PERSON OF THE WEEK: Chris Backe is director of financial services for Velocify, a provider of customer relationship management, lead generation and sales automation solutions to the mortgage industry. MortgageOrb recently interviewed Backe to learn more about how mortgage lenders can increase sales in this current environment and how technology has changed the way mortgages are sold.
Q: In your opinion, what are the biggest roadblocks keeping lenders from increasing sales?
Backe: A few years ago, I would say the market itself was the biggest obstacle. Today, however, the largest roadblock is the gap between most lenders’ marketing and sales efforts. Many lenders spend thousands of dollars each month to promote their brand and to generate leads for sales. However, an inconsistent sales process or lack of detailed feedback limits the return on these sales and marketing investments. The lack of effective communication between sales and marketing can make matters worse. For example, salespeople often feel marketing is ineffective because they perceive lead quality to be poor. Marketing often feels like sales is spoiled and unappreciative.
This particular gap is nothing new – lenders have struggled with it for years. However, its impact on production is much greater today for several reasons. Competition is fiercer than ever. Referral channels are not as effective as they once were. Vastly more borrower leads are coming to lenders through the Internet, as today’s borrowers go online and shop for products and rates. Yet, few lenders know how to capture these borrowers and engage them.
Q: What is causing this roadblock, and how can it be overcome?
Backe: Most lenders are simply unaware of the gap that exists between sales and marketing, and you can’t fix what you don’t see. As a result, they remain blind as to why they don’t hit their goals. Another issue is that few lenders are measuring the effectiveness of their marketing campaigns holistically, from demand generation through to the sale, so they don’t know what really works.
In other industries, for example, marketers use technology to measure and track response rates on ads and other marketing efforts. A growing number of lenders are now doing this too, as evidenced by the growth of marketing automation providers in our industry. Once they’ve gotten a potential borrower’s attention, however, many of these lenders lack the tools to finish the job. A prospect raising his or hand in interest is just the beginning; a true contact strategy seeks to turn that lead into a sale through ongoing education on market trends and opportunities for the borrower.
Q: What impact are the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosure (TRID) rules and other regulatory hurdles having on mortgage sales?
Backe: Compliance with TRID and other regulatory mandates is having a significant impact on sales, but not necessarily because they are struggling with the requirements. Although some lenders and loan origination system (LOS) providers have struggled with TRID implementation, many are throwing an exorbitant amount of money at the problem. If lenders placed a fraction of what they spend on compliance toward sales technology, they could automate their marketing and sales processes. This would create a more effective and consistent process for communicating with their borrowers, helping check some of the boxes that are a concern with TRID and other regulatory mandates.
On the topic of compliance, however, I should mention that the gap I spoke of earlier is also an area of risk for lenders. Many mortgage companies rely on their loan officers or sales representatives to convert leads but have little idea what strategies are being used. From the organization’s standpoint, this lack of visibility into sales and marketing processes increases compliance risk. Yet, this could be easily solved with the right technology.
Q: What major consumer trends should mortgage professionals be aware of?
Backe: The Mortgage Bankers Association expects year-over-year home purchases will rise by 10% in 2016. This increase in purchase volume will cause the gap to be more pronounced because in a purchase environment, the lead to application time can be six months or more. During this period, there are tons of opportunities for that lead to fall through the cracks. Without some sort of technology to ensure that does not happen, lenders will continue to lose opportunities.
The other major trend is that lenders, not real estate agents, have become the most popular first contact for consumers, and the majority of consumers are finding their lenders online. That means lenders that lack a strategy for converting Internet leads are in big trouble. Real estate referral partners are still important, but the simple fact is that more and more borrowers are applying for and receiving loan approvals online, and that trend will only continue.
Q: How is technology changing the way mortgages are sold?
Backe: Technology makes many things possible, but it primarily increases speed and efficiency. When a lead comes in, leads need to be called back within minutes or even seconds. Our own research shows that contacting a lead by phone within three minutes of a Web inquiry increases the likelihood of conversion by 98%. Our own technology helps lenders respond to borrower leads in as little as 20 seconds.
But, technology isn’t just about speed. It’s making lenders more effective with their sales efforts. With technology, any borrower lead can be scored for quality so that lenders can prioritize the most motivated prospects. It can also automatically distribute those leads to loan officers who are ready to call them. And, technology also keeps a lender’s sales team consistent in executing a contact strategy so nothing falls through the cracks.
Some sales people believe that this sort of technology will be used to micromanage them or that it will eat into their sales time. But, when they see it can help them focus more time talking to potential borrowers and ultimately bring them a bigger paycheck, they are in. As Jerry Maguire said, first you must “show them the money.” Within five years, however, I think you’ll be hard-pressed to find any lender that is not using sales technology – because at some point, the lenders that fail to do so will not be able to compete with the ones that do.