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When I came across Fannie Mae’s recent study that revealed a significant increase in the number of online mortgage shoppers, I almost immediately thought of fast food. Not because I was hungry—but because what’s happening in the mortgage industry today is akin to what happened in the fast food industry in the 1970s and 1980s.
Believe it or not, there was a time when most fast-food restaurants didn’t have drive-thru lanes. In fact, the first McDonald’s to have a drive-thru option was in Sierra Vista, Ariz. in 1975. It was created only because the restaurant was next to a large military base, and the base personnel were not allowed to leave their cars while wearing fatigues. Today, well over half of McDonald’s revenues come from its drive-thru lanes. Indeed, most consumers actually prefer this service option, which is why a fast food restaurant without a drive-thru has become an anomaly.
Right now, we’re experiencing a similar transition taking place with mortgage borrowers. Fannie Mae’s study, “Technology Use in Mortgage Shopping”1, found that nearly half of all people shopping for a mortgage today are getting their quotes online. In other words, roughly 50 percent of your potential client base are connected with a lender without ever leaving their house or picking up a phone—just as most fast food customers no longer leave their car when ordering their burgers and fries.
The good news is that it’s a lot easier and much more profitable to target online borrowers than ever: you can have it your way, as in the old Burger King commercials. Thanks to advancements in online marketing and lead generation tools, lenders are able to identify and engage the online shopper in multiple ways including Search Engine Marketing (SEM), online advertising, corporate blogs, and social media platforms such as Facebook and Twitter. And advanced profiling capabilities allow lenders to get more targeted in their online marketing efforts, producing higher quality Internet leads that contain more information about potential borrowers than ever. Lenders can take all that rich profile data and match the needs of the borrower with their particular product niche or expertise. This adds up to higher quality leads and a better borrower experience.
That said, successfully converting the online prospect to a closed loan on your books requires a certain set of tools and skills that you’ll need to develop in order to win. If you want to attract, nurture and convert the online borrower, here’s what you must do:
Time is of critical importance to the online borrower. And it should be to you, too. In other words, lenders shouldn’t waste time getting in touch with prospects, online or not.
Of course, acting fast on a hot lead is Sales 101. But not many lenders understand exactly how fast. Taking a day or longer won’t cut it. Even an hour may be too long. If you have an online lead generation strategy, keep in mind that most online prospects seek competition. In fact, prospects on average reach out to at least three or more online sources for information and quotes, according to a recent survey by Zogby Analytics and Velocify titled “Online Buyer Expectations”2. So if you are selling to online borrowers, you should be prepared to respond to their inquiries in minutes. Ever notice the timers that many fast food drive-thru windows have? That’s because they know customers care about time.
The “need for speed” also applies to how quickly you are able to grasp what a borrower wants and how they prefer to work with you. Savvy consumers expect that once they express their interest in a mortgage, lenders will pounce. Not only will they be timing you, they will be paying particular attention to whether you respond the way they prefer, such as by e-mail or phone, and whether the person that reaches out to them understands what they need and has the experience and skills to deliver.
Yes, you need to be both fast and patient. Even though speed is important to the online borrower, you cannot automatically assume that every prospect is ready to act. Buying a home is still a major financial and life-changing decision, and online borrowers are no different than any other borrower in this regard. While you may be working with your borrower solely through phone and e-mail, and responding to their questions as quickly as possible, online borrowers shouldn’t be rushed.
Patience is an especially valuable tool considering all the extra hoops lenders are required to jump through these days, such as checking and re-checking a borrower’s assets, income and credit. Many times, a prospect won’t qualify, or may put the decision on hold. But just because someone does not qualify today doesn’t mean they won’t in the future, or that a borrower who decides the timing is not right won’t return. They’ll appreciate someone who can work with them and stay in touch with them until they are ready to pull the trigger. Yes, it's a lot of work, but if you are patient and persistent, you have a customer for life.
Make online leads a priority
The steady growth in online borrowers does not mean you should immediately drop all other lead generation strategies and bury your head in your computer screen. It does mean that if you want online leads to work, you need a plan to incorporate this lead generation strategy into your current business in a way that works.
For example, some lenders with retail operations are adding additional staff and placing them in charge of managing and responding to online leads. These folks typically act as a “first contact” for the online borrower. They’ll conduct an initial screening interview before passing the borrower on to the actual sales person, hopefully one who is best suited to help the customer and close the loan. To truly do this right, you’ll need tools for managing and distributing online leads, such as a technology platform that enables your staff to identify certain types of borrowers by their particular need and motivation level. It should also allow you to identify which loan officers, based on their skill set, performance, or other key attributes are best equipped to turn those leads into borrowers.
Very large lenders are using these tools now to supplement their retail operations with online leads. But thanks to the increasing availability of lead management and sales automation technology, including cloud dialers, many smaller lenders are using them, too. In fact, the smaller shops often do much better at converting online leads because they are simply faster and more nimble by nature.
According to Fannie Mae’s study, higher income borrowers—those who earn more than $50,000 a year—tend to shop for a mortgage online twice as often as lower-income borrowers, and they are likely to base their decision on how hard a lender competes for their business. You can compete on price, but you need also to compete on service and how easy you make the process for your borrower.
If someone is comfortable with finding a lender online, I would venture to say that they are comfortable doing business there, too, such as online banking and even using electronic signatures. I understand that the mortgage process is still not entirely paperless, but my recommendation would be to make the mortgage process as paperless as possible for your online customers.
Adapt to Generation Y
I might add that a growing number of mortgage customers are younger Americans who have grown up with the Internet and are not shy about online transactions—in fact, quite the opposite. They may actually question your credibility if you ask them to sign anything in person or in ink. Again, this is where an investment in technology can really pay off. While online lead quality has improved dramatically in recent years, it's still a numbers game, and not every borrower you contact is going to convert. On the other hand, the only proven way you can increase your response rate, and thereby maximize your lead conversion ratio, is through technology.
You may also find other benefits, too—such as the ability to automatically sort high priority leads. By taking all the extraneous tasks off the table, your work is stripped down to doing what you do best: Providing excellent advice and selling quality loan experiences. Keep in mind to that a fast-food restaurant like McDonald’s wouldn’t be able to sell a single burger through the drive-thru without a technology platform in place to ensure fast and accurate service. You’ll need it, too.
Again, tackling online borrowers correctly will take planning and work. But if you’re truly “hungry” to capture a growing segment of mortgage consumers—and if you’re fast, patient and smart about it—there’s still plenty of room at the table.
Kelly Booth is the director of the mortgage unit at Velocify, bringing more than 25 years of experience in sales, marketing, management, strategic planning and product design in the financial software industry. She possesses a solid understanding of the mortgage and banking industries, the overall mortgage lifecycle and the technologies that support the loan process. She may be reached by e-mail at [email protected].