Scotsman Guide - December 2008 Residential Edition

Make More Money with Scored Leads
Brokers may profit from working with lead-providers that score their results
By Joey Liner, co-founder and vice president of sales, DoublePositive Marketing Group

Many mortgage brokers’ businesses rely on the leads they purchase. They turn to various lead-providers hoping to receive strong prospects that will become funded loans.

Increasingly, lead-providers are scoring their leads to predict their likelihood of converting into funded loans or progressing to the next step in the loan-orig-ination process. The concept is similar to how credit scores predict the likelihood of borrowers repaying a loan.

Brokers who purchase their leads from Internet lead-providers should understand how the lead-scoring process works, as well as how they can profit from using scored leads.

Without an accurate feedback loop of final lead outcomes, lead-scoring isn’t possible. The score’s quality depends on the accuracy of the feedback loop. Feedback that reports back only 50 percent of all

the amount of time mortgage professionals spend on low-score leads.

A solution that is becoming popular among lead-buyers that have begun scoring their leads is to redirect low-scoring

“For a lead to be ready for the loan process,
live contact is essential, and the consumer must be
genuinely interested and qualified. Anything less
is a waste of a mortgage broker’s time.”

Determining scores

To determine lead scores, lead-providers analyze how data characteristics have influenced historical lead results. This is not complex when there is only one data field to analyze.

For example, analysis may indicate that 50 percent of e-mail addresses from a certain domain will convert into funded loans compared to only 25 percent of e-mails from another domain. The lead score of the first domain’s e-mail leads would be 5 0, and the other’s would be 25.

The process becomes more complicated as we add more data fields, such as state and gender.

We may see that 60 percent of leads by males convert into a funded loan, compared to 40 percent for females.

And looking at the state field, we may find that Alaska has 70 percent of leads converting into a funded loan compared to 20 percent of Florida’s leads.

To determine a single, composite lead score, each field needs its own “weighting.”

In other words, it’s possible that state is a more accurate field to determine the likelihood of a funded loan than the e-mail domain, or vice versa.

Weighting each field’s degree of influence is the best method for normalizing these variations of influence.

the leads that convert into funded loans will result in a lead score that is less than 50-percent accurate.

Most lead-buyers simply seek to close loans. But they also can optimize scores for other events, such as a submitted application or a live, hot transfer. These are milestones that occur before a loan actually funds and can be useful with loan cycles of 90 days or more.

Data accuracy on the front end often is limited to the accuracy of the con-sumer-provided data, which consumers usually fill out via an online form. More-accurate data and more fields of accurate data on the front end can substantially add to a lead score’s accuracy and efficacy.

leads to a leads-provider to contact, qualify and transfer the consumers. Typically, the lead-buyer is only charged for the leads that result in a live, hot transfer.

Mortgage brokers then can use their time for loan-related activity with genuinely interested and qualified consumers rather than wasting their time chasing down consumers, leaving messages, scheduling callbacks, sending e-mails or asking preliminary qualifying questions.

A live-hot-transfer leads-provider typically performs the time-intensive

tasks of mining the nuggets of gold from the leads with the lowest scores.

Leads with the highest scores can be delivered directly to the mortgage brokers as usual. But because brokers’ lead flow is limited to those with the highest probability of converting into funded loans, they can fund more loans.

The typical outcome is a higher conversion rate of all received leads into funded loans — sometimes 50-percent to 100-per- cent greater. This can drastically lower the average cost of acquiring new customers, even with the cost of the leads-provider incorporated into the total average acquisition cost.

Past Articles

by Joey Liner

“Lead Your Way to New Business,” January 2007 “Pick the Right Lead for You,” June 2007

View these articles and more at
scotsmanguide.com

A means to an end

Predictive analysis through lead-scoring essentially provides a way to predict the future. But it does not create any value on its own. Lead-buyers must find ways to use lead scores to extract value from the process.

The answer lies in first identifying the economic consequences of leads with low lead scores. Even leads with low scores can be converted into funded loans. The problem is the amount of time required to mine these leads for the gold nuggets.

Time is a mortgage broker’s most valuable asset, and every effort should be made to allocate as much time into loan-related activity as possible. But for a lead to be ready for the loan process, live contact is essential, and the consumer must be genuinely interested and qualified. Anything less is a waste of a mortgage broker’s time.

Leads with high scores typically require minimal time for the broker to establish live contact and to assess the consumer’s interest and qualifications. Leads with low scores, however, can require excessive amounts of time to contact and qualify.

The key to making money with lead-scoring is to find a process that minimizes

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Ensuring accuracy

From a data perspective, no two Internet leads are alike. Thus, the more accurate the score for predicting outcomes, the more valuable the process becomes.

The key to the most accurate and useful lead scores are:

1. Accurate and timely feedback loop
data (back end); and
2. As much accurate lead data to analyze
as possible (front end).

Specializing in the immediate funding
of loans to borrowers with cash down
or existing real estate equity.
(No Source or Seasoning Requirements)

206-362-4444

Joey Liner is co-founder and vice president of sales at DoublePositive Marketing Group ( www.doublepositive.com), the industry leader in the “hot transfers” space. His day-to-day responsibilities include sales and vendor/supplier relations. Previously, Liner was the leading sales associate for TheLoanPage.com, an Internet mortgage-lead-generation company. Liner graduated from Towson University in Baltimore. Reach him at (443) 278-8566 or e-mail joey@doublepositive.com.