Industry in depth

Leading the way

1 July 2006

We are all in the service industry. It’s a tough industry to operate in and those that offer goods or services that are not up to standard are quickly found out by customers, leaving the operator with a simple choice – reform or retire.

That’s why, following press reports highlighting complaints of upfront fees and dead-end leads, I welcome the decision by the Association of Mortgage Intermediaries (AMI) to investigate lead generation firms ahead of launching a charter outlining good practice.

This is a necessary move if we are to build confidence in the reputable companies that offer good service to the broker community. It is also necessary if we are to isolate and extinguish those lead generation companies that promise the earth and deliver very little. The existence of these firms is detrimental to those that seek to provide brokers with genuine warm leads that may ultimately prove revenue enhancing.

I also agree with AMI that the best way to clean up this sector is by drawing up a code of best practice rather than calling for statutory regulation.

A charter will provide confidence in the sector and give advisers protection and confidence about what they should be looking for and what is expected to be delivered when dealing with a lead generation firm. Regulation will only succeed in strangulating the service by binding it in red tape.

Confusing

There is no doubt that lead generation can be a confusing topic, especially if you are new to it. But it is the key to growing nearly all businesses through generating income and creating critical mass. The mortgage business, in particular, needs to source a constant stream of new leads if it is to remain healthy through growth and expansion.

There are, of course, different ways that businesses can go about generating leads. Generating new business can be an art. For example, it takes a certain type of person with recognisable social and personal skills to gain results through networking on a regular basis. Similarly, opting for direct marketing can get results, but it often tends to be a hit and miss approach that can end up being costly. Advertising can be expensive and needs careful monitoring to access any return on investment.

Good quality lead generation firms can outperform other ways of generating new business because you are being presented with clients that have already indicated that they are wanting to be to contacted and are receptive about the products you are attempting to sell them. These aren’t just random people. They have specifically requested information on your range of products.

Mortgage originators are now realising the amazing power of a mortgage lead generator to boost their loan production volume and origination. This is possible without rejection-filled cold-calling, or buying expensive advertisements, or thousands of pounds drilled into media advertising and no direct mail campaign costing you a fortune.

A new approach

Lead generation is not a new way of winning business, but practitioners are adopting a new approach. Rather than sitting at a trade show table for hours on end, or setting up a display in the hope that targeted consumers will complete a form, or adopting the cold-calling method or tele-marketing approach, you can have leads generated and sent to you using the technology of the internet. Most of the work can now be done for you. Many companies now prefer to use a lead generation agency that has its own resources to deliver new clients. Another very popular method used on the internet is to have a website or a group of websites that are devoted to getting people to sign up for your product. People go to these sites actively seeking the kind of products that you are selling. In effect, we are waiting for them to approach asking for help in securing a suitable mortgage. This is most important, as enquiries from potential borrowers who have taken the time to complete a detailed mortgage enquiry means they are serious, self-motivated prospects. They are expecting, and waiting for your phone call. Now you just need to turn that person into a sale.

There are agencies that specialise in providing qualified leads to businesses. The process of lead generation is actually very easy. An agency develops a website or partnerships with several websites in which they promote and advertise your product or service.

A consumer finds these directories or information sites and they are able to complete an online quote request form. This form is submitted to the agency. The buyers’ information is verified and matched to the appropriate providers. These matched leads are then sent via e-mail to the prospective providers with full contact details. It means that new incoming enquiries can be sent to brokers in real-time and are only seconds old when you receive them. In theory you could be contacting the borrower while they are still sitting at their computer.

Flexibility

Lead generation has become especially popular with mortgage businesses because it enables them to determine pricing on a ‘per lead’ basis, giving them the flexibility to manage budgets and workloads according to the resources at their disposal at any given time.

It also means that the broker can choose the product or service they wish to offer to prospects meaning they can provide the client with the best deal on the market at any given time. They can also select a certain geographical area to mine for new clients – perhaps as a prelude to opening a new office or to relocating to that area, or simply because it is an area perceived to be less competitive and therefore easier to generate new business.

On the other hand, the business could be doing very well, but still require new business leads to maintain momentum and return. A good lead generation firm can control the number of leads a business wishes to receive per month. Once again this can be a real bonus when it comes to budgeting – especially since the client should pay only for the leads that are received.

Lead generation is a win-win for both the buyer and seller, but it is understandable that some brokers may be reluctant to dip their feet in the water following the revelation that some firms were promising advisers good quality leads, taking up-front payment and then either disappearing or delivering way below their original sales pitch. It was for that reason that AMI produced a guide into the sector for brokers. I’d encourage anyone considering using a third-party lead generation firm for the first time to read this guide before making a commitment.

Brokers, quite rightly, place a high value on their existing client base and are committed to building and maintaining long-term relationships with their customers. But they should not devote all their energies to serving their existing client base but instead concentrate on growing their number in order to ensure a balanced client base.

Similarly, if your calendar is empty and you need business fast, lead generation is a way you can grow your business rather quickly with good quality clients. It’s an easy way to increase your return on investment and get more business on your books. Approach it like you would any other marketing activity – set aside a reasonable budget to test it and see if it works for your business. The key to being successful in lead generation is to brush up on your sales skills so the leads you receive convert at a high rate. Don’t approach this method of marketing without the ability to follow through and close the sale.

As long as brokers take the trouble to vet the firms they choose to do business with, lead buying can be an extremely valuable business tool that can play a key role in helping brokers to grow their business.