Conversion rate is not the whole story
Mortgage Strategy11-23-2009
At the recent Mortgage Business Expo there was a lot of activity around the stands of lead providers, with the main question being - what leads do you sell? The next most frequent question was - what’s your conversion rate?
Although this is a reasonable question there is no simple answer as lead providers can only give an average conversion rate for a product and conversion rates vary greatly from buyer to buyer.
Many factors contribute to conversion rates and most of these are not controlled by providers. These include speed of contact, sales skill and product. For example, with life insurance leads some advisers convert leads at 15% while others convert those from the same sources at 30%.
Given that conversion rates vary and that it will at least take a few weeks for new buyers to get the top end of the conversion scale, the more important question buyers should ask is - what is the value of a converted lead?
The fixation with conversion percentage often hides the point of lead generation which is to achieve a desired return on investment.
A lower conversion rate and a higher return on investment should be preferable to a high conversion rates and a lower return.
For some leads, even a single-digit percentage conversion rate can generate good returns. There’s plenty of evidence of buyers who have bought £5 mortgage leads only to earn thousands in commissions.
With these types of revenue opportunities even a 1% conversion rate would be profitable.
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