As published in Scotsman Guide's Residential Edition, December 2005.
At the end of each year, mortgage-industry experts take turns passing judgment on the year gone by and the one that lies ahead. However, despite the dozens of articles in dozens of publications, one important topic rarely seems to be discussed: direct marketing.
For mortgage brokers, direct marketing is what drives business. The ability to market loans effectively is what keeps the lights on, keeps food in the fridge and puts the kids through college.
Direct marketing changes every day. The data, delivery methods and strategies are constantly evolving. In particular, 2006 will be a good year for direct marketing, with a greater focus on getting better information, building relationships with current and potential borrowers and implementing new technologies.
Businesses are built solely around the collection and delivery of data. Age, income, address, credit score, market value, loan-to-value ratio and many other figures are essential to a direct-marketing campaign. As with any year, much of 2006 for data providers and brokers will be focused on obtaining good data.
Here are some things brokers will be doing with data this next year:
Finding better information
Data is the backbone of direct marketing. Without it, we would have no one to whom to market. With bad information, we would market to people who may not receive the message or who may not be interested. Marketing campaigns based on poor statistics are a waste of time and resources.
Some brokers also are beginning to understand data's volatility. Regardless of how much money is spent in getting good information, it is important to understand that people change. They make more money, have children and buy more-expensive homes. With each life change, a corresponding change in information also must occur.
The latest revisions to the Fair Credit Reporting Act (FCRA) better clarify how credit information can be used for direct marketing. The ability to look beyond the credit score and weigh prospects by their larger financial picture can make a significant impact on a marketing campaign, especially in the nonprime market. We have only begun to see how this information is helping brokers.
It is important, however, to remember that with great power comes great responsibility. Obtaining, storing and using consumer-credit data requires a number of disclosures and safety measures. Failing to use this information responsibly could carry great consequences. Understanding the FCRA is a crucial component of developing a successful direct-marketing campaign.
Facing more competition
There is greater competition for business in the small and midsize markets. Years ago, if brokers could not afford to invest significant dollars in building direct-marketing expertise, they could not access the proper data or solutions to be successful. Now there are many quality solution-providers to help navigate the direct-marketing landscape. Larger lenders are even offering direct-marketing solutions to their brokers as value-added services.
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