Responding To Shifting Home Buying Habits

How do we transition with shifting consumer buying habits? As more and more consumers begin their home buying search online, they are increasingly shopping for their mortgages there as well. You only have to look at Zillow, with a monthly average of 36 million unique visitors and a 27.2% market share (based on visits) in the home search market, who’s business model for lending is 100% purchase in a consumer-direct call center.

The answer isn’t everyone moving to a call center model. Instead, the answer lies in finding the best way to maintain your current customer base and take advantage of the new access to your local customer base. Let’s first define who your existing customer base is:

1. All your loan officer’s referral partners- Real Estate Agents, Financial Planners, and Builders.
2. What about Past Customers? Their next transaction, as well as future transactions by their family, friends, coworkers, social media connections, and neighbors.
3. New Prospects- All of the prospects your loan officers have come in contact with and their referral partners have as well.

Now, let’s define your new customer base you have access to. First, it is technically safe to say anyone in the United States who can get a mortgage is your customer base. However, we will narrow it down to your local region.

As you look at narrowing this customer base down, most traditional distributive retail lenders will define their new customer base as local home shoppers who search for their homes online, which is also made up of in part their current customer base. So, having an online strategy is very important to defend and keep your existing customer base. Many lenders are failing to adjust and will continue to fail to adjust to their changing consumer buying habits. That is now your new customer base.

How do you first adjust and keep your customer base, and how do you then take advantage of the new customer base you have access to? You can start by taking a few pages from the consumer-direct model. In this article, we will cover contact and lead management.

First, it is critical to respond to and manage any online or digital inquiry immediately. And we are talking seconds in this case. There are numerous studies that show that response to an online inquiry instantly increase your chances of success by well over 100%. One study that highlights this is MIT’s investigation that found if you call an online lead within minutes versus 30 minutes, you are 100 times more likely to get in contact with that lead. How do you ensure you call your leads quickly? That’s the area most lenders struggle with because of the lack of technology that enables online leads to be responded to promptly or in almost 50% of the time respond to at all.

For more information on how the overall mortgage market responds to leads, you can see our MBA contact studies that shows surprisingly most lenders never make a phone call attempt, only 16% do. When lenders do respond on average it takes 3 hrs. 22 minutes.

 The solution is your new lead distribution and telephony automation technology.

Let’s start with the lead distribution.

It’s not getting information emailed to you and then forwarding those leads onto a Loan Officer. Instead, it’s the ability to take an online lead post from your website, social media, or an online lead provider, like Lending Tree. It’s about ensuring that the leads you take and act on, are handled by a loan officer who is licensed to handle it. This requires technology to distribute leads by state licensing rules. Next, you then need to be able to allow for leads that go directly to Loan Officers for personal campaigns such as social media page, referral partner page,  or lead capture form.

The next step in the process revolves around contacting the lead immediately. For this, you need a platform that has call automation. How this works is once a lead is received, the lead is sent to the appropriate loan officer or loan officers and also a phone call at the same time. Either in a round-robin fashion or a ring all method where any loan officer who is eligible for the lead is alerted and their phone rings, the first agent to answer the call then gets the lead, and the system begins dialing the lead. You can do this out of the box with any phone system, including the loan officers’ cell phone with our platform, which makes this very easy for any lender to implement.

Expect to get a hold of 1/3 or less of people with the initial call, so after you manage lead distribution and that initial call, you then have to manage contact strategy and follow up to engage with your lead. To do this well, you need several things. First, we will start with automated communications (think text, email, social media, ringless voice, and direct mail). Imagine that once you have a hand raiser, you need to show up everywhere they are. You want to follow up that initial call with a text asking them when they can talk. If that doesn’t work, you will want to reach out to them through a variety of channels. Doing this well ensures you make the most of every inquiry and capture all the business you can. You will need a platform that can automate all of these communication channels, content for the communications and strategy of when to communicate.

Next, you will need call management for the Loan Officer, which means an easy to use system that enables them to call thru their leads quickly, and helps prioritize which leads they call first. It can also include sales management and lead redistribution. If you are paying for a lead online from a place like Lending Tree and the lead does not get contacted instantly like it needs to be, you would want to have reporting on for this lead.  This will also allow you to redistribute the lead to someone else for follow up. It’s essential the platform you use can differentiate between lead campaigns such as personal referral vs. paid lead and handle the distribution and redistribution separately as any lender would quickly lose their loan officers if they redistributed their referrals.

You have now covered the basics of how to get ahold of leads simply by your loan officers doing the work. At a certain point, no loan officer can keep up with the amount of follow up that is required to ensure you get the most amount of business out of the leads you create or purchase. How to solve that issue is by long term drip and nurture campaigns. When you think of drip and nurture, you need to think beyond emails. Emails play a role, but with today’s technology, borrowers are in many places, and emails are only part of the attention you need to get. Think about showing up on their Facebook or Instagram feed at the right time with not just an ad, but also something of value to them and meets them where they are at in the journey. Like ‘3 tips on making an offer’ or ‘How to choose the right location,’ you can then reinforce it with an email or a text message checking and seeing if they found the info useful.

Next, imagine a borrower you spoke to but at the time could not qualify for a loan because of credit, income, or down payment. With services today you can monitor them for when they are ready and qualify, you then reach out to them via email and social media and you add in a piece of direct mail telling them they now qualify, and if you think direct mail doesn’t work, first, think about how much mail you get. If it didn’t work, those companies would no longer send the mail. If you believe it is an old form of communication, then you probably don’t know Amazon uses direct mail to promote their products. You can truly show up in all of the places they are. The same thing is true for someone who ends up not buying or uses someone else for the loan. With the average borrower doing 11 loans in their lifetime, there is much opportunity by keeping all of the leads you produce in some type of long-term nurture campaign through email and social media. Also, the odds are in your favor of getting them the next time around if you stay in front of them and stay relevant, with the average borrower choosing a new lender 3 out of 4 times on their next loan.

After you have your contact strategy, lead distribution, and marketing automation in place, you need reporting. You need to be able to see metrics on leads source performance and also loan officer performance. First, let’s cover lead performance metrics. With this, there are six main metrics you want to focus on. First, are you getting ahold of the leads?  at what percentage?  A good rule of thumb is 40-60% depending on the channel. If it’s directly on your website or Facebook, you should expect a high 60% contact rate. If you are buying a lead that has three other lenders buying it as well, you are looking at 40%. Now, this is with executing everything correctly. You now want to look at each individual lead’s performance in this category as well as the others, to see how each lead compares to the others. Next, you look at application rate, are you not getting half of the leads, but the application rate is high? That might mean this a campaign that will work.

Next, from the applications, are they qualifying and going into processing? From processing are they funding? What’s the overall conversion rate, and ultimately, what’s the ROI on the lead source? Now we move onto the Loan officer. It’s very similar to the lead source. Are they performing within the expected numbers? If not, where are they struggling? Maybe they have a low application rate and need help learning how to take an application form someone who is online and has three other offers. If they are taking applications but not submitting deals into processing, then maybe they are not following up with their leads. This type of borrower is different from the one you get directly from a referral partner. They have already shown they are willing to work with someone who is not known by them and online. So you see how every loan officer in America as your potential competitor, instead of just Team Sally and Dan at Acme Bank Mortgage. Having reporting lets you see what areas to work on and also how to coach your loan officers and show them how to be successful.

This can seem very challenging with all of the new processes, strategy, technology, content, and management. The good news is, with today’s technology and cloud computing, any lender, can quickly implement this change. You can make use of already existing best practices, integrations, content, and more. If you choose a newer platform and one designed for the mortgage industry, you should also expect to onboard and management of the system to be easy. In the end, whether we like it or not, this will become the new reality in the mortgage industry for the vast majority of transactions. It may not happen tomorrow, but expect it to impact all lenders significantly in the next three years. In shifts like this in markets, there is always an opportunity for companies to grow market share. What’s excellent about innovation and change, new smaller players emerge and become the dominant force. All you have to do is look at Quicken, they are by far the most technologically-driven mortgage company, and they have taken over the market in the past ten years.