Avoiding the Pitfalls of Lead Generation

While some reverse mortgage loan originators attract new clients through a web site, referral sources or advertising, many others purchase “leads” from third-party vendors.

Buying leads can be exasperating and costly, if you don’t know what you’re doing. NRMLA assembled several sales people to discuss their worst experiences and how they are now able to avoid mistakes and turn purchased leads into closed loans.

Purchased leads are usually derived from one of three sources: Internet, telemarketing and direct mail.

On the telemarketing side, “my favorite type of lead is a hot transfer where you are put in touch with a live borrower,” said Bobby Windsor, a sales manager at Net Equity Financial, Inc., based Nottingham, MD.

While some people have shied away from direct mail because of market saturation, Windsor has had some success distributing advertisements in smaller batches of 1,500. He then handwrites the consumer’s address on the envelope, which, he said, “adds a personal touch,” and more often leads to a return call.

Asking the Right Questions
When Morrie Shoob, owner of Seniors Reverse Mortgage Solutions, based in San Ramon, CA, responds to a lead provider’s solicitation, the first question he asks is whether the company is a member of NRMLA.

Shoob only works with NRMLA members. “I’ve been burned too much in the past and it has me cost several thousand dollars” dealing with companies that don’t support the industry or adhere to the association’s Code of Ethics and Professional Responsibility.

Next, Shoob asks for at least two references, so that he can speak with other brokers who have purchased leads from the same vendor. “The single most important thing you can do is ask for references. More times than not you will get answers that are evasive, such as ‘sorry, I can’t do that because of confidentiality concerns’ or ‘I will get back to you with that information’ but then you never hear back from the company,” said Shoob.

Ed Barrett, of Salem Five Mortgage Company, LLC, based in Plymouth, MA, commented that lead providers will say anything to get your business and, if you’re not careful, will send you prospects who have no idea they responded to a direct mail piece advertising reverse mortgages.

“The worst advertisements are so vague in what they are promoting that when you utter reverse mortgage on the phone, the person on the other end immediately hangs up,” said Barrett.

Because most brokers have less money to spend on marketing, don’t experiment with different lead generation sources. Only pay for what is working. “For the past seven to eight months, I have exclusively purchased Internet leads, because that is what is working for me,” added Shoob.

Shoob said he is thrilled if he gets a 15% closure rate, but if his loan officers buy their own Internet leads, the conversion rate is often higher, because “they have skin in the game” and are working the lead more closely.

Larry Wolf, of Finance of America Mortgage in Marlton, NJ, asks vendors how they obtain information, what filters are in place to ensure quality leads and whether they comply with federal “Do Not Call” laws.

Wolf normally requests data on prospects between the ages of 68 and 74. Then he looks at certain property values, whether the property is already encumbered by a mortgage, and whether the prospect has large amounts of credit card debt.

Always produce your own advertisements. “One time, I paid for a postcard produced by the vendor and what he showed me was specific to reverse mortgages, but what I received in the mail was a more general piece that addressed financial needs,” added Wolf. “It was a bogus situation that cost me a lot of money to get nothing.”

Most lead providers do not have a refund policy, but rather an exchange policy. Before committing yourself find out what the company’s policy is with non-qualified leads, or those who don’t qualify for a reverse mortgage. “Find out how they define a bad lead,” said Shoob, “and what is their timeframe for exchanging a bad lead for a good one.”

On your end, you need to track how cooperative and hassle-free the company is.

If you are a manager who is buying and distributing leads to your sales staff, it is your responsibility to make sure they are following up with those leads.

For a higher fee, some companies will give you exclusive rights to market to a prospect and not sell that consumer’s information to other brokers.

“My experience has been that exclusive leads are cost prohibitive,” said Wolf. What is more important is that you are the first person to contact the consumer, which is why you need to stay on top of your sales force, if you’re handing them leads.

Shoob agreed and mentioned all of his loan officers have blackberries, so if a lead comes in the loan officer drops what he or she is doing and immediately calls the person. “This is not a sales call, but a courtesy call letting the consumer know that they are being contacted in response to a request they made on the web site to receive additional information,” he added.

Find out what the exchange policy is with your vendor and then train your sales staff and “have them report back on how well the leads are working out, or not working out.”

A good time to discuss lead exclusivity is when you’re speaking with references. “That’s when you find out whether you’re going to be the sixth or seventh person to receive that lead,” commented Wolf.

If you’ve never bought leads, or you’re switching to a new vendor, conduct a beta test using a small sample, so that you can measure the quality of the leads before spending lots of money. For direct mail, try a few hundred.

“We buy anywhere from 5 to 10 Internet leads initially to make sure it works,” said Shoob. “If we get good results, we’ll buy more.

Always purchase leads with a credit card, said Patrick Ervin, of Talmer Bank and Trust, headquartered in Troy, MI. If the vendor doesn’t live up to his promises, the charge can be challenged and you might get your money back.

“When I was dealing with one vendor, there were 10 things he promised verbally during our initial conversation,” explained Ervin. “I wrote him an email and requested he confirm in writing what was promised. At first, he didn’t respond. He came back and said ‘when are you going to buy?’ and I told him to respond to my email, so that I knew we were both on the same page.”

Ervin kept dates and times of all the phone calls he had with the vendor. “When it all went bad, I went to the credit card company to contest the charge and gave them all the information I had collected to prove that the promises that were made to me were not kept. They said ‘this is exactly what we need’ and all the money I had spent was put back into my account and that’s the last time I dealt with that company,” said Ervin.

The most important thing you can do, added Ervin, is to analyze a lead generation company’s business model, so you can figure out how they make money. If you can’t understand their model from A to Z — for example how data is collected, whether leads are sold exclusively and if not, how many times are they distributed — then you know something is deceptive.”