Taking the lead
Mortgage Solutions27-10-2008
Lead generation can work for just about any business, but in a desperately slow market should mortgage advisers be spending money on this type of marketing? Justin Rees argues the case
Based on current trends, lead generation will become even more popular in the future, especially in the area of financial services advice. Used correctly, it can be a win-win for both the buyer and seller.
But in the current mortgage market, at a time when revenue is being squeezed, it can be seen as a luxury firms can do without. However, there are good reasons to persevere – and here are 10 of them.
Keep your sales pipeline full
Rather than waiting for customers to walk through your door, lead generation delivers interested prospects to your inbox. Buying leads is effectively buying the results of somebody else’s marketing efforts, which means less risk and more reward.
Lead generation can be used in a variety of ways. Some intermediaries buy leads to ‘top up’ during quiet periods, while some use lead generation as their sole source of new business.
Easily measure whether it works
Unlike other forms of marketing, lead generation is completely transparent.
You decide on a budget for your lead generation campaign, work the leads, and calculate your revenue generated. Then look at the difference between what you spent and what you made to determine whether it works for your business.
Every business is different and therefore some businesses need higher conversion rates than others to make lead generation work. It is essential you have an idea of what constitutes success before you start buying leads.
Keep up with changing criteria
Lead generation allows you to keep up with the rapidly changing market.
For example, for mortgage leads you should be able to filter by postal area, loan amount, credit grade and maximum loan-to-value (LTV). As lenders pull high LTV products you can just change your LTV filters. You can also lead generation to target consumers that will generate you more income, such as consumers looking to borrow higher loan amounts.
Only pay for good leads
With most forms of marketing, once you have handed over your money then you just have to hope you generate some revenue.
For example, if you pay for a listing in the Yellow Pages, you cannot get a refund if somebody enquires about a product or service you do not provide.
With lead generation, you only pay for leads that match your predefined criteria and you should be able to return invalid leads. This includes things such as disconnected phones and wrong numbers.
Use the credit crunch to your advantage
The more products and services you have to offer, the more leads you can convert into business. If you make sure you have partnerships or referral schemes in place then your lead buying can go a long way.
For example, as the market falters, an increasing number of your customers will have too much debt to get a mortgage. Rather than turn them away you could by refer them to a debt company and earn a referral fee. This is all revenue that can be attributed back to the lead.
The more you can do with the leads you buy, the more profitable lead generation will be.
Lead generation gives you stability
Lead generation enables you to plan ahead and give some stability to your business. For example, if your business runs on completing 10 remortgage cases per month, then once you identify your target customer you can work out how many leads you need to buy to generate those 10 cases.
Industry conversion rates for remortgage leads are between 5% and 15%. Imagine a few different conversion scenarios. If you can convert 10% of the leads you receive then you would need to buy 100 leads in a month to complete 10 cases.
Don’t just survive; thrive!
Despite the current market conditions, there are many businesses that are planning to expand in the coming months.
For any company that wants to grow, lead generation allows businesses to take on new advisers and get them generating income within a matter of days. Lead generation is the only plug-and-play method of sourcing new business that can provide interested customers at the touch of a button.
Diversify your revenue streams
As fewer consumers are able to get mortgages this does not have to affect your business. At the click of a button, lead generation will enable you to get into new markets.
For example, as the credit crunch has taken its toll on the mortgage market, at the same time life insurance has been one of the fastest growing lead categories with conversion rates steady at around 20%.
If you have the correct processes in place for working and managing one lead type then this can be applied to any other lead category.
Buying leads is relatively cheap
There are a whole range of possible marketing methods available to financial intermediaries.
For example, an advert in a local newspaper with a readership of a few thousand might cost hundreds of pounds. For this you get no guarantee of any response, when their response might be or who will respond. For the same price, you can buy leads filtered to your specific criteria delivered in real time.
Build your customer database
You will only convert a certain percentage of the leads you buy in the short term, but every lead you receive is a consumer who has requested to be contacted about a product or service you provide.
So if you speak to a consumer whose mortgage application is turned down due to the current market conditions, they should go straight into your client database to be contacted periodically. This is known as lead nurturing, and can generate revenue for your business for years to come.n
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