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   ARTICLE   |   From Scotsman Guide Residential Edition   |   December 2012

Know What Makes a Good Lead

Recent research uncovers the attributes of quality prospects

With so many consumers looking to take advantage of today’s low interest rates, helping mortgage brokers and originators sift through and prioritize incoming opportunities is critical. With the high cost of generating and responding to leads, the ability to recognize quality leads can make a big difference in the bottom line for mortgage companies. Gaining a better understanding of what makes prospects convert to customers can prevent wasted marketing dollars generating and chasing suboptimal leads. The ultimate benefit in identifying leads that have a higher likelihood to turn into a customer is that overall conversion rates improve, driving increased sales.

Recently, Leads360 conducted a study of historical leads data to analyze what attributes were more likely to result in closed loans. This research provides a few more clues about what makes one lead more likely than the next to qualify and convert. Some attributes identified in the lead-scoring study, like credit rating, are obvious, but others, like length of employment, may not be something a mortgage professional typically asks about early in the process.

This research looked at more than four million leads across hundreds of customers and identified several indicators of lead quality, including home state, e-mail address, length of employment, credit rating and type of loan, finding trends among them that indicate lead quality.

As might be expected, an important measure of lead quality in the mortgage industry turned out to be credit rating. Leads with higher credit ratings tended to have higher closing rates. The study found that mortgage brokers should be looking for the most financially stable consumers. Individuals with “excellent” or “very good” credit ratings converted almost 28 times more often than those with “poor” ratings, unsurprisingly.

Less obvious, however, was the impact of length of employment. More than 30,000 leads in the mortgage vertical were analyzed based on length of employment data, which indicated that those with longer employment histories tended to close at higher rates. Workers with more than 10 years of employment converted more than two times better than those who joined the workforce within the past 10 years. The highest closing rates came from leads with a length of employment between 10 years and 20 years; these leads closed at more than 80 percent above the average.

Leads also were analyzed by location, and another surprising result was that mortgage leads in Vermont were four times more likely to convert than the average. Other top performing states included Tennessee, Idaho, Hawaii and New Hampshire, with the lowest performers being New York, Minnesota, Connecticut, Nevada and Wisconsin.

The reasons behind the performance of one state versus another likely are attributable to several factors. For instance, it’s possible that seasonality affected some states in the three-month period studied. Inside knowledge about issues affecting the mortgage industry in each specific state or a more detailed study over a longer period of time would be necessary to determine whether leads from certain states consistently outperform or underperform the average over the long term.

Having an understanding of your leads, prospects and the attributes that make them more or less likely to convert to a funded loan is critical to running a successful mortgage business. The data uncovered in this study may provide some insight as to how to begin adjusting your lead-management practices to maximize the value of your leads and prospects.


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