How Data and Analytics Help Lenders Better Target Fresh Leads

Data is nothing new for the mortgage industry, but the types of data lenders and servicers now have access to, and the volume of seemingly irrelevant information available about borrowers and leads is altering how the industry can and should conduct business.

Before the meltdown in 2008, lenders sent direct mail pieces by the ton, with invitations for consumers to apply for both purchase and refinance loans. That may have worked when qualification standards were lower. But in today's underwriting environment, generic direct mail marketing is a waste of lenders' money.

Every company undoubtedly has an ample supply of its own customer data. Cross-referencing that against external sources — such as public records or county recorder data — can provide greater detail.

Before jumping into the next marketing campaign — whether it's for a mortgage product, a deposit account or a special service — updating and refining mailing lists by leveraging nontraditional data sources should be a top priority.

Stats like mortgage amount, number of liens, interest rate and loan-to-value or combined LTV are all available — and a matter of public record in most states — and can all be valuable in targeting.

Ultimately, this data can be added to the information already held on individual customers — such as credit score, mortgage values and so on. Then, a sophisticated data model or a simple selection process whittles down the overall client base to a group of best prospects. In other words, the data can help you determine whether a particular customer is a good fit for the products you want to market.

That enhanced data can also help identify the products that make the best fit for specific individuals.

For example, there might be a model that predicts that any homeowner with a current LTV less than 80% is a good fit for a home equity account. Or, it could make sense to set a default that filters out from consideration anyone with a mortgage of $250,000.

By focusing your contact list based on this expanded data set, you zero in on those customers most likely to respond and convert. And that can potentially decrease the cost of the campaign while raising the return on investment.

Yesterday's standards often don't apply anymore. It's time to better target the best and least likely prospects for the here and now — and optimize ROI for every campaign. It's time to leverage new data sources.

Greg Sultan is senior vice president, strategist at Customer Communications Group.