If you’ve ever purchased reverse mortgage leads or spoke to someone who has you’ve probably heard or even said the words yourself… “those leads were no good”. Some have taken this mindset to heart and have convinced themselves one should never purchase leads. The largest reverse mortgage lenders in the country consistently purchase leads and would not do so if it was a losing proposition. In reality, purchasing leads can and should be part of your overall marketing strategy along with referrals, public workshops, direct mail, etc. Now the question: was it a bad batch of leads or something else?
Definitions are important, especially when making business decisions, so let’s define a ‘bad’ lead. In fairness a bad lead should be one where the borrower does not qualify due to a high mortgage balance, low home value or fails to meet the minimum age of 62. A lead should not be considered faulty however, if the prospect qualifies but chooses not to take action. In other words, no loan, no commission.
Reputable lead providers provide varying degrees of guaranteeing a lead meets age and value guidelines which should make them eligible. Finding reputable companies is your first step. Ask for references from fellow colleagues or visit Reverse Fortune’s Lead Central which provides a central portal of top providers and the ability to inquire on price and availability.
Is it the process or the sale?
I once had a sales manager who told me “leads are only as good as the salesperson who works them”. While this may be a bit overstated, we must be willing to examine our own approach with prospective borrowers. Are we taking the time to know them, build an emotional connection between the product and their unique situation? More importantly, are you continually asking for the sale by getting small “yeses” or agreements to move forward incrementally? Sales is not a dirty word. The highest compensated individuals on the planet usually are involved in sales at some level. Sales is merely the skill of communicating in such a way to move a prospect to take action that is in their best interest. It is the art of communication and motivation.
How we conduct our business is really the compass which determines our success or failure. Many reverse originators purchase leads but trash them after one ‘no’. Others may have a haphazard approach to call backs, tracking conversations and strategic touch points. The result: thousands of dollars in lost commissions and fewer funded loans. Most potential borrowers require multiple contacts before they will make any commitment to move forward. If we stop at step three but they will move at step seven later, we have cheated ourselves from a sale and the prospect from a possible solution. The most effective sales forces utilize a database or CRM (customer relationship manager). This allows them to never discard a lead and to religiously follow up with each prospect over an extended period of time without fail. Another advantage to a CRM is the ability to track your past conversion ratios. For example: you purchased 30 leads and 8 took applications and 4 closed and funded. Your conversion ratios would be 26% for applications and 13% for funded loans. Knowing this you could project how many leads you would purchase to reach your intended sales target from purchased leads. Keep in mind the larger the data sample and time period the more accurate your results will be. If you intended to close five loans you would plan on purchasing at least 40 leads based on past conversion ratios. A CRM also allows you to track your ROI (return on investment) and cost per lead and funded loan. These metrics are key not only to control costs but in motivating you to be consistent in your marketing efforts.
Lastly, to succeed in lead purchase and loan conversion one must avoid the ‘one and done’ syndrome. One unsuccessful lead purchase and future investment in leads stops. Having a strong tracking system (CRM), knowing your conversion ratios and polishing our sales skills are the best tools we have in successfully working purchased leads. In the end we must ask ourselves ‘is it a bad lead or is it the process?’.