Quantifying a lead's probability to convert often will save brokers time and money
Nisheeth Singh, director of strategic intelligence, Leads360
As published in Scotsman Guide's Residential Edition, January 2009.
All mortgage brokers are looking for the “secret sauce” to close more loans more profitably. Of course, there is no secret. But there are proven approaches to growing a mortgage business.
Even in a difficult market like this one, there is significant opportunity for mortgage brokers to grow their originations and to improve their returns on investment while maintaining constant lead volume. This opportunity exists with the use of lead-scoring.
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Lead-scoring is the process of quantifying a lead’s probability to qualify or convert. It often occurs in real time as a lead arrives.
Brokers who understand lead-scoring and how to use it often can find an advantage, even in a dry market.
What is it?
Lead scores are calculated via a formula that often accounts for:
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Self-identified lead characteristics, such as contact information, income or debt information, and information about the borrowers’ desired loan;
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External demographic and other data, including household and individual-borrower demographics; and
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Lead-seller behavior.
The exact lead-score formula can vary company to company. Once organizations discover a scoring model that works for them, it becomes their secret recipe.
Lead scores are like credit scores. There is not a set number that correlates to a good or bad score. It depends on the model, the formula and the company using it. Therefore, all lead scores are not created equal and often are not comparable.
Lead-scoring also is still a new and rapidly evolving science, though a few scoring models for mortgage leads can predict with 95-percent accuracy if a lead will proceed beyond the loan-application stage. Although pricing models differ in terms of monthly or per-lead fees, service-providers should demonstrate why their particular scoring model works.
How brokers benefit
Using lead-scoring, lead-buyers can benefit in three primary areas:
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Decisioning: Depending on a lead’s score, brokers can take a more appropriate action with each lead.
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Prioritizing: Brokers can better decide which leads to act upon first.
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Purchasing: Brokers also can determine the quality of leads from a seller and the cost per qualified lead.
Lead-scoring has other significant implications. For instance, a company could use the score to distribute the best leads to the best salespeople, to contact the best leads first, to prioritize direct-marketing materials and even to determine acceptable lead quality from certain sellers. Lead-scoring can benefit lead-providers, too, because they can receive real-time feedback about their lead quality and understand more about their campaigns.
Although lead-scoring adoption has been somewhat limited, usually reserved for larger organizations with larger data sets, that advantage has faded with the entry of lead-management systems, lead exchanges and other specialized outfits. These operations house lead information generated by hundreds of lead-providers and used by thousands of clients, so they often are rich in variety and volume. Models use aggregated data characteristics without revealing any individual lead information, which assures privacy.
Thus, even the smallest sales teams can use lead-scoring models to their benefit. In today’s market, that can go a long way.
Nisheeth Singh is the director of strategic intelligence for Leads360. Singh has nearly five years of strategic-intelligence experience as a successful analyst in the technology and software-as-a-service industries.
Before joining Leads360, he was a senior strategy analyst for SalesForce.com. Singh has a master’s degree in management and engineering from the Massachusetts Institute of Technology. Contact him at nsingh@leads360.com.
