The Financial Services Authority (FSA) is opposed to cold calling for mortgage sales, and has once again reinforced this position within CP186. This makes it seem highly unlikely that any change to this view will take place before the final mortgage rules are published and we enter a fully regulated mortgage market after 31 October 2004. Although this method of lead generation should already be playing a smaller role by now, the final outright banning of this marketing option does put the spotlight on sales lead generation ‘ and how practices will have to evolve in future. Smart mortgage brokers will be looking carefully at redesigning their marketing strategies to stay ahead of the competition and to keep both purchase and remortgage business rolling in, while at the same time remaining competitive and keeping marketing spend as low as possible. For any brokers who are still cold calling, the whole issue is more pressing than it may seem to be ‘ because compliance must be demonstrated at the time of applying for authorisation which is now less than six months down the line, on1 January 2004.
However, rather than looking on this as a threat to business volumes, it could be seen as a golden opportunity to revisit the basic marketing methods of generating sales leads. Perhaps it is also time to start collaborating more, and sharing thoughts and ideas about successful lead generation, so that the whole industry benefits.
The general perception is that it is hard to arouse the interest of remortgage clients by mailers and other traditional methods. National press advertising is effective but hugely expensive, so the sort of sustained advertising campaigns that can deliver bulk sales leads are beyond the reach of all but the major players. Brokers and packagers selling direct to the public report that the biggest hurdle to credit-impaired sales is lack of consumer knowledge about the products and lenders available. Perhaps, once a more collaborative spirit has been fostered, we will see lenders and packagers come together to run more ‘generic’ marketing campaigns that will raise general awareness of remortgage opportunities for those borrowers who are finding it hard to get a loan from the high street, but brokers cannot afford to wait.
Peaks and troughs
Discussion with packagers has shown that, generally, one of the biggest problems of lead generation is the huge peaks and troughs that result from marketing activity. Spending precious marketing budgets on advertising can certainly result in a flood of enquiries ‘ but this can bring its own problems. For example, a specialist non-conforming broker will inevitably receive a considerable proportion of prime enquiries from advertising or mailers inevitably, but what can they do with them? Similarly, if marketing activity stimulates a lot of replies all at once, staff may not be able to cope and many of the potential leads may be lost.
Therefore, it follows that, if mortgage brokers start to look for opportunities to form marketing co-operatives within their local area, there could be considerable marketing synergies. For example, a number of brokers could share the local advertising costs and share the leads. Also, by pooling resources, the peaks and troughs can be evened out by more regular mailing activity where sharing the leads means that no individual broker is swamped by enquiries at anyone time.
There is also a case to be made in favour of spelling things out clearly to the end customer who may not realise that people with credit problems can actually get a mortgage. The term ‘remortgage’ can also be confusing and it often does not mean a lot to many members of the public, so the wording on marketing material must not fall into the jargon trap. Experience shows that a much clearer explanation of the remortgage proposition is needed before potential customers will pick up the phone with that initial enquiry.
Designing marketing mailshots and advertising to promote the maximum understanding and response is one aspect of lead generation ‘ but we need to go back one stage to the lists themselves. Obtaining mailing lists from list brokers is simple enough ‘ but how do you make sure that you specify criteria for your lists that will produce good leads?
Mark Piper, director at Phoenix Mortgage Services, uses highly specified broker-supplied lists as his sole source of new sales leads, and is confident that it is the best marketing option for his business. He explains: ‘Our expertise as mortgage advisers lies in meeting potential clients and talking to them about the mortgage options open to them and this is where we maximise out business opportunities. So, the crucial point in the marketing process for us is once the appointment has been made. As a business, we are firm believers in using our time most profitably, and buying in pre-screened leads that have got as far as the appointment stage helps us to do this. This is a more expensive option that buying in lists and doing our own mailshots. However, we are getting a 40% success rate using our preferred method, compared with a 2% success rate when doing our own mailings.
‘We use a tried and trusted source for our bought-in leads, and we are able to specify our criteria in detail, so that the appointments are supplied to us with enough customer information to let us take the cases forward quickly. Our experience has taught us that it is important to negotiate (and obviously pay the premium for) sole rights to the names on our list. Too often, brokers can waste money buying in very poor quality lists that have already been recycled several times. By sticking to the sole right of usage, we guarantee ourselves the best start with each new potential case.’
Phillip Evans is head of Enable Finance ‘ a mortgage broker that has embraced the internet as a major marketing tool, as well as the more traditional mailing methods. Evans believes there are two key factors in achieving successful web-based marketing. The first is building a simple, user-friendly site, and the second is to keep pace with the ever-changing listings criteria of search engines.
He explains: ‘In generating leads for sub-prime/non conforming mortgages, we must make sure that we put out very simple straightforward messages that are easy to understand. This is even more important when putting together a promotional website, as the attention span of people trawling through websites is very short, and they need to be drawn in quickly. The golden rule is that new visitors to the site must only be three clicks away from the screen that shows them where and how to email in their details for further information ‘ or to make an application.
Another important element is to give site visitors as many ways as possible to respond. For example, if you have a free phone number, make sure it is on the screen all the time and in a prominent position, as a lot of people will use the internet for information gathering, but would prefer to telephone for additional information rather than type in their details. You also need to be very clear about your speciality. If this is adverse credit ‘ then you must state this very clearly in simple terms.
‘When it comes to generating visitors to the website, we make sure that our web address is prominently displayed on all our traditional marketing materials such as mailers ‘ and not tucked away in the small print. Increasingly, everyone who uses the internet is making their favourite search engine the first port of call, to bring up a list of relevant sites. If you are not displayed prominently by the major search engines, such as Google, Yahoo and MSN, then running a website as a sales lead generator will be a waste of time. Search engine facilities are constantly evolving and I would recommend employing specialist web-building consultants to make sure your keywords fulfil the search engine criteria on an up to date basis. Search engines constantly strive to keep a level playing field for all websites, and often change their keyword criteria to stop larger companies from dominating their front pages. Unless you can keep up with these changes, you will be relegated to the later pages and miss out on the best opportunities.’
We all know how diverse the marketing opportunities are ‘ and yet how easy it is for marketing activity to fail to come up to expectations. Hopefully, if a wider debate on lead generation can be opened up, it will be to the benefit of all participants. This does not necessarily mean creating new ideas all the time as making traditional methods work better can produce excellent results. Irrespective of the constraints that regulation will bring, we are all working in an increasingly competitive industry, and the winners will be those who have learned to ‘work smarter’ in generating business.