JAN 15, 2014

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Torturing the Numbers...Until They Confess

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Last week, I began a series of articles about why conversion will be so critical in 2014.

Any salesperson will tell you that conversion is the key to success, but few are good at ensuring that it happens without a well-developed sales process. For many, it’s a numbers game and they burn through leads aggressively in order to reach the ones they can convert. In truth, the ability to convert starts long before the loan officer makes contact with the prospective borrower. It’s very much like what Sun Tzu, the ancient battlefield philosopher, wrote about war:

“Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.”

I am only into the second week of the year, and I have already gone bellicose with war analogies? Whatever happened to the normally glib commentary in which I used more modern culture references, such as selfies? Nobody gets killed by a selfie. Perhaps this is serious business, and it requires a serious approach. Nothing is more serious to Americans than death and taxes—and I categorically refuse to write about taxes.

Therefore, let me state my thesis plainly: you will not win the market share war unless you prepare well for each battle. If you want your business to survive 2014, read on!

With apologies to Mr. Tzu, how is it possible to close more sales based on what happens before we ever make contact with our borrower? Success is not just the result of a single change, a switch that the lender can turn on.

Conversion is a multistep process. We need to convert data into prospects, and prospects into opportunities, and then each opportunity needs to be worked to application, and then loan applications into locked deals and so on, all the way to the closing table. Then we need to convert past customers to active referral sources and satisfied business partners into lead generation machines. I am going to talk about each of these steps over the next few weeks.

A lot of success comes from being ready before you have the first conversation with the borrower: having the tools, analytics and technology in place to make sure that you’re having face-to-face (or phone to phone) conversations with the right borrower. And this is not applicable to the call center only. In retail that means understanding exactly what is happening in the marketplace and making sure you have the right loan officers, and the right type of loan officers for each market. That means getting down to the real numbers that matter in your business.

We’ve done work for clients who, at a macro level, look like they have the right number of loan officers. But when you drill down into the individual markets, they have some loan officers that are not producing at the same level as the others. Doing the analytics to know how much volume is done on a weekly basis within your marketplace helps you react to those changes in that market and enables you to make sure you have the resources to be effective, whether that’s in a call center, direct, Internet or retail. This work is more important than many realize.

For example, many clients don’t realize that the percentage of consumer direct business in each state differs—and not always in the way you think. In fact, we think of the progressive nature of the People’s Republic of California and assume that borrowers there are more likely to get their loan via consumer direct. But the data tell us otherwise as the Golden State sports one of the lowest concentrations of consumer direct business in the country. When you go by county and MSA, you find that certain areas have higher concentrations of retail loan originations, indicating that they may be the best places to deploy professional loan officers.

We often work with banks to help them figure out how many of their existing customers are getting mortgages and by what method they should market to those borrowers. In some cases, it’s a bank-centric LO stationed in a branch, or maybe they need a hunter type to go after Realtors, and for some a call center is the most effective method. It’s all in the data.

There is significant value in understanding what is happening in your market based on the new market conditions, and then making decisions based on the best way to execute your goals to grow share. Sun Tzu would call lenders who take this approach good generals.

My colleague at Stratmor, Nicole Yung, approaches this problem from a slightly different direction that you may also find helpful. She says, “Torture the numbers until they confess.” I know, rather shocking coming from someone that everyone knows is one of the nicest people you’ll ever meet. But her point is well taken. The truth is buried in the numbers, and you have to be willing to work those numbers to find a path to victory.

Note to my gentle readers: No numbers were tortured in the development of this blog post.

Garth Graham is a partner with Stratmor Group, and has over 25 years of mortgage experience, from Fortune 500 companies to startups, including management of two of the most successful mortgage e-commerce platforms. He was formerly with Chase Manhattan Mortgage and ABN Amro, where he was a senior executive during the sale of its mortgage group to Citigroup.

Comments (1)
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Posted by Barry smith | Sunday, January 19 2014 at 10:39AM ET
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