Turning Leads Into Applications

Over the past couple of years, the reverse mortgage industry has seen an influx of “lead generation” companies to assist lenders with their marketing efforts. Through legal channels, these companies obtain consumer information, such as mailing addresses, phone numbers, and e-mails. This information is sold to reverse mortgage lenders seeking to market their services to prospective clients.

Types of leads you can purchase
Historically, lenders have generated reverse mortgage leads through networking with elder law attorneys, CPAs, and other similar professionals—and from referrals. This type of marketing is time-consuming and the lead stream is inconsistent. It’s difficult to build a sales force without a steady influx of leads making it tough to grow your business at a more rapid pace.

Incorporating lead generation into your marketing program allows you to reach a larger group of prospects with relatively little time or effort (in comparison to traditional networking and relationship building), build a strong “pipeline” to fuel future growth, receive referrals from lead generation clients, and is a valuable tool to recruit quality loan officers.

Types of Lead Generation Programs
There are three types of leads: cold, warm and hot.

Cold leads are historically used for direct mail. The cost to obtain a cold lead ranges from $15-$45. The information that is obtained is minimal—name, address and maybe exact age (lead is older than 65 usually).

A cold lead is not exclusive, meaning the information is public and accessible to anyone. A cold lead’s interest level in reverse mortgages has not been established yet. It is up to you via your direct mail piece or telephone conversation to establish interest.

Warm leads are used for direct mail and telemarketing. The cost to obtain a warm lead is moderately priced. Information that’s obtained includes a name, address, age, telephone number and home value

A warm lead has expressed a mild interest in the product but would like to learn more. This individual most likely responded to a direct mail letter, advertisement or some sort of email solicitation.

By contrast, consumers are considered hot leads because they have expressed a high level of interest in the reverse mortgage program and want to learn more ASAP. These individuals want to meet with a reverse mortgage specialist.

Because the closing rate for a hot lead is much higher, so is the cost to obtain this person’s information; typically $45 to $100. Information provided includes the individual’s name, address, age, telephone number, home value and mortgage balance.

This is considered an exclusive lead because the information is disseminated to only one lender—you.

Legal ramifications of lead generation
Now that we have established the types of leads that are available and the best way to utilize them, it is important for you to understand what you can and cannot do with the lead to abide by privacy laws.

A cold lead is where you reach out to a consumer without the consumer initiating contact with you. As long as you are certain the consumer’s information is public knowledge, you can send a direct mail piece.

For telemarketing purposes, if you obtain a consumer’s name, address and telephone number, lead generation firms will require you to do the following:

  1. Go to www.donotcall.gov
  2. Apply for an SAN number – for every area code that you cold-call within, you must have permission from the government stating that you can do so. This SAN number provides you access to the latest national registry of the do not call list. Note: you must reapply for this number once a year
  3. The company that you are purchasing your leads from will scrub its list against the most recent Do Not Call registry to ensure your list is up to standards.
  4. Lastly, the lead generation company will ask for a copy of the script you are using to put on file. You must keep detailed records to ensure your scripts have been approved by a compliance professional and that you have accurate records of the SAN information.

With regard to warm and hot leads, as long as the prospect initiates contact with you by responding to any type of advertisement created by you or a lead generation company, this prospect is considered a client. This gives you the right to contact that individual via telephone, direct mail or email. However, if this individual asks not to be contacted again by your firm, you must make sure you or someone from your organization abides by their request. Lastly, if you send a blast email or newsletter to your prospects, you must always have an opt-out disclosure.

Converting Leads—Who Should Assist?
The person on your staff chosen to “work” the lead depends, in large part, on the type of lead purchased.

A cold lead can be handled by a junior people or trained assistants. Their job is to gather information about prospects—including age, home value, property type—to see if they qualify for a reverse mortgage. If they qualify, the junior person should let them know that a reverse mortgage specialist will contact them. If not, the lead is essentially eliminated.

This person’s job is to take cold leads and qualify them – turning them into warm leads for a senior loan officer.

Warm to Hot Lead
If lead have been qualified, it’s important to “warm them” up. This should be handled by a senior person, someone knowledgeable who can answer detailed questions and who will make the most of this opportunity.

In terms of handling your warmed-up lead, be sure to make an introductory call to establish a relationship. State where you’re calling from, reiterate how you received the lead’s information. This reminds the consumer that they asked to be contacted, and that this is not a cold call.

It can be helpful to reiterate the client’s information—“So I see you have a single family house worth $200,000, a mortgage balance of $50,000…” This helps to build client familiarity. Find out the reason they may be interested in a reverse mortgage, whether it’s debt consolidation, living expenses, or home repair.

Ask clients questions that will help you understand their need, such as: “Why are you looking for additional income? or What do you intend on using the reverse mortgage proceeds for? Currently, what is your monthly income, what are your expenses?” What you need to do is identify clients’ financial needs and suggest how a reverse mortgage can meet those needs. This will make setting the appointment easy. I call this tactic needs-based selling. Never give a question that requires a Yes or No answer, for example, would you like to make an appointment with me so I can further explain your financing options?

A better option is to say “the next step would be for us to sit down so I can further explain all of your different financing options, as well as how the reverse mortgage process works. What’s better for you, evening or daytime?”

If your lead is asking a lot of questions on an initial call, try saying “I understand you have a lot of questions, and I’m happy to answer them all. Why don’t you write down each of them, and at our meeting we can go through them all in detail. What would be better for you—evening or daytime?”

If your lead isn’t ready for an appointment send out a follow-up letter with specific information about your company, let them know in the letter you will call them again in a week, and don’t throw away a pre-qualified, exclusive lead.

Develop 30-day, 60-day, 90-day and 6-month follow-up letters—and send them out religiously.

Lender Lead Banc, for example, has follow-up letters that you can automatically generate for a given lead. These are regular, recurring follow-ups, via mail and phone, to help you convert at a later point. A reverse mortgage is a major decision and a long process. Give your leads the necessary time to pan out.

After scheduling an appointment, suggest to clients that they bring friends or family members who are part of the decision-making process.

These people will have a voice no matter what, so it’s best to meet them face-to-face to explain a product’s value and deal with any potential objections. This extends your relationship to a senior’s family and builds your potential referral base

What Not To Do
If your client wants more information, DO NOT send an application summary. Instead, send a basic information package about your company—without fees or qualification requirements

Specific figures can scare off a lead and are better to go over face-to-face. Remember, your leads already have plenty of information on the reverse mortgage program.

Don’t forget the importance of face-to-face meetings. Take an application in-person, and prior to HUD counseling. Don’t send your leads to HUD counseling before meeting them face-to-face. This is critical to your conversion.

Help your lead fill out the application. DO NOT MAIL the application unless your driving time is completely unreasonable. You are legally entitled to take the application prior to counseling. You just cannot charge any fees to the borrower or order a FHA case number until you get the certificate.

Conversion rates speak for themselves: Face-to-face 85% versus Mail 15%-25%.

If you’re going to make the investment to buy leads, you should work them with regular follow-ups and have extensive marketing tools at your disposal:

  • Self-populating follow-up letters
  • Loan officer recruiting materials, allowing you to leverage your ability to offer these leads
  • Easy-to-access, personalized marketing letters, postcards, flyers, etc.
  • Online education materials and training for loan officers
  • Phone scripts geared to different scenarios
  • New techniques generated through market research and focus groups

Lastly, measure your return on investment for each lead in order to ensure that your lead generation program is minimizing costs and maximizing profits. Remember, referrals that you receive from these lead sources help to reduce your overall cost and maximize your return on investment.