this?

The lead generators need to be concerned with how the lender’s operation is setup to handle the leads. Do the leads go right to LO’s? Is there a pre-sales contact team that is working the leads? What are the followup methods that the lead buyer has in place to really work the leads hard?

Expectations. The lead buying process all starts with how expectations are set with lead buyers. Many lenders have unrealistic expectations, or perhaps their expectations are wrong because they are trying to compare apples to oranges. Contact rates on leads generated from affiliates, organic search, paid search are all wildly different.

The major lead buyers in the room (Equity Direct Mortgage, LEI Financial) seem more than willing to be transparent in letting the rest of the industry benefit from their knowledge on lead buying. Still, one major lead provider in the room shared a story about very large lead buyer who is having great success with their leads, but is less than willing to share their “special sauce.” Yet, so many lenders won’t share their best practices with anyone — lead providers or other lenders. Won’t more transparency in the industry help everyone be more successful?

Our friend Tom from Low.com is more than willing to have his sales team not only promote and sell Low.com leads, but they will tell a lead buyer of what other lead generators they should try. After all, that helps us grow the lead generation industry AND make our clients more successful. We do the same at DoublePositive. Like investing in the stock market, buyers need a well balanced portfolio.

WOW. This was a great session… Noel Collins was fantastic (the first one to get a round of applause). The “threesome” that can really benefit from cooperation and best practices — lead management systems, lead providers, and lenders.

How do you build and maintain long-term relationships with your clients? This is the question posed to originators (with consumers) and lead providers (with originators).

If there is a constant flow of leads coming to loan officers — if they are “drinking from the fire hose of leads” — then there is little or no incentive for them to try to build long-term relationships. One way brokers can try to encourage this is to make their LO’s realize that they are essentially self-employed. Some even go as far as to have their LO’s put some skin in the game by having them pay for their own leads.

(On a related note, this is the reason why I wish more of DoublePositive’s clients would see the value of new purchase leads. There is a lot of value there if you consider the life-time value of those relationships).

Lead buyers are spending a lot of money to contact consumers, but too many spend little or nothing to keep the relationship going. Even so, aren’t consumers who failed to convert the first time just likely to go to the Internet and start their process again, even if they receive tickler emails and postcards from a broker?

See Also: LenderFlex’s on Sales Approaches

The main question at hand here is “What technology innovations will have the most significant impact on the industry?”

Lots of the discussion is about metrics, which of course leads into a discussion about technology — whether it be a CRM, lead management system, mortgage management system, other in-house solution. Lots of disparate systems, and even more disparate levels of adoption of these systems. That makes it very hard to get any true metrics as to how the leads are contacted or converting.

Which is a better metric that originators should concentrate on — cost per funded loan or ROI?

Noel Collins explained why it’s hard to get adoption of a lead management system. He explained that the loan processing system is, in fact, a lead management system — but one that is geared just for the loans in process. So, it’s hard to push the use of the lead management systems when the bread and butter is in using the system for the loans in process.

From here the discussion really went all over the place, dealing with issues of lead quality, ballparking industry metrics, lead distribution methods, subprime fallout effects.

A lot of discussion about the standardization of the consumer experience on the front end.

There are stories on both ends of the spectrum here. Of course there are stories of borrowers who are contacted by a dozen, overly aggressive lenders. Still, many agreed that the number one complaint that branded Tier 1 lead generators get from consumers is that they were not contacted by all of the lenders they were promised.

Is there anything more damaging to the consumer experience than trigger leads?

Bill Rice, of Kaleidico and our gracious host for this conference, shared with us that his numbers show that the first lender to contact is converting higher… If a lendercan get to a 5th or 7th contact then their application ratio skyrockets. The originators, however, seem to disagree with that, because the 2nd, 3rd, 4th to contact can always undercut the first lender and has the opportinity to further educate the consumer.

Todd from Airfoil had an interesting take. The folks who are on the phone talking to consumers (pre-sales, loan officers, etc…) have never owened a home themselves because most likely they are young and probably renting. But do you need to own a car to sell a car? Mortgage companies provide their LO’s a phone and a desk, but drop the ball when it comes to training.

Mortgage brokers are all fighting over the same leads… They all want the 640 FICO with 75% LTV and a $450k loan amount. So 95% of the mortgage originators are fighting over 1% of the leads. That’s not productive…

To what extent should lead generators/providers be qualifying lead buyers? For most lead generators, almost all of them only care that their lead buyer has the money to buy leads, period. While there is fraud in lead generation, there is fraud at mortgage companies, too. We all know that if a guy is fired from a mortgage company because he is suspected of fraud, he’s probably going to get hired by the company down the street and start calling the lead generators he worked with at the first company. But what role, if any, could a lead generator play in that scenario?

See Also: Improving the Customer Experience? Do We Care?
 

Monday and Tuesday I’ll be blogging the Leads2007 conference in Tampa, Florida. So many of the industry’s lead generation companies are here today as well as some mortgage lenders. Check out the full agenda at http://leads2007.com/.