If you are a mortgage broker you have certainly received the frequent call from pay per lead mortgage lead providers. They tout high quality, superior ROI, and dramatic growth; which all may be true, but only if fits your business. This type of marketing requires a specific understanding of the marketing used to generate the lead and the unique sales processes that can ultimately convert them consistently. Let’s take a closer look at the factors that may make pay per lead a good or bad fit for you.

Understanding Pay Per Lead Marketing

Pay Per Lead is the ultimate result of a myriad of marketing techniques that produce a customer inquiry or lead, which can be sold to a sales team.

First, let’s look at the marketing that produces a lead. Typically, two primary techniques are used to produce a mortgage lead: email marketing and paid search. Both techniques are highly specialized disciplines within marketing that notoriously require scale (large email lists or significant advertising budget) and efficiency (the simplest adjustments are the difference between boom and bust). In each case, the general principle is to engage the customer with information or advertising creative (marketing speak for a combination of image(s) and value/benefit message(s)) and convince them in a matter of seconds to provide an introductory amount of personal contact data and information about their potential mortgage need.

Second, let’s look at the lead that is produced by the marketing. Now that the customer has provided this information and a lead is produced, what has the lead provider produced? Most simply they have approximately 20 introductory data elements and an indication from the customer they would like to talk to someone about mortgages. However, considering the brevity of these marketing messages and the customer’s low time, risk, and commitment level the percentage of inquires with a high intent to buy is most likely low.

Finally, let’s look at what happens to the lead once it is produced. Although, the percentage of buyers that have a high and immediate intent to buy is low the marketing expense to target and produce any reasonable quantity of  potential borrowers and homeowners with this level of intent is very expensive. Ranging anywhere from $100-$300 per lead produced. Obviously, since the market will not bare that sort of price per lead the monetization of that marketing spend must be distributed. This, of course, is the most basic reason that pay per leads are sold to multiple mortgage companies.

With a better understanding of pay per lead marketing programs and the leads that they produce lets see if this type of marketing program fits you mortgage business.

Multi-State Licensing

Just like the marketing programs and lead providers that produce the leads you are considering buying, your mortgage business needs some level of scale to be successful with Internet leads. This scale begins with the breadth of geography in which you can provide mortgage loans. If you are a single state, or even a single town local lender buying Internet leads is not for you. This is not to say a single individual or small 2-10 loan officer branch is not a fit for lead buying. In fact, in most cases this is a perfect fit. However, make sure that either through your own licensing effort or with the help of a Net Branch affiliation you can write loans in at least 5-10  States.  Fortunately, this is a reasonably low barrier to overcome with approximately 30 States with manageable licensing requirements.

Broad Range of Loan Programs

Prospective homeowners and refinancing borrowers will naturally have a range of financial situations and needs. Consequently, to service the customer inquiries in good faith you need to support several loan options. Attempting to fit every customer into a 30 year fixed mortgage is a recipe for frustration for you and the customer. Really this requirement is not unique to pay per lead programs, but it is important to consider. These inquiries will most likely be sophisticated and knowledgeable borrower and often have more complex past financing or current needs. Therefore, the richer your portfolio of loan programs the higher rate of success you are likely to have.

The good news is that again this is a fairly low barrier to buying leads. Most correspondent and wholesale programs offer a full spectrum of loan programs and capable processing assistance to support your mortgage operation.

Disciplined Sales Process

The level of discipline in your sales process is likely the key determinate of whether pay per lead is for your mortgage business. All of the other factors for success are easily achievable and require little adjustment from the way you do business today. In contrast, your sales process most likely will need to change significantly.

Internet leads come in sporadically and unpredictably throughout the day and the evening. The customer expects immediate and frequent responsiveness. An Internet customer may not be seeking to create a “relationship.” Each of these attributes of an Internet lead will effect how you need to alter your sales process to be effective.

You need a system. Most likely this means lead management software or service designed for mortgage leads, but can be constructed less efficiently from email and spreadsheet tracking. This sales system needs to immediately alert you to new leads, compel you to quickly follow-up, allow you to track contact and customer needs, and enable you to efficiently move the customer to a loan closing with minimal personal interaction.

Pay Per Lead Can Be Highly Successful, But Only If It Fits

Pay per lead marketing programs can be hugely successful in your mortgage business, but only if you are prepared and it fits your business design. If you are veteran loan officer flush with referrals and relationships that have locked you in as the mortgage expert in your community, then Internet leads are probably not a fit. However, if you are an aggressive loan officer, with a young business, and trying to build that solid foundation of referrals for the future buying Internet lead is probably the best path to success.