tems who are constantly testing to see if they receive the e-mail they send out, and some of the marketing messages don’t even clear their own spam filters.
la as of yet, I can guarantee you that we are going to see strategies like this pop up all over the place.
Hidden opportunity Multi-channel marketing Even when the e-mail does get through to us, we’ve all seen so many e-mail marketing messages that they don’t even register on us before we’ve clicked the delete button. It’s like the check engine light in our car, if nothing bad happens right away by ignoring it, we eventually learn not to take it very seriously. After a few weeks, we don’t even see it anymore. It’s not news to any of us that there’s very little power in solely using e-mail as your communication and marketing tool. Today, it takes a combination of touches from different channels (or media) to keep prospective borrowers engaged. Borrowers are alerted to messages in one medium, say e-mail, but will respond and engage with companies that approach them through multiple avenues, such as e-mail combined with social networking sites, YouTube videos and a personal phone call. The problem, of course, is that loan officers don’t the have time, expertise and money to do this type of marketing, much less generate the content it takes to provide the messages for those media. Some outsource it but most, cross their fingers and do nothing in hopes that maybe the statistics won’t apply to them.
Marketing responsibility falls to the lender
When Gary Keller looked into the habits of the most successful real estate agents in their industry, they learned that marketing was less about the particular sales messages that the salesperson used and more about the different ways the prospect was touched and how often.
“Most discussions of marketing are complicated by confusion about how it relates to sales. While sales are the results of good marketing, they are not at all similar disciplines.”
OCTOBER 2010
Rene F. Rodriguez is a corporate business strategist, acclaimed speaker and trainer, and chief executive officer of MortgageDashboard. He may be reached by phone at (612) 310-4010, e-mail rene@mortgagedashboard.com or visit www.mortgagedashboard.com.
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MORTGAGE PROFESSIONAL MAGAZINE
Their research indicated that the nation’s best agents had two databases, one that was comprised of past customers and people they knew (their “met” list), and the other consisted of a targeted group of prospects, typically a purchased list in a specific area code or neighborhood (their “not met” list). The agent would systematically farm both lists. It turned out that, if the agent sent a postcard to every person in the “not met” database once each month for 12 months, Kellar Williams calls this approach the 12 Direct program, they would earn one new transaction for every 50 contacts they mailed to. In other words, they got a two percent response rate. When it came to marketing to their “met” database, Kellar’s book recommended a two-step approach. Step one would be to touch every new prospect eight times in eight weeks, then follow up with a total of 33 touches throughout the year. Those touches consisted of e-mails, postcards, drop-offs, gifts, etc. That strategy yielded two deals for every 12 people they marketed to (or a 17 percent response rate). The value of this research is realized when you utilize these metrics to not only accurately determine what your marketing activities should be to reach your desired income level, but also, you could calculate the cost of not marketing to your clients. These metrics are consistent with the mortgage industry. The Mortgage Bankers Association (MBA) reported that 8.7 percent of your closed clients will refinance each year and the U.S. Census Bureau stated that 6.8 percent of the nation’s population will purchase a home each year. Combine those numbers and the end result is that 15.5 percent of your database will be in need of a new loan each year. For example, if an originator has a database size of 500 people, that means that 77.5 loans will happen, but the question is, “Will they be yours?” According to the research and stats we
stated previously on the subject of mindshare, if you are number one or number two, the chances of those loans coming to fruition is pretty good. It’s not like I need to twist the knife any further, but if the average fees on a loan are $3,000, then that means there is in excess of $232,000 of opportunity in a 500-person database. Even if we are half-right with these numbers, it still translates into a huge opportunity for those can properly execute this plan. That’s what we call database math. Other results that the nation’s top agents were enjoying came clear after the research, but they all said basically the same thing. Once the metrics were worked out and the agent knew how many touches were required to produce a sale, the marketing function was reduced to a numbers game, and the most successful agents keep doing the work. Now, the federal government is working harder to make it possible for home loan borrowers to shop around for the right lender. While that has traditionally been harder to do here, the government is not likely to stop moving the industry in that direction. That means that mortgage loan officers will soon face a similar challenge and will need to remain in the forefront of the prospect’s mind. This will prove increasingly difficult for mortgage lenders who are dealing with legal and investor compliance, technology, mortgage fraud and a host of other issues critical to their business. Those who are able to deal with these pressures without letting their marketing suffer will succeed. Many say that we are living in the “Information Age,” but I no longer think that’s true. I believe we are now living in the “Implementation Age.” You can do a quick Google search and receive any information you want, but that data alone benefits you little. It’s what you do with that information that matters. The very same is true of marketing. Many know that it’s the number and quality of prospects that leads to future business. Few have the wherewithal to implement a practical marketing program that works. I hope this information will help shift focus away from the upfront cost of marketing to the real question of what is it costing you NOT to market to them.
NationalMortgageProfessional.com IOWA
In the end, it’s up to the mortgage lender to provide the marketing that will provide a steady stream of sales leads to the loan officers. In fact, it makes good business sense to do so. But here again, we run into the challenge of recruiting the nation’s best loan originators and paying the high commissions required to get them to come aboard, there is little money left for marketing purposes. Soon, many lenders are going to be forced to re-think and re-structure how they compensate originators, which will inevitably lead them re-think how they are going to retain top talent. Herein lies the opportunity. Lenders that are able to find ways to offer ancillary value that originators are able to monetize are going to be the big winners. Most likely, the originator’s compensation will be perceived as going down, but if done correctly, lenders will be able to successfully reduce the cost of business to the originator by taking on such expenses as marketing. The positive result will be more business generated at a lower cost to the originator. While there isn’t a magic formu-
As everyone rushed to make the move to e-mail marketing, traditional printers were somewhat left behind in the dust. The printing industry has been under heavy pressure coming from online adverting and falling prices for traditional mass media. While advertising online may not always be cheaper than doing so in print, it comes without the cost of printing or paper. All of this is taking business away from printers. Consequently, printing companies are hungry for business. They have streamlined their operations and have added technologies that allow them to do some great things for marketers. At MortgageDashboard, we chose to fully integrate Cross Media’s (www.CrossMediaLLC.com) LeadStar marketing engine into our new loan origination software (LOS) and customer relationship management (CRM) system. They are a perfect example of what is possible when you combine the expertise of a traditional printer and the power of variable data printing to execute marketing best practices. With their technology, they can offer their clients individuallyprinted marketing pieces printed directly from a database at an affordable price. The ability to automate certain marketing and communications that were personalized and delivered through multiple channels based on strategically placed triggers throughout the loan process was a dream come true for me. The more customized a direct mail marketing piece is, the more effective it will be. One of the advantages to the company for handling this type of marketing on behalf of its mortgage originators is that should an originator leave the company, a simple change to the database, perhaps the addition of a new originator’s name and photo, and prospects may not even notice the change if the company’s other branding remains the same. It falls on the shoulders of the company to seek out these marketing opportunities and make sure that prospects are getting attention regularly. This will require firms to either bolster the staff in their marketing departments to handle the content generation, media buying and database maintenance responsibilities; outsource it to a firm that can handle it for them; or invest in a technology to help them streamline and execute their marketing plan. Those firms that keep the work in-house must be prepared to play a numbers game.
Database math