Rethinking mortgage leads
Matthew Edwards is managing director of efinity Leads
While the recent bout of sunshine has been pleasant, it has also reminded me that, as is the case every summer, we could soon expect the volume of finance leads in the market to drop sharply.
Unsurprisingly, when the sun comes out, the number of people using the internet falls, leading to under-supplied lead buyers and rising media costs. It is these rising costs that have led me to question the way that we buy and sell mortgage leads.
As the number of online eyeballs falls during the summer months, the price of those eyeballs increases as lead suppliers compete against each other more aggressively to win the impression, click etc.
Lead suppliers are ultimately left with reduced revenues and margins. As a lead buyer, you might think ‘who cares?’ Well, you should. You will receive fewer leads at higher prices, it’s a lose-lose situation.
The way I see it, the only winners in this current scenario are media owners and search engines.
They sit there rubbing their hands together as lead suppliers compete against each other, pushing the price, and ultimately, their profit up.
Ok, in some areas of finance, like life insurance for example, it is a clear-cut case that volume will drop, the cost of generating them will rise and that cost will need to be passed on. But the case is not so clear when it comes to mortgage leads.
I think that if mortgage lead generators and buyers worked together we could smooth some of the spikes in costs and enjoy a pint in the sunshine every now and then!
Before the credit crunch hit mortgage leads were relatively easy to buy and sell - you could sell almost any lead criteria at any time of day.
These days, mortgage lead buyers are becoming increasingly picky about the criteria of leads they will buy, making it almost impossible for lead generators to target accurately, leading to fewer leads sold and more consumers being told ‘sorry we can’t help you’.
Typically, a generator of mortgage leads will target remortgage consumers, which makes good sense as this is where the biggest revenues are.
But even with a tight, well managed campaign you would still expect between 30 and 40 of every 100 leads generated to fall outside of remortgage.
Of the 60 leads you have left, 15 will fall outside of LTV caps or credit criteria, 10 will inevitably be invalid, so refunded, and of the 35 leads you do sell through as remortgage, it’s likely only half will qualify for top-tier pricing.
Trying to run a profitable marketing campaign under these conditions is no mean feat - I can attest to that from experience!
So what can we do to combat this? Well, for lead generators to be able to market confidently they need to know what returns they can expect to see from their leads.
As you can see from the example above, at the moment this is almost impossible.
Meanwhile, lead buyers are competing against each other for minimal amounts of premier lead criteria.
So how about taking a step back, and instead of chasing particular criteria while letting the rest of the leads go to waste, value a supplier’s leads as a bucket and give them a price per lead which reflects this.
Yes, it may mean more hard work on the buyer’s side to extract value from difficult criteria, but if we continue down the path we’re on, there will inevitably come a time when lead generators say, “you know what, it’s not worth generating mortgage leads anymore”.
