During the height of the mortgage boom, generating origination business all but took care of itself. Rates were low, volumes were high and the greatest challenge lenders faced was simply trying to keep their heads above water amidst a flood of new business.
During this time, technology investments were largely focused on streamlining and automating processes to allow loans to move through the origination process more quickly and with fewer errors. Lenders didn’t worry too much about technology that would help the sales team find and convert leads into loans because they already had more business than they could handle.
Today, of course, generating new business is a much more competitive endeavor. With a greatly reduced volume of qualified business to go after, multiple lenders are aggressively competing for the same smaller pool of prospective mortgage loan customers.
While technological investments in process automation that were made during the boom years are still paying dividends—and the data and automation inherent to those investments continue to be put to new uses—today’s growth will not be fueled by investments to further streamline processes in operations that now handle far fewer loans. Instead, to achieve growth goals in today’s tough market, it is far more important for lending organizations to provide their sales people with the right tools and sophisticated marketing capabilities they need to capture every possible lead and convert every qualified prospect into a mortgage loan.
So what comes first—automating processes to find and manage leads or converting leads into new loans? The proverbial chicken—or the egg?
Not All Investments Leveraged to the Full
In the past decade, lenders invested heavily in technology to streamline origination and in so doing, cut multiple steps from a historically long and involved process. By gathering data from third parties electronically and coupling it with automated decisioning tools, lenders were able to extend the reach of real world expertise by replicating it on a large-scale basis.
At the same time, shifting to a paperless environment eliminated costs and further streamlined document processing, while advanced Web portals helped break down the walls between customers and loan officers and brokers. By leveraging the Internet, lenders were able to benefit from a more seamless interaction with their customers, field services vendors and partners. All the while, the accumulation and intelligent use of data became more and more beneficial across the entire mortgage continuum.
When it came to lead tracking, most loan officers were given the tools to track and respond to those borrowers who were actively looking for loans. This usually meant entering prospective customer information into a loan origination system once a mortgage loan inquiry was made. The system then tracked these leads for the 30 to 120 days it took for customers to make an offer on a home and proceed with the loan process.
For the most part, however, longer-term leads, personal relationships, purchased lead lists and repeat customers have been tracked in the sales professional’s personal database. The risk lenders face with this approach is that valuable prospect relationships are almost entirely dependent on individual employees or partners. If these professionals receive a better offer from competitors and move on, the new business opportunities that lenders have paid to cultivate literally follow them out the door.
A New, More Challenging Marketplace
Today, the industry faces a much tighter origination market, with substantially more competition for a smaller pool of business. Stricter credit requirements translate into fewer potential customers, and the shaky economic landscape is likely to be with us for quite some time, slowing demand.
With the playing field being much more difficult, lenders must use multiple strategies to generate qualified new business. More importantly, when they do find the right leads, they must maximize the conversion rate of those leads into loans.
Three Important Challenges
Lenders face three key challenges that must be successfully addressed and managed in order to convert leads to loans: find the right (qualified) leads, funnel the leads to the appropriate sales professional for handling, and ensure that all communications to those leads are in compliance with regulatory requirements, align with the company’s message and follow appropriate protocol.
First on the agenda is finding leads that are a good fit for the lender’s product offerings. Most organizations have databases in systems across their operations that contain current client contact information. In addition, they conduct marketing campaigns, have a website presence, and advertise to get consumers interested in a variety of products and services. The real concern is effectively capturing the leads that are generated from these efforts—and then making sure they are followed up on in a timely manner.
Traditionally, technology has been used to store leads in some type of information warehouse, and the sales team is responsible for tracking the leads. However, this challenge can be managed with CRM technology that automates the complete process with data mining tools, campaign tracking tools and integration into core technology systems. This approach also allows the marketing department or sales manager to search the CRM database, identify qualified leads and follow up with consumers who may be a good fit for the products offered by the lender.
The second challenge is getting the lead to the right person. Most organizations have established multiple channels to generate leads. For example, there are traditional branch networks for retail loan officers, back office Internet lending operations, and call center operations all within the same organization. Depending on the philosophy of the lender, local sales people may handle mortgage loan inquiries that come into the branch, while Internet leads may be routed to a centralized call center.
Getting the lead is half the battle. Aggressively protecting that lead and managing it with effective controls in place to make sure the message and contact timelines are on target is the second half of the battle. The CRM technologies of today route leads to sales team members on the time schedule that has been established, automatically escalate the lead if the defined action is not completed within the indicated time frame, and can even provide a suggested sequence of steps to assist the sales person in maximizing the opportunity to convert the qualified lead into an appropriate loan product.
Finally, lenders must get the messaging and lead generation procedures right. Every company must comply with the do not call and do not contact consumer outreach rules. Most organizations maintain a company database or contract with a third party to make sure they are always in compliance with these requirements. The more progressive companies also put processes and procedures into place to make sure they control the messaging that is presented to a consumer.
CRM tools that are designed for the lending industry now have complete marketing integration capabilities, including the ability to manage message drip campaigns controlled by the marketing department. Once established, the loan officer can select from a pre-established set of campaigns to make sure the messaging and the product offers are appropriate for their prospective customer leads. These systems track all of the communication steps and timelines, and have reporting available for management review.
From Luxury to Necessity
It’s no longer sufficient to simply generate and track leads. Conversion requires actionable customer intelligence, and intelligence arises from the effective gathering and use of data. Cultivation of leads through ongoing communication rooted in a deep understanding of prospect needs and interests helps lenders to better serve these valuable future customers with best fit offers and helpful information.
Integrating CRM tools across a lender’s disparate systems can leverage both existing internal and third party customer data sources. This integration is essential to the lender’s ability to manage the extensive campaigns that have become so critical in today’s competitive marketplace.
Integrated with the systems that are in use in multiple channels across the organization, CRM technology can help originators drill down into customer information to identify the most targeted leads, access professional marketing materials that can be customized with the agent’s name, and/or appropriately target product or package offers. Ultimately, the ability to set up and efficiently execute well-targeted marketing campaign strategies is one of the most important enablers of success for any lender with an eye on growth.
A New Mindset
For originators, the ability to leverage customer and prospect contact information, track lead sources and analyze important information like customer product preferences and current interest rates is extremely powerful. By leveraging the full power of an integrated CRM, originators can more effectively identify, cultivate and ultimately close promising leads from diverse channels and referral sources.
Lenders still need to continue to automate and streamline processes in the back office lending operation, and using CRM at the enterprise level will allow lenders to gain distinct advantages over the competition. What matters is that CRM technology should be considered a “must-have” in order to achieve a highly efficient and effective approach to lead management, and resulting in a much higher conversion rate.
The current mindset around CRM must change. No longer simply a method for managing customer relationships, CRM technology should be a part of origination technology and more correctly seen as a primary driver of new business performance. Even more, it will help lenders build valuable relationships that they can leverage long into the future.
Ultimately, where new business growth is concerned, CRM technology is both the chicken—an enabler of lead management excellence—and the egg—conversion results. This is the time—and the market—for lenders to maximize its potential.
Don Covey serves as Managing Director of Origination Technology of Lender Processing Services, Jacksonville, Fla. In this role, he is primarily responsible for the Empower loan origination system and the Customer Relationship Management platform.
