How To Avoid Losing Your Leads
Everyone knows that the ability to provide a predictable and sustainable stream of quality sales leads is a goal for every successful sales organization. For many organizations, 3rd party lead marketplaces have become the “go to” channel for that predictable, sustainable business. As a lead buyer, what if you walked into your office tomorrow to find that you had received only 75%, 50% or worse yet, even less of your expected daily number of leads from this “predictable” channel? What if the cost to deliver your daily lead capacity from your current suppliers were to increase by 25% or 50%. What if the quality of the leads you’re buying begins to fade, could you catch that trend in time? With so many of your competitors vying for the same leads from likely a combination of the same suppliers, what are you doing to secure the future production of your business?
Volatility in the 3rd Party Mortgage Lead Marketplace
If your business relies, to any degree, on 3rd party generated leads, volatility in your lead supply chain is never a welcome guest. Regardless of whether you’re buying leads for yourself, a small branch office or for a large consumer direct sales center, your ability to understand the dynamics at work in the lead ecosystem are paramount to your ability to mitigate the potential impact any volatility may have on your business.
Volatility in the lead marketplace can be triggered by a variety of catalysts and here are a few that any lead buyer should watch for:
- Market Condition Changes: Fluctuations in the market conditions can have a profound impact on the lead marketplace. Rising interest rates, changes in product guidelines, shifts in the makeup of the competitive advertiser and lead buyer landscape can all individually impact the balance in the lead markets. For example, a sudden or sustained increase in mortgage rates can result in a brief uptick in mortgage inquiry volume from “out of market” rate shoppers. The increase in available lead volume can often create a false read on the volume of leads with market benefit. It could also cause lead buyers to tighten their filters which in turn results in more concentrated competition and higher lead cost.
- Lead Vendor Changes: Just as lead buyers diversify their marketing across different channels and lead suppliers, Lead sellers diversify their marketing and lead sourcing. As a buyer, you won’t always know how or when your supplier’s adjustments will affect your success, so it’s important to track trends in your success daily. Changes in management or ownership can also impact not only your relationship with your suppliers, but it can also disrupt the 3rd party lead ecosystem. Anyone buying leads from GetSmart back when it was acquired by Lending Tree or anyone buying leads from Lending Tree after they bought Home Loan Center understands this first hand.
Seasonality and Changes in Consumer Behavior: The fourth quarter has always been a seasonably slow time for mortgage lead generation and for a variety of reasons. Consumers typically aren’t as focused on their home-financing needs at the end of the calendar year. They are inundated with advertising messages from all the retailers vying for valuable wallet-share during the holiday season. In the early part of the calendar year and up through tax time, consumer focus comes back to their finances. Then home-buyer’s attention on mortgage financing picks up into Spring and Summer home-buying season. These seasonal trends all impact the cost to generate mortgage leads and as a result the cost for lenders to buy leads in the 3rd party market.
Common Mistakes Made by Lead Buyers
Some buyers are proactive in their lead buying strategy and take precautionary steps to minimize the impact of a shift in the lead markets. However, too many companies are so focused working “in” their business that they don’t take the time to work “on” their business to implement and test precautionary strategies in advance. Two common mistakes made by businesses are:
- Failure to Continually Test New Lead Types or Suppliers:
To often companies rely on a lead acquisition strategy that is not diverse enough. If you answer “Yes” to any of the following questions you may want to re-evaluate how you buy leads.
- Does more than half of my lead supply come from fewer that 2 sources?
- Do I know what type of leads work best for my sales force?
- Do I have additional lead suppliers setup and ready to activate if my current sources cannot meet my needs?
- Do I have a score card of current and potential lead vendors that is prioritized for success?
- Failure to Track “Static Pool” Lead Key Performance Indicators (KPI):
Gone are the days of picking a vendor based on if you like them or if they had a great salesperson. Today, you need to know what numbers are important to you and make sure you manage your suppliers to your expectations. Without proper tracking of leads you can easily find yourself buying low performing leads from a position of weakness instead of a position of strength. What KPI metrics should I be tracking? Every business model is unique so it’s important to know what metrics matter to you.
If you do not have a diversified lead buy strategy and/or are not managing the performance of leads buys, you can easily find yourself panicking for leads resulting in bad business decisions. Take the time today to assess your lead buying strategy and make sure you don’t wake up tomorrow wondering “Where are my leads?”