Monday, 20 July 2015 by Bill Baskin
When I first started generating and selling Internet leads in 1995, training sales teams to work them had an extra challenge we don’t have now: First we had to explain what the Internet was and then sell them a computer so they could work the leads! These days, our firm generates and delivers more than 10,000 exclusive reverse mortgage leads per month to a lender you may be working for or with.Since the ’90s, most people have used the Web to research products, review them and ultimately make a buying decision based on what they’ve read and learned. The Web is a double-edged sword in this regard, as there is as much misinformation as good information out there on reverse mortgages.
The most important thing I’ve come to understand as a lead generator is that a reverse mortgage is not a commodity product that everyone understands. There are many misperceptions from consumers caused by the word “reverse.” Few people realize that it’s really just a traditional mortgage, but with more payment options and flexibility, as it can “pay” you (thus the “reverse”). How many other loans allow you to choose when and how you pay it back, or not pay it back at all, during your lifetime? I often hear that it’s expensive, and my response is, “Expensive compared with what other loan you don’t have to effectively pay back during your lifetime?”
I fully believe in reverse mortgages and the incredible financial options they offer retirees, and it excites me to introduce so many consumers to this product. Using the proceeds of a reverse mortgage just to defer Social Security until 70 can increase a borrower’s benefits by 76 percent and prevent a borrower from draining their investments, which are also earning a return. Proceeds can be used to start a second career, buy a dream vacation home, downsize through a HECM for Purchase or simply help pay for the golden years. As a salesperson, it’s important to understand that your prospects may have applied for a quote after reading only a few bullet points highlighting the benefits of a reverse mortgage, so they probably need a lot more education and a greater comfort level to make them ready to buy. Although I will cover “how to work leads” in another article, today I want to focus on why leads work and how to choose a lead company.
Having managed many sales teams myself, I can assure you that Internet leads have always performed to a level of acceptable return on investment (ROI) for your marketing dollar. That said, having had the privilege of working with tens of thousands of loan officers, brokers and major lenders, many salespeople still look at leads the wrong way. Salespeople focus on bad leads rather than the good ones, and that’s a big mistake!
I’m here to tell you why.
If I buy 100 leads, the performance waterfall I will be looking for is as follows:
50-60%+ contact rate
15-30% application rate
2-8% fund rate
What do these numbers tell us? The first thing we can surmise is that you may not have the opportunity to speak to up to 40 percent of the leads you buy. Using a trickle email campaign and continuing to make monthly calls as time goes on can move contact rates up to 80 percent, but it takes focus, intensity and a plan to do so. Sadly, most salespeople give up within a week or two. It’s OK though, as great ROI can still be achieved.
Having an effective sales process is still important. With the people you do have an opportunity to speak with, take the time to sell yourself, sell your company, qualify the borrower (their needs, not their credit), and educate the prospect on the many ways to use a reverse mortgage and the financial benefits. This way, you can establish the product as a really flexible financial planning tool to supplement a borrower’s retirement.
The goal during this phase is to discover and solve a borrower’s problem by using a reverse mortgage, whether they believe they actually have a problem or not. It’s your job to discuss their situation, goals and dreams and ferret out that problem. I’m confident they have one even if they have not yet recognized it—no one’s life is perfect. About 10-30 percent of people will need help getting their family’s buy-in, survive counseling and make it to the funding finish line, but you need to both educate and set proper expectations along the way. Sending vetted, trusted links to third-party articles about the benefits of a reverse mortgage for borrowers to research helps tremendously. We publish nowitcounts.com, which has great content in the money section on reverse mortgages. Ideally, you don’t want the borrower doing this research on their own, as there is too much misinformation and inaccurate information out there about reverse mortgages. People are lazy, so make it easy for them. Surprises or missed steps kill deals; we all know this.
This lead waterfall will yield three to eight loans from 100 leads. It performs like this for our advertisers month after month, year after year. Smaller shops with better controls and more focused people often perform even better. The deals won’t fall in your lap, however, and again, you must work them with focus and intensity until the buyer is ready to move forward, which could be months. The main takeaway here is that on average, 95 percent of the leads you buy wind up in the trash for whatever reason (bad phone, changed my mind, equity, family, flakes, whatever). It doesn’t matter why, so don’t focus on it! Alternatively, if you focus on finding the three to eight loans in every 100 leads that will fund, you will see huge ROI relative to your marketing spend. A mentor of mine once told me, “Some will, some won’t, so what!” Focus like a laser on those who will, and forget all about those who won’t. Too many salespeople determine the lead source is “bad” after going through a handful of leads and finding a few of those 95 that end up in the trash, but they don’t take the time or have the mindset to find the five that are solid. Find the five good ones, because those will earn you a better car and a nicer house if that is your goal—and they are in that pool of 100 every time!