About the Author
Mark Green is President of Top of Mind Networks, specializing in client retention and referral generation for mortgage firms. Mark can be reached at email@example.com or 866-TOP-MIND.
One of my favorite lines from the movie Caddyshack was when Judge Smailes bragged about his golf game. “You should play with Dr. Beeper and myself. He’s been club champion three years running… and I’m no slouch myself!” he said. Of course, Chevy Chase (as Ty Webb) delivered the zinger:
“Don’t sell yourself short, Judge. You’re a tremendous slouch!”
As President of Top of Mind Networks, I’ve found there are two disparate types of firms:
- Organic: Your traditional “referral” and “database” driven model. Organic LO’s know how to bait their hook, clean the fish and prepare the meal.
- Lead-Gen: These firms depend on third-party prospecting sources. I’ve found many Lead-Gen firms to be incredibly savvy and process driven. Many are hugely profitable. I still think most are tremendous slouches when it comes to maximizing their return on investment. Here’s why.
Talk to a Lead-Gen mortgage pro and their primary metric is “cost per funded deal”. Many can tell you down to the decimal what it cost them to purchase the lead, purge out the waste, process the loan, pay the LO and satisfy the overhead. Meanwhile, ask an Organic LO his “cost per funding” and you’ll probably get a blank stare.
This is because the Organic LO simply needs to grab his fishing pole and a luge every morning in order to fuel his mortgage business. Not so with the Lead-Gen firm. The Lead-Gen firm must reach for the checkbook every morning.
Yet, the Lead-Gen firm thrives today. Refinance leads are abundant and rates are low. Why fix a model that is not broken? I believe I have the answer. You fix a model that isn’t broken today in order to preserve your financial future tomorrow.
Tenet #1: A borrower is a borrower.
Lead-Gen firms often tell me they cannot loyalize a shopper. This is false. What they really mean to say is that they cannot loyalize a shopper in fifteen minutes and for fifteen dollars. And if it cannot be done that quickly or that cheaply, the typical Lead-Gen mentality says it cannot be done period. I emphatically disagree with this mentality. A shopper is a shopper because they had nowhere else to go. It’s your job to change that, not theirs.
Tenet #2: Every bucket leaks.
However, no bucket leaks quite like the Lead-Gen bucket. As opposed to the Organic bucket, which only begins leaking upon loan funding, the Lead-Gen bucket begins leaking (more like hemorrhaging) the instant the lead is delivered. Thus, the Lead-Gen firm applies CPR on the front end of the process. In other words, the typical Lead-Gen firm aims to improve front-end closing ratios. Ironically, a phenomenal lead-to-close ratio for Lead-Gen firms is in the 5% to 10% range. Ninety percent of the leads purchased are left to die on the vine. Even Bob Eucker batted over 20% didn’t he?
Tenet #3: Loyalty is not granted. It is earned.
Borrowing from Tenet #1 – why should a customer who entrusted you with the *largest purchase most people ever make* reinvent the process the next time they are in the market? The simple answer – they shouldn’t. However, it’s up to YOU to tell them their shopping days are over. You must reinforce this message early and often – and into perpetuity (ie: well after the transaction has funded). You must shift from a sales-driven process to a relationship-driven process.
Tenet #4: Client retention warrants moderate investment.
Here’s what really burns my britches: Lead-Gen firms are not afraid to invest. In fact, I think most Lead-Gen firms overinvest on the front end. Most Lead-Gen firms care about the client as much as Organic LO’s. But for some reason, they refuse to plug their leaky buckets.
Conclusion: Create a Client-Retention System.
This idea intimidates most Lead-Gen firms because it deviates from what they do best. However, a client-retention system does not have to be intimidating, complex or expensive. In fact, it should be affordable, efficient and turn-key. Best of all, client-retention investments are only made when the revenue is there to warrant spending. In other words – does it make sense to invest in 100% of clients rather than 100% of strangers (95% of whom will not do business with you)?