Unfortunately I recently had to have a couple of days off because of illness. Before pushing for the pantomime ahhhhhhh, I must also confess that I spent the majority of my time tucked up in bed surfing between a variety of terrible daytime viewing. In doing so I lost count of the number of ads I saw on even the most obscure of channels waxing lyrical about the benefits of an array of comparison sites. Whilst the positives are plain to see for such things as travel, car or even home insurance, when it comes to consumers sourcing mortgages on comparison sites just the idea of it raised my temperature even higher than it already was.
Of course, as a general rule of thumb, driving people to particular websites is the main objective of most marketing campaigns. However, it is also fair to say that there are many websites who, once they have managed to convince their target audience to visit the site, then lets them down with its content and usability.
I read recently that an average 80 per cent of a typical marketing budget is wasted. This 80 per cent signifies the percentage of customers that arrive on a site, can’t find what they want, then leave and/or get pushed to another site - usually a competitor. Now I am not a marketing expert but this seems a staggering statistic especially when you consider the cost involved in an extensive marketing campaign.
Online information
Information needs to be presented in a way that replicates exactly what potential customers are looking for and by doing so this will ensure that they don’t get bogged down by the site and can make their informed choices easily and quickly.
It is also important to remember that many customers don’t actually complete their tasks on their first visit so upon their return, by presenting them with content that replicates their first visit will ensure that their tasks are completed as straightforward as possible. Now this issue is an article within an article but before going into website specifics, it is important to illustrate how mortgage comparison sites are currently working to the severe detriment of the industry.
Comparison sites
As illustrated from my sickbed, the media does have a big impact on our perceptions and our everyday choices. This comes in many forms, TV, newspapers, magazines and of course the internet itself. Just before Christmas I watched the BBC Money Programme which focussed on mortgage comparison sites. Working within this market meant that the viewing was compulsive but very damning on the sector. It highlighted a number of inadequacies regarding ‘leading’ comparison sites. Major faults found by the programme included cold calling consumers when not requested, and doing credit searches without permission. It also criticised the amount of sponsored links carried on websites and highlighted some sites not showing the full ‘true’ costs of deals.
We believe that there needs to be an urgent rise in the standards of mortgage comparison sites across the board as these inadequacies have filtered through to the broker market. This has resulted in a plethora of tepid leads being generated which are being bought by mortgage brokers without much chance of conversion. We would even go so far as to say that current mortgage-related comparison systems are killing the online mortgage market.
Online shopping
This is a big statement especially when you consider just how the world has embraced the internet and specifically online shopping. We have all used the internet to either source, compare or purchase – for the majority of us probably all three – and it is easy to take the actual impact of the internet for granted. Online shopping has become a massive market. The research and consulting firm Forrester Research estimates shoppers in 17 Western European countries purchased 71.0 billion Euros worth of goods online in 2008. By comparison US online retail sales totalled $133.6 billion in 2008, according to the US Commerce Department – 39 per cent more than Forrester’s estimate for Western Europe. It adds that online sales in Europe will grow to 123.1 billion Euros by 2014, a compound annual growth rate of 9.6 per cent. Including leisure and travel, online purchases in the 17 European nations will grow by 8 per cent during the period, from 116.0 billion Euros to 202.8 billion Euros.
“This growth is due to a mix of factors, such as well-established mail order retailing, high population density, a wide variety of payment options, and above-average confidence in online security,” writes author Victoria Bracewell Lewis in the report Western European Online Retail and Travel Forecast, 2008 to 2014. “The UK maintains its lead as the largest online retail market in Europe, with more than half of its adult population buying online regularly.”
The last sentence really emphasises just how big the UK market currently is and how it is showing no signs of slowing.
Online mortgages
Consumers increasingly expect the internet to deliver the opportunity for them to feel more in control over what they are buying. Unfortunately, when it comes to online mortgage propositions they have typically failed to keep up with these expectations. As a consequence, conversions have declined sharply, which has really killed the market for mortgage brokers. The amount of time being spent online is growing at a huge rate and for the mortgage market to be so behind the rest of the financial service industry in the utilisation of this technology is nothing short of staggering.
The market will only resume its previous growth trajectory when consumers and brokers are provided with a proposition that meets their needs. It is quite clear that the old model is failing. Sites that are limited to a short form generating leads for the highest paying mortgage broker will not survive the current shake-out. Nor will brokers that continue to tie themselves to this business model, as they are already telling us.
Broker requirements
It’s time for brokers and comparison sites to embrace a new way of working; one that enables consumers to take a more active role in the process. The first companies in both sectors to do so will gain a crucial advantage in the fight to redesign their businesses to be competitive in the market that exists post credit crunch.
It is vital that mortgage sourcing tools are in close contact with brokers in order to fully appreciate their requirements. The solution should include:
• An updated home page to give consumers an easier choice of service dependent upon their requirements
• Simplified matrix to compare results providing the ability to print, save and email results
• Improved enquiry form to reduce the amount of relevant questions and increase usability, whilst still being able to gain an accurate result.
• Advanced filters to display only the information that is important to the user
From feedback received, brokers require real-time sourcing delivered through a compelling online proposition. The solution should enable the user to view best buys, source a quick quote, complete and submit an enquiry, and then review the results and apply online. It will also encourage the user to request help from a mortgage intermediary on or off-line at any stage of the process.
A good system should be aimed at providing incremental income opportunities for brokers with the option of being packaged as a white labelled addition to any website. The ultimate aim should be to stimulate consumer interest by providing intermediaries with an added solution for those financially savvy consumers committed to sourcing their own financial solutions.
Firms operating in the mortgage market have to look at what is happening around them and realise how powerful a tool the internet really is and work with it not against it. There will always be a need for advice as house buying remains the biggest commitment there is but there is growing evidence that people are looking to take a more active role in the sourcing and comparison process.
Current systems are not providing this and this is detrimental to all areas of the market including brokers who are left with the tepid leads which provide little opportunity to turn into written business and therefore income. Standards need raising and we hope to be the flag bearers for both consumers and brokers in moving this technology forward.
