Ten years ago, on any given Friday night, “let’s go to Blockbuster” was probably the most popular phrase in America. Back then, Blockbuster was the top video store chain in the world and one of the largest entertainment companies ever. It even had its own awards show.
Over the past decade, however, Blockbuster’s customers completely vanished.
Well, they didn’t exactly vanish—not like the VHS tapes that made Blockbuster famous. They simply stayed home and began using Internet streaming and mail-order rental services like Netflix and Gamefly. As a result, Blockbuster fell into bankruptcy, even after a spirited attempt to duplicate Netflix’s business model and salvage the Blockbuster brand.
A similar phenomenon is taking place in the mortgage industry. In fact, according to the recent Fannie Mae’s report, “Technology Use in Mortgage Shopping,” more than half of all borrowers who got a mortgage within the past three years searched for their lender online. And about 46%—or nearly half—of recent borrowers found a quote online.
Of course, applying for a mortgage is not the same as renting James Cameron’s “Titanic” or “Avatar,” but these are pretty big numbers. If you were a mortgage lender, you would certainly try to target the millions of borrowers currently shopping online, right?
Surprisingly, most lenders don’t. And when you ask them why, you’ll encounter certain limiting beliefs about who they are and what it takes to find and close a borrower over the Internet. Beliefs like…
“Online mortgage leads are junk.”
This may have once been true—and it may still be true depending on the source of the mortgage leads. But there are some great lead providers that have invested serious money developing detailed, high-quality mortgage leads out of potential borrowers. In fact, we have clients that are mining gold out of them on a regular basis.
“That’s not our approach.”
Fair enough. Many retail mortgage companies rely almost exclusively on referrals and partnerships with real estate professionals to generate business, because it’s a strategy that works. But forget about the lender’s approach for a minute; what is the borrower’s approach? Remember, the next generation of homebuyers will have grown up with the Internet. Many of them will not only be comfortable with a digital relationship, they’ll probably prefer it.
“We’ve got enough business.”
Hey, that’s great! Although in my experience, there are ebbs and flows to every mortgage operation. When you have a number of loan files sitting in a holding pattern, waiting for some action to take place, having a steady supply of online mortgage leads is a great way to keep the sales pipeline full.
“It’s too expensive.”
Not true. Generating online mortgage leads can be done inexpensively through web optimization, social media, email marketing programs and much more. Search engine optimization (SEO) and purchased leads are another option to widen your net, and these leads can be gold if the right persistency and process is used as I mentioned above – ensuring rapid response, persistent follow-up and the right level of service throughout the process. Think about it this way too, if you impress upon the borrower’s Realtor, you tap into a new source of referrals. If that one relator passes along three new referrals a year – it becomes a buy one, get 3 free scenario the first year alone – not a bad ROI!
“But what about the software needed?”
The lead management tools needed to ensure maximum ROI on leads generated online is available on a per-user basis, which makes it affordable for any size mortgage shop. They also save lenders money by automating the tasks needed to reach out and respond to prospects. In fact, sales automation more than pays for itself by increasing conversion ratios by more than 100% for most companies.
I’m not saying that every brick-and-mortar retail mortgage shop is going to end up like Blockbuster. Again, mortgages and videos are two entirely separate products, but Blockbuster is a good example of a company that might have survived if it had paid attention to where its customers were headed and reacted quickly enough.
As our industry embraces for its next big shift of titanic proportions, it’s worth taking a look at where your borrowers are headed. If half of your potential customer base is online, shouldn’t you be there, too? And to ensure you have the right tools to be successful, stop by and see us at MBA Tech next week, booth #308 or visit us online!
About the author: Kelly Booth is the director of the mortgage unit at Velocify, bringing more than 25 years of experience in sales, marketing, management, strategic planning and product design in the financial software industry. She possesses a solid understanding of the mortgage and banking industries, the overall mortgage lifecycle and the technologies that support the loan process. Follow Kelly Booth on Twitter @BoothTweets.