I am sure that everyone knows that the mortgage industry, especially the sub-prime sector, is going through a rough stretch right now. It's all over the news. Every time you turn around, another company is filing Chapter 11, or just closing up shop. The mortgage industry is going through yet another consolidation, only this time the stakes are much higher.
Many brokers are pulling back on their marketing plans until there are signs of stability in the marketplace. Is this the smart thing to do? Well, it really depends on how well developed your ‘pipeline' is. Brokers that have insulated themselves from the current market conditions by offering a diverse portfolio of financial products are not going to feel the pinch of, say, a sub-prime broker. The sub-prime market is going through a transition right now that is unprecedented in recent history.
The current sub-prime mess is shaking the very foundation of the financial markets and brokers are scrambling to try and survive this recent downturn in the market. So, that brings us to the burning question--with all of the uncertainty in the mortgage industry right now, is this a good time to market your company?
Look at it this way. If you take the ‘wait and see' approach and market conditions improve (which many experts believe they will in the not-too-distant future), and you have done nothing in terms of marketing, you will have placed yourself squarely behind the 8-ball. Marketing, whether it is direct mail, telemarketing, Internet leads, or whatever form of marketing you use, is not something where you can ‘flip a switch' and sales leads will come pouring out of the pipeline. Any form of marketing has a ramp-up period.
Let's use direct mail as an example. If someone comes to me today, I can absolutely help him to develop a lead stream, but it will not happen overnight. First, we will need to determine the market sector he wishes to target, then we must identify the ‘profile' of the borrower he seeks to attract, then we must take into account the creative process involved in designing his direct mail piece. Then, we have to produce and mail the piece, and lastly, we have to wait for it to be delivered to the prospect via the United States Post Office.
Brokers will call us up and ask: "How soon before you can get my phone ringing?" The brokers who are hurting for business, or are looking to feed some of their loan officers' leads, think that we have a bucket of leads stored up and can just turn a handle and leads will pour out in their specific geographic area. Well, it is not that simple to generate leads and turn them into return phone calls so quickly.
This is not quite how marketing and sales lead management works. Marketing is a marathon, not a sprint. If you are serious about developing a viable lead source for your company, or for yourself personally, you must understand some key points about marketing.
- Timing. Timing and planning are paramount in order to ensure that your marketing plan succeeds, or has the best chance of success. Sending out a marketing piece touting ‘no money down, no doc or stated income loans' while the restrictions on this type of loan have tightened up dramatically, is going to put you in a precarious position when calls start coming in and you cannot satisfy the needs of your prospects. This will do more to harm your corporate image than enhance it.
- A measurable goal. What is the goal of your marketing plan? Is it designed to produce sales leads like most marketing campaigns, or do you have a different reason for your marketing campaign? Perhaps, you are just looking to create inquiries for another purpose. If you do not define your 'goals,' how will you know if you have achieved them?
- A plan. What are your marketing plans? If you are planning to make one mail drop with no intention of additional mail drops, or follow-up mailings, save your money! This type of ‘shotgun' approach to marketing will not achieve the results you are anticipating and you will be wasting your precious marketing dollars.
- Name branding. Name branding, simply put, is keeping your company's name in front of your target consumer on a regular basis and creating a recognizable ‘branding' for yourself and/or your company. Sending out one direct mail drop will NOT accomplish this. You must be prepared and budget for repeated mail drops and campaigns. This is how direct mail marketing will produce the results that you desire.
- Tracking. Do you track the results of your marketing to measure the effectiveness of your efforts? Most people (companies) do not. With just a simple question--"How did you hear about us?"--you can track the success of your direct mail marketing. You can also use a reference code, whereby the prospect must refer to a code contained within your mailer to redeem a special offer, coupon or other form of incentive.
- Know your product. Although there are many styles of marketing mailers (#10 business envelope, postcards, oversized envelopes, etc.), we have found the Snap Pack style mailer to be most effective this time of year (tax season). But once those mailers are out and your phones start ringing, what happens when you get the call? Nothing will ‘kill' a lead faster than not being able to answer your prospective borrower's questions. After all, you are the mortgage expert, not them. Know your product inside and out and be prepared with alternatives and options for the borrower, especially in today's volatile market.
- First impressions. First impressions really do mean a lot so this is, by far, one of the most important sales tips. This is especially true in the world of advertising because it is so competitive. Sending out a ‘flyer' that looks like you printed it on your copy machine will not have the impact or impress the recipient in the same way a professionally designed direct mail piece will. Your mailer speaks volumes about your company's image and level of professionalism.
Of course, there are other components of sales techniques that are equally important to those listed above, including the mailing list/database, your incentive or special offer, your ‘message' or ad copy, etc. In the world of direct mail, success is not determined by cost per piece. Direct mail success is determined by cost per response and ultimately, your return on investment. I have seen well-designed and esthetically pleasing marketing pieces fail because the broker mailed them to the wrong target audience. Don't forget, it's called a marketing plan for a reason.
I hear brokers complaining all the time that when they target ARM (Adjustable Rate Mortgage) borrowers in today's mortgage environment that more often than not, they are unable to help the borrower because of the lack of equity in the borrower's home. I ask them one question: Did you build in a loan-to-value or equity filter into your database/mailing list? This might shock you, but 75% of these brokers did not know such a filter even existed.
Wouldn't it be good to know prior to mailing that most of your prospects have equity in their homes, thus increasing your chances of getting their refinance loans approved? Sometimes it's the little things that are overlooked and spell certain doom for a marketing campaign.
Another key factor that directly affects response rates is the delivery rate of your mail piece. Did you know that up to 20% of your direct mail pieces might not be delivered at all? How does this happen? In the world of data compiling, there may be subtle errors contained in the mailing list. An example of this could be as simple as a street direction being reversed. Let's say you want to mail something to: Mr. John Smith, 123 Main Street North, Any Town, USA. However, the data file is formatted to read: Mr. John Smith, 123 North Main Street, Any Town, USA. This piece of mail will be deemed undeliverable by the United States Postal Service, because it does not match a certified address contained in their CASS address file.
What is CASS and what does it do?
The term CASS (Coding Accuracy Support System) is the system used by the USPS to verify the accuracy of an address list. To be CASS certified, the list must be checked against the USPS Address Matching System (AMS) CD-ROM, and a match must be found for each address. The correct 11-digit ZIP code and barcode will then be assigned, thus making the mailer eligible for automated bulk mailing rates.
The mailing list must be re-certified every six months (every three months for carrier route mailings). This is especially important to you because of the difference between "automated" and "non-automated" postal rates. The difference could be as much as five cents per piece. This equates to saving $500 for every 10,000-pieces mailed.
Make sure that whatever marketer you choose routinely CASS certifies every data file to insure that the maximum number of mailers reach their final destination. After all, you are paying for each piece, whether it makes it to the final delivery point or not. Your response rates largely depend on how many of your records are actually delivered to your prospective audience.
No matter whom you decide on for your marketing needs, make sure that they are experts in your field (the mortgage industry). By doing this, you can feel reassured that your marketing company is familiar with the nuances and intricacies of the mortgage industry and will be in compliance with RESPA regulations, and can identify trends and ‘niche' markets for you. This takes a lot of the guesswork out of deciding what market to target and which markets are performing well in term of response rates.
There is no need to reinvent the wheel. Remember, you're in the business of closing loans, not in the marketing business. Rely on a professional lead generation service/letter shop for your marketing requirements. Marketing need not be difficult or expensive, if properly coordinated. After you understand how to generate sales leads in any market condition, you are better able to make the decision of doing the marketing yourself or hiring others.
By Ron Appel, National Sales Director of