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   ARTICLE   |   From Scotsman Guide Residential Edition   |   August 2007

Channeling Your Marketing Efforts

Target your marketing by channel and niche to achieve record loan volumes

The tipping point of success in today’s mortgage industry is marketing prowess. In fact, the coming years are likely to be banner years for companies with marketing savvy.

To fuel growth in a decelerating mortgage market, look to how the industry’s most-productive marketing experts do it. For many, the key to their success lies in their channel and targeting tactics. You may wish to use the same techniques at your company to reach high-quality leads.

Change the channel

Many marketing experts have shifted from using broad-market media (e.g., TV and radio) to using direct marketing. With direct marketing, you can create a situation-specific message and offer it to a niche rather than sending the same message to an entire market. Direct marketing through the Internet, telemarketing and mail can be effective channels, depending on how they’re used.

When looking at which channels to use, keep in mind that the Internet can generate leads, but by itself, has yet been proven as an effective acquisition channel. Using other marketing channels to drive homeowners online for qualification, application and loan closing is now common, however.

As more mortgage prospects casually shop rates, the pool of serious searches (higher-quality leads) is becoming diluted. This can decrease the overall effectiveness of Internet or aggregator leads. Worse, some lead aggregators are generating less-than-qualified leads and selling them multiple times, which further degrades lead performance.

Telemarketing can be an effective means for acquiring leads. But millions of consumers are listed with the Federal Trade Commission’s National Do Not Call Registry, which has steep, easily enforceable penalties. As demand for qualified telemarketing leads increases, it’s harder for brokers and lenders to rely solely on telemarketing.

Consequently, brokers and lenders are using tactics to encourage prospects to use the communication channel of their choice. Once the channel is established, savvy marketers boost conversion rates by opening a meaningful dialogue at the lowest-possible cost. That is, they are “incubating” leads by keeping them warm in the pipeline so borrowers know where to go when they are ready to act.

When that time comes, brokers must be accessible via the consumers’ channel of choice. And you’d better be there with the right offer and expertise.

Managing the cost

Even with postal-rate increases, many marketers continue to use direct mail effectively. But once you establish contact with a prospect, you can reduce costs by using inexpensive online avenues.

Direct-mail programs should be designed to drive prospects to the Web and to keep them engaged with relevant messages and offerings. This helps keep your organization top of mind when prospects are ready to transact. Ultimately, you’ll be in a better position to convert these relationships to funded loans.

Your success in presenting your value proposition as well as in maintaining these relationships will depend on how well you understand your target homeowners, as well as their preferred method of communication.

Using channel-preference models for phone versus mail is a mainstream practice. The same dynamic is evolving for online versus offline preferences. If you know how to score prospects by their likelihood to respond via the Internet versus other channels, you can target your efforts appropriately.

Also, not all online-generated leads are alike. You must understand the differences between leads generated from large online lead-generation sources and those generated by banner ads or keyword searches.

Understanding each profile will impact your lead-purchase decisions, scripts and offers. You can determine whether prospects have appeared in previous lead sources and have already been barraged with competitive offers. You can also use analytics to recognize and remove the individuals who continue to appear but who don’t convert. This ensures higher overall conversions and return on your marketing investment.

Targeting tactics

Many brokers and lenders now refrain from using credit data for lead qualification. This means you must go beyond credit-based targeting and explore other niches.

The obvious niche of converting ARMs to fixed-rate loans may evaporate before the mortgage market turns around. It’s simply not a big-enough market for all the surviving brokers and lenders.

Instead, seek to mine more niches and opportunities, including:

  • Resetting ARMs
  • Homeowners headed toward foreclosure
  • Minority first-time homeowners in nonprime loans
  • Federal Housing Administration eligible nonprime borrowers
  • Hispanic homeowners
  • Military members returning from overseas
  • Habitual refinancers back in debt

Knowing which homeowners to target — and which messages and offers will reach them effectively — is key to achieving a higher response. Capture response and conversion history to analyze results and to create new targeting models.

Transaction-level data is available today to help you understand who to target, when to target, what to offer and which channels will reach your prospects.

Take advantage of this information to capture prospects who are likely to respond to your offers and to make a purchase or refinance. Implementing good marketing models versus relying on data selects (i.e., loan to value, FICO scores, etc.) can increase your response rates. But deploying well-developed models is imperative to achieve these results.

Your marketing message’s content and its relevancy to recipients will drive their decision to respond. Therefore, your marketing efforts must speak to the personal situations of every niche.

Moving toward conversions

A lead is only a lead — until it converts. So marketing must work closely with your sales and operations teams, because they, too, play a critical role in the conversion process.

When leads withdraw, regardless of where they are in the pipeline, you incur expenses. Withdrawals reduce your marketing returns and your overall profitability. One way that marketing and sales can solve this problem is by optimizing loan-officer capacity. If there aren’t enough loan officers, it takes longer to close. And the longer it takes to close, the more likely the borrower will withdraw. Therefore, you should calibrate your lead plan to take loan-officer capacity into consideration.

Solicitation intervals and frequencies also contribute to withdrawals and vary by prospect source and channel. A customer-acquisition database that ties key marketing activity directly to the financial transaction is essential. Brokers and lenders should be able to run analytical queries across this database and create plans to help increase their marketing performance.

Choose a database-driven direct-marketing partner that can provide services such as creative outbound telemarketing, e-mail marketing and other lead-origination channels.

By fine-tuning their marketing channels and targeting tactics, brokers and lenders increasingly can see the value of tying direct-to-consumer marketing analytics into origination systems.


 


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