With the mortgage industry facing an increasingly competitive purchase market this year, loan originators and mortgage companies are using every means at their disposal to distinguish themselves from the clutter of mortgage marketing messages inundating prospective borrowers. It’s a jungle out there, but there are ways to tame it, to cultivate a thriving garden of borrowers.
Today, savvy mortgage originators are using data to create relevant, one-to-one messaging that attracts and acquires potential applicants. Data-driven direct mail used in an integrated direct marketing campaign that involves multiple touchpoints — including e-mail and digital channels — can drive an increase in leads and loan closures.
Direct mail is not a new channel for mortgage originators. What is new is how often direct mail is being used. Over the past three years, mortgage- related direct mail volume increased by 439 percent, from 62 million pieces in third-quarter 2014 to 334 million pieces in third-quarter 2017.
The mortgage sector (including purchase mortgages, reverse mortgages, home equity lines of credit and home equity loans) mailed close to 1.1 billion direct mail pieces in the first 11 months of 2017, accounting for 42.8 percent of all financial- services direct mail volume. According to the Data and Marketing Association (DMA), financial services companies are the heaviest users of direct mail. In fact, in the first 11 months of 2017, financial services accounted for 46.8 percent of all direct mail volume in the U.S., according to market research company Mintel Comperemedia.
Direct mail effectiveness
The reason for this recent increase is simple: Direct mail continues to be an effective, measurable and trustworthy marketing tool for acquiring new customers in the mortgage industry.
In fact, direct mail response rates continue to out- perform digital channels. As highlighted in the DMA 2017 Response Rate Report, direct mail achieves a 5.1 percent response rate when using a house list. In comparison, no single digital channel achieves even a 1 percent response rate — with e-mail at 0.8 percent response, paid search at 0.6 percent, social channels at 0.4 percent and online display at 0.2 percent.
When it comes to measuring success, direct marketers continue to embrace multichannel marketing. Some 61 percent of survey respondents in the DMA report use online tracking to measure their direct mail response. In addition, 53 percent use call centers and/or telephones for tracking and 42 percent employ codes and/or coupons for tracking responses to direct mail messages.
Finally, direct mail is still a trustworthy source of financial information. In fact, direct mail tops consumers’ preferred means of receiving marketing communications from financial services companies because consumers see direct mail as both trustworthy and authoritative, according to a report by the DMA and online market-research agency Fastmap. This preference for direct mail extends to the 18- to 34-year-old demographic as well.
Trend-driven marketing
Moving forward in 2018, mortgage originators should be aware of homebuying trends and how to incorporate data-driven direct mail into their marketing efforts. According to the Mintel Targeting First-Time Home Buyers report, Mintel states, “49 percent of millennials who do not own a home plan to purchase one in the next five years.” Mortgage originators focusing on this target demographic should increase their acquisition-focused direct mail volume sent to renters.
Direct mail continues to be an effective, measureable and trustworthy marketing tool for acquiring new customers in the mortgage industry.
To increase opportunities with first-time homebuyers, mortgage originators also must be available to answer questions, guide buyers through the application process, and provide digital tools to manage the mortgage application process. A recent U.S. Bank direct mail piece offered the assistance of loan originators to discuss options and walk borrowers through the mortgage application process. Wells Fargo offered potential first-time homebuyers a digital loan-tracking tool to follow the mortgage application process.
The initial financial requirements of mortgage loan origination also may discourage first-time homebuyers. In response, some mortgage originators use their direct marketing messaging to offer low downpayment rates. Quicken Loans recently sent a direct mail piece promoting a 1 percent downpayment option. Navy Federal Credit Union sent a direct mail piece to first-time homebuyers promoting cash back and credit incentives and eliminating the requirement for private mortgage insurance on many loans.
Because direct mail can communicate consistent messages that potential mortgage applicants find trustworthy and reliable, it’s a great channel for educating future borrowers. Use it to explain recent tax changes affecting homeownership incentives and provide options for making homeownership more attractive, for example.
In addition, with consumers relying heavily on digital devices, it is important to enhance that consumer trust. Some financial services companies are creating digital tools and alert services, improving data protection and providing proactive tips to keep consumer data secure.
Data-driven results
Data-driven strategies can allow mortgage originators to identify the right prospects and also to personalize and time their offers based on the known habits of individual prospects using state-of-the-art digital personalization. For an effective data-driven marketing approach, however, originators need a way to identify the right prospects.
To begin this process, mortgage companies or originators can use their current data and focus on recent home mortgage closures. Using factors such as gender, age, credit score, etc., they can determine who responded to offers, who applied for mortgages and who became new homeowners.
When potential mortgage applicants become ideal mortgage customers, their customer journey is just beginning.
This data creates a profile for the ideal mortgage applicant. For the next step, mortgage originators can go back to the database and identify potential mortgage applicants whose profiles match the criteria for that ideal mortgage applicant. They should include relevant data points such as qualifying annual percentage rate (APR), anticipated mortgage amount, and whether applicants currently rent or own a home. By using look-alike data, it is possible to create a mortgage-acquisition direct mail file.
Once the mortgage-acquisition direct mail file is created, companies and originators can make use of state-of-the-art digital personalization technology to target individual applicants and create highly personalized, one-to-one, relevant mortgage offers that drive results.
A personalized tag line that can be seen through a window on the outer envelope can be added, for example. Use messages like: “John, Tired of Renting? Your Home Mortgage Information is Enclosed!” to get John’s attention.
When John then opens the letter, a personalized promotional card affixed to the letter could include his full name and application number, as well as the originator’s website, mobile app, and toll-free phone number for John to respond to the mortgage offer. A comparison chart in the middle of the letter illustrating the benefits of the specific mortgage offer with John’s unique qualifying APR and the anticipated mortgage amount compared to options from other lenders can help illustrate benefits to make John’s decision easy.
Customer journey data
When potential mortgage applicants become ideal mortgage customers, their customer journey is just beginning, which is good news for originators. According to consumer research from the Gartner Group, existing customers spend 33 percent more on average than new customers, and 80 percent of profits come from just 20 percent of customers.
It is important, therefore, to proactively communicate with existing and previous clients when new products or services become available, such as credit-monitoring services to protect customer data. Mortgage originators can consider offering qualified mortgage customers home equity loans or home equity lines of credit to renovate or remodel their existing homes, for example. More mature clients may qualify for a reverse mortgage or an additional mortgage for a vacation home.
Direct mail plays an important role in driving the success of integrated marketing campaigns to both potential and existing clients. To enhance this role further, originators can integrate direct mail and digital-marketing channels with the latest data technologies. By overlaying third-party data to the mortgage-acquisition direct mail file, it is possible to add digital identifiers to each file, such as an e-mail address, mobile phone number, IP address, network cookie IDs, social IDs, or app user IDs to easily track the customer’s journey.
Website visits can then trigger direct mail campaigns, and social and display advertising can be coordinated with direct mail timing by using data from the U.S. Postal Service Intelligent Mail barcode system. Integrating direct mail and digital marketing channels will enable originators to reach the same mortgage applicant multiple times through various channels, generating improved response and increasing return on marketing investment.
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By incorporating data-driven direct mail marketing, mortgage originators can identify and target potential viable mortgage applicants, increase their number of leads and loan closures, and communicate better with clients throughout their entire mortgage journey.
