Hack The Funnel

“Back in the day,” Sher recalls, “people responded to mailers, rate tables, and real estate agents saying, ‘Here, call this person.’” Those days are rapidly coming to a close. “We’ve never seen a segment of borrowers like this before.” According to GWI, a market research firm, 54% of social media browsers use social media to research products.

Sher’s happy to play by the new rules: since the program’s soft launch in mid-2021, NFM’s Creator Collective has generated over 65,000 leads from mortgage-related posts on social media platforms like TikTok, Instagram, Facebook, and YouTube. From those leads, the company has closed over 1,000 loans representing nearly $400 million in unpaid principal. Sher accepts credit for originating the program but deflects praise for the success they’ve achieved over the past 30 months.

Rather, “the artists” who bring the idea to life every day deserve the applause. After all, it’s because of the team assembled, Sher’s quick to point out, that the strategy works at all; there just aren’t that many mortgage influencers, let alone influencers also licensed to originate. In the two years of the Collective’s existence, NFM has expanded its stable of influencers who originate to 12, not including a few real estate influencers. When it comes to reaching borrowers earlier in the process, “that’s why NFM’s got such an enormous head start,” Sher says.

“And to some degree,” he continues, “why I’m so open about sharing it. We’ve lapped the field 10 times over and I’m not saying that out of arrogance. No, a lot of it is just luck and timing.”

Watch it on The Interest: Reaching Out To Digital Natives

Just An Old-Fashioned Good Idea

For Sher, a sense of timing meant being strategic about pitching his plans for an influencer division to NFM’s leadership. Lacking proof of concept for a like-to-leads-to-loans origination strategy, Sher built a process for funneling mortgage-curious followers into a pipeline of potential borrowers. The initiative officially launched in January 2022, but as early as March 2021 Sher was Beta-testing this process with the “Michael Jordan” of mortgage influencers: Scott Betley (@ThatMortgageGuy). A licensed originator for more than seven years, Betley commands one of the largest audiences of mortgage-curious followers on the internet with more than one million across all of his platforms.

What first struck Sher about Betley was the sheer volume of engagement he received on his posts. Every engaged follower was a lukewarm lead in Sher’s eyes. Not only did some of Betley’s videos have view counts in the millions, but many garnered hundreds and thousands of comments. Commenters asked questions like, ‘Do you do business here?’ or ‘Do you do self-employed people?’. Others contextualized the circumstances under which they hoped to attain a mortgage within the next 12-18 months, such as having recently graduated from school or else filed for bankruptcy within the past year. Sher remembers thinking: “This is the future.”

He quickly discovered, though, building something that has never been built before requires a fair amount of troubleshooting. “Because we didn’t know any better,” he admits, “we would take an interested person right into an application. We would send them a link. Well, we got completely bottlenecked with people that didn’t qualify.”

To widen the funnel, Sher started screening leads, establishing workflows based on followers’ answers to intake questions about their timeframe to purchase, income, and creditworthiness. Even then, Sher realized he needed a buffer between the influencers and the intake forms, so he built a call center domestically.

A November report published by NFM reveals some of the data behind how TikTok views translate to leads and then closed loans. In July alone, NFM’s influencers accumulated 30.7 million TikTok views from Gen-Z users, up 21.8% from June. The 1,401 leads — as in, completed intake forms — generated from those viewers became 24 prequalification applications and finally, 20 mortgage originations. As for added value, two-thirds (941) of the 1,401 leads asked to be introduced to a real estate agent.

By exemplifying his own leadership, Sher earned the full support of NFM when he formally pitched his strategy with a process (“of sorts,” he says) already in place.

First-Of-Their-Kind Borrowers

Whether separated by age, income, or ethnicity, different borrowers approach the homebuying process with different expectations for how that process unfolds, including on whose terms. As a matter of fact, a tortoise won’t run on a hamster wheel even if one is placed in its enclosure. Sher believes the homebuying process should match borrowers’ ability to participate in the process. After all, borrowers’ expectations for participation arise from their ability to participate.

As consumers, young millennials and Gen-Z borrowers — the first wave of digital natives to buy mortgages — have different capabilities than their parents and grandparents, made possible by 21st-century technologies. By default, new capabilities give rise to new behaviors and habits, and therefore new psychological approaches. When it comes to mortgages, Sher describes younger borrowers’ new approach as, “I’m going to dictate; nobody’s going to tell me. I’m going to take somebody that I follow, and I’m going to engage with them and go through the process with them.”

Speaking strictly about those who watched a video, clicked a link, and completed the application process, nearly 40% of the borrowers NFM has closed through influencer-generated leads fall in the 25- to 35-year-old age bracket. Because the program was launched to target that set of borrowers, Sher isn’t very surprised by the numbers. Instead, the success affirms how listening to borrowers can help lenders build up resilience through a forward-looking origination strategy.

As the mortgage industry has shrunk over the past two years, influencer-generated leads have brought in much-needed business for NFM. But, in building a lead-gen apparatus for younger borrowers, NFM has also built a system for collecting data on this demographic. Not only do the intake forms create leads and loan applications, but NFM aggregates responses into data sets that offer unique insights into the behaviors and circumstances of young borrowers. These data have helped NFM hone its strategy with an ever more nuanced understanding of digital natives.

For example, from a sample of 10,000 influencer-generated leads, 92% of mortgage-curious Gen Zers wanted to be contacted by text or email; only 8% sought a phone call. What does this indicate to Sher? Whereas most borrowers used to prefer a phone call for such an important conversation as financing a home, digital natives “are very comfortable clicking. That’s what they want. They don’t want to be bothered,” Sher shrugs. “They want to do things on their time.”

Referral Reversal

Of the total set of 65,000 leads, 97.5% want to purchase a home, yet 85% don’t yet have a real estate agent. 93% say they want to be introduced to an agent, demonstrating how early in the acquisition funnel NFM reaches borrowers through social media. “The business is changing right before our eyes, and we’ve definitely been on the forefront of this evolution.” They’ll continue to be, Sher’s sure, because reaching borrowers earlier in the funnel translates to more control over the process, putting lenders, not real estate agents, in the driver’s seat.

The conventional way people do business in the mortgage industry — i.e., a real estate agent starts the borrower on the homebuying journey and eventually refers that borrower to a lender for financing — is rapidly changing, according to Sher. Technological advancements drive this transition by reshaping the ways and means by which people interact with their environment, including other humans in their environment, across both physical and digital spaces.

In the past decade, social media influencers across many industries have revolutionized how companies reach their target audiences. The ease and ubiquity of screens and Wifi have spawned a generation of consumers too savvy for traditional marketing methods. While the internet makes the universe of mortgage- and housing-related resources available at the swipe of a screen for borrowers, social media helps to channel borrowers toward providers (posters and uploaders) of this information. Armed with the power of choice, borrowers trust social media influencers who answer their questions and, perhaps more importantly, humanize the process. “About two out of every 10 videos should be something personal,” Sher advises.

Take, for example, Jordan Nutter (@ANutterHomeLoan), who only entered the mortgage industry in 2019. She has rapidly succeeded as an influencer-originator, but she picks her priorities: “I’m an originator. That’s how I make my money, support my family, and that’s my career.”

Nutter’s appeal is her balance — a knack for walking the tightrope between coach and confidant, originator and educator. Many of her best-known videos are satirical, in which she reenacts sometimes nonsensical and sometimes uproarious real-life conversations with her clients. While others use the verb “influencing” to describe Nutter’s origination strategy, the essence of her outreach is “educating.”

Ultimately, young millennials and Gen Zers are making themselves available earlier in the funnel, turning themselves into leads by expressing through follows and likes their desire to get into a home. “You have to know when their hand is being raised,” says Sher. With their 12 mortgage influencers, NFM has spun a digital web for tech-forward, mortgage-curious borrowers to stick to, baited with educational tidbits about housing finance. The way he sees it, that hand is being raised (and the web begins quivering) as soon as a first-time homebuyer turns to their search engine to answer the question, “What’s a mortgage?”

Being available to NFM’s originators earlier in the funnel has reversed referral networks that typically order agent-originator relationships. “I don’t think the agent will ever be irrelevant,” says Sher, though he predicts that agents will have an increasingly diminished role in assisting borrowers in the future. Introducing borrowers to real estate agents has become part and parcel of NFM’s white-glove service because agents are experts on neighborhoods, school systems, and recent sales, among other important factors for borrowers to consider. “There’s still a lot of value agents can bring, I’m very bullish on that,” Sher affirms, “but they’re in the process of getting phased out” — especially those unwilling to adapt.

A Big Opportunity

Despite Facebook celebrating its 20th anniversary in February, using social media to incubate business still feels unfamiliar to many industry old-timers raised on old-school methods like cold calling and classifieds. Graduating from Facebook posts to TikTok videos could be its own badge on LinkedIn. Sher says the badge that no one in the industry should wear is: “I’m not on social media. I don’t need it.” Those originators and agents actively lose business when they can’t be searched, found, and followed by borrowers on social media platforms.

Influencer-originator competition has increased, though, since NFM launched its initiative in January 2022. What’s A Mortgage, for example, is a team of 15 loan officers that includes Minh Nguyen, an influencer-originator with nearly 240,000 followers across all platforms, and Jide Buckley, who has 365,000 followers on Instagram alone. In December, What’s A Mortgage and West Capital Lending, the top originator for Rocket Pro TPO for 29 consecutive months, announced a partnership for leveraging social media and mortgage education to generate leads and close loans. The influencers will brand Rocket Pro TPO and West Capital Lending.

For NFM, when it comes to actually closing the loans generated from influencer leads, 80% are closed with an originator who was not the influencer with whom the borrower first interacted. Part of this discrepancy is due to licensing constraints, but influencer preferences also play a role. A content creator through and through, Scott Betley prefers to have more time for making videos and studying trends, so he hands off more of his leads to other licensed loan officers on his team. Jordan Nutter, on the other hand, takes hand-holding seriously and prides herself on guiding her followers through the entire process. Either way, they’re all paid on commission.

All of these metrics are tracked, tallied, and reviewed weekly. “It requires a comprehensive back end to even be in this game,” Sher stresses. A persistent challenge he faces is keeping his influencer originators enthusiastic and motivated. Collaborations offer a measure of excitement, but data analytics and efficient systems directly improve his influencers’ brand-building strategies and conversion rates. “If I’ve got a thousand people raising their hands, but we’re only able to get one to the table,” he levels, “that’s a problem.”

Misinformation about homebuying runs rampant across the internet, especially on social media. Sher points to how “a large percentage of people that are 19 and 20 think that it requires a 25% or 30% down payment, or that you need a perfect credit score. None of that’s true.” Borrowers want someone they trust and like to guide them through the process.

Looking ahead, originators and lenders have the opportunity to become that trusted source. It’s a process-oriented approach to building your brand, growing your business, significantly reducing the costs of generating leads, and realigning originator-agent referral relationships. Don’t follow the business — let the business follow you.

What Sher and NFM have built so far, though, only represents the tip of the iceberg. “You want to talk about opportunity and just how much grander this could be,” Sher posits, “only 18% of the people that go to our form fill it out.” In other words, the 65,000 leads generated so far from influencer content only represent 18%, or slightly less than one-fifth of the followers who made it to the intake form. “So, you can imagine,” he continues, “we’re leaving 82% on the table. We’ve actually had +300,000 people uniquely go to a page where they’ve considered filling it out and raising their hands.” Increasing friction in the funnel, such as by dropping cookies or using chat bots, is one way Sher plans to improve the completion rate for intake forms.

“Are we leading? Yes,” he hedges, “but make no mistake, there’s still a lot of work to do.”