Why Do Mortgage Lead Conversion Rates Suck So Bad?
With the sudden rise in popularity of DIY and boutique-agency-driven online mortgage lead generation, many mortgage loan officers are deciding to make the leap and try their hand at a new source of business. For many of us, internet leads are nothing new, and mortgage lead conversion rates don’t need to be exaggerated. However, I work with or talk to loan officers every day who tell me about their brief experience with a lead vendor or lead generation platform, and more often than not their issues come to the expectations not being set properly by the salesperson they talked to.
If you’ve been in mortgage for any reasonable amount of time, or in any line of sales prior to your mortgage experience, you’ve heard the phrase “it’s a numbers game.” As with some of the most profound pieces of wisdom you can learn from, this is often dismissed as being nothing more than a common cliche. However, the solutions to all of your internet lead woes are hidden within that cliche.
Mortgage Lead Conversion Rates Average 2-3%
If you do a Google search for “mortgage lead conversion rates,” you’ll get a lot of results and no definitive answers. You’ll see people trying to sell you systems that they claim will help you convert leads at 10%, forums with people saying they never converted anything after spending thousands of dollars, but what you won’t see is a definitive answer as to how many mortgage leads that are generated and sold actually turn into a loan.
After extensive research of platforms like LendingTree, Zillow, RateMarketplace, and more, we’ve come to the conclusion that what differentiates lead generation companies has all but disappeared over the last 5 years or so. Anymore, if you buy a lead from a reputable lead vendor, and you implement a good system for follow up, you’re most likely going to see your conversion rate fall into that 2-3% range. With ironclad practices and a careful eye on lead volume, you can MAYBE see 4 or 5%. Our clients generating their own leads on Google range from 1-5% depending on their model (low overhead, low volume vs high marketing budget, high volume), but if you’re generating mortgage leads with Facebook Ads you can expect much lower conversion rates than that.
I hate to get all elementary on you, but let me spell this out. This means that out of 100 people that you call, you should only be expected to close 3 of them. So what does that mean for a loan officer? That means half of the leads won’t ever pick up their phone, half of those that do are probably going to tell you to pound sand, half of those that are willing to talk to you will ghost you after you answer one question for you, and of the 12 you have that are willing to talk to you about applying for a loan, 75% of those aren’t going to be able to qualify or will change their mind after you put in all of the work of prequalifying them.
What Does Quicken Have That You Don’t?
So if internet leads are so bad, why is it that the mortgage company with the largest amount of market share over any other mortgage company has been able to build their entire enterprise on the backs of internet leads? Well, the answer is pretty simple really, and it comes down to an insanely high volume of leads generated and managed. Quicken does so well because not only are they able to generate and buy as many internet leads as they want with their budget, but they have dialed in systems and processes to ensure they’re capitalizing on the opportunities they get.
Have you ever submitted a lead to LendingTree for shits and giggles? It’s not very nice to the person buying leads, and I don’t recommend doing it often, but if you want to see Quicken’s systems at work, give it a shot. Odds are the first call you get will be within seconds of submitting the form, and it’s going to be a live rep from Quicken ready to chat. If you don’t answer, they’ll leave a voicemail, and you can expect about 20 more of those calls along with a handful of emails over the next 2 weeks or so before the follow-ups will drop off.
Don’t get it twisted though, that live rep is not a producing loan officer. That sales rep has no job except to stay in front of their computer with their headset on and bang out calls all day. In fact, more than likely, they don’t even have to press a button and have a queue of calls that automatically are completed at the point that their previous phone call ends. They’re trained to be a part of a well-oiled machine, and Quicken is continuously refining that machine and pumping more money into it to make it better and better every day.
Why You Can’t Replicate Quicken By Buying Leads
I told you to go to LendingTree to get in touch with Quicken, right? So does that mean that Quicken has built its success from LendingTree leads? Not so fast, you can come across Quicken when working with just about any major lead vendor. This must mean that Quicken is just buying up leads from all of the lead vendors and that’s how they’ve become successful, right? Once again, not so fast.
First off, yes Quicken buys a lot of leads from a lot of different vendors. It’s important to understand though, that a lot of these costs are offset by higher profit margins on the leads that they generate for themselves. I have no way of knowing what percentage of their business comes from their own leads vs what comes from others, but I can tell you they’re more than likely generating as many leads for themselves as they possibly can, and filling in the gaps with the rest. Why? Because obviously if you eliminate the middleman, you can save costs.
You don’t really have the luxury of choosing one or the other if you’re looking to recreate a small amount of Quicken’s success and here’s why: Purchasing leads from vendors has become cost-prohibitive for most. I talk to lenders about their lead generation efforts every day, and major lead vendors are now charging upwards of 20-30 dollars for non-exclusive or semi-exclusive leads, and 50-75 dollars for exclusive long-form leads with some costing upwards of $100!! If the key to success for Quicken has been their massive volume of leads, and leads are costing even $40 each on average, how do you ever grow? It’s going to cost you $4000 to generate 3 closings. Does it pencil? For most of us, it will, yeah. Does it scale? That depends, do you have an extra $4000 laying around? How about $8k? $12k?
Buying Mortgage Leads Sucks Because You Need High, Cost-Prohibitive Amounts of Leads and 40 Extra Hours in A Week To Convert Them
Remember, the key to Quicken’s success isn’t just the ability to afford high volumes of leads. They have a well-oiled machine that is working those leads non-stop for weeks from the time that they come in. What does this mean for you? More money, or more time. This is why it’s been so difficult for people to reach a high level of success while relying on internet leads up to this point.
Let’s say you can invest $8k in generating 200 leads for your business. Great, now what? Now you have to hit the phones like a Quicken call center rep to convert them into deals right? What about your realtor relationships? What about your loans in the pipeline? Shit, even as a full-time job, working 200 leads to try and find 6 deals would be tough to manage on your own.
The Solution? Generate Your Own Exclusive Leads and Automate Your Initial Contact
As you read this article, you may be thinking to yourself, “This is EXACTLY why I haven’t ever bought internet leads.” If you’re one of these, great! I’m glad you saw the flaws in that model and didn’t invest too much time or money into trying to make it work for you. Can I fill you in on a little secret though?
The game has changed. Loan officers (like myself) and lead generators alike are cracking the code that has allowed large lead vendors to control the flow of internet leads for so long, and the results are oh so sweet.
The leads that Zillow sells for $100 a lead? They are long-form leads (multiple questions regarding financing goals answered by lead) that are generated in 1 of 2 ways. They either come from a paid advertisement on search engines, or they come from the search engines organically (through unpaid search results). Zillow takes the attributes of the lead based on the questions they answered (purchase price, estimated credit score, zip code, etc) and will price the leads based on the level of appeal they have to a mortgage loan officer.
When we generate long-form leads on the search engines, our average cost per lead is less than $10. Granted, we don’t get the benefit of having the obviously BS leads filtered before they hit our client’s inbox, but that’s because our client has now BECOME the Zillow or LendingTree, or whatever other lead vendors you may have heard of. The best part? These are 100% exclusive with no possibility of them going somewhere else on the website and submitting their info to another lender in your market. So even though you get some more of the “bogus” leads, we’ve witnessed that the true exclusivity offsets any loss in conversion rate you’d expect.
If you could generate leads that converted at 3% for $10 a lead, how many would you buy? Well, the answer to that should depend on the volume of leads you can handle and work to get them to close right? Remember when I said earlier that half of the leads you reached out to would never answer the phone, and that half of those that did would tell you to go pound sand? What if there was a way just to skip right to the 25 that are left and at least willing to engage in a civil conversation with you? What if you only had to talk to 25 leads to get to 3 deals?
Automated follow up is a beautiful thing, and it’s becoming more and more popular. Platforms are rolling out more and more, ones that allow you to create a series of automated text messages, emails, and even pre-recorded voicemails to send to your leads within seconds of inquiring, with the ability to program a campaign for up to 2 years out! Is this as effective as Quicken’s use of call center personnel to call and engage prospects on the phone? Most likely not. But at $10 a lead, generating 2-300 leads in a month to support the amount of production you want to reach is no longer cost-prohibitive, and with automated follow up you can expect 90% of the conversion with 10% of the effort.
Schedule Your Live Demonstration To See How An Automated Lead Generation Platform Can Help You Dominate Your Market
At Empower Funnels, we build out fully automated lead generation platforms that are positioned in the only place you should be generating leads from; search engines. If you’re looking to take your business to the next level, and the traditional methods of mortgage marketing just aren’t doing it for you, you owe it to yourself to book a call with us.
As always, thanks for reading, and I’ll see you at the top!