Over the past three years, I’ve had the opportunity to work with many lenders – large and small. Throughout this experience, I was able to see the differences between:
- Lenders that still rely on buying leads instead of generating them themselves, thereby outsourcing all the analytics to someone else
- Lenders that have data but lose out on the opportunities it presents because they either struggle with the work needed for getting real and deep use out of their data or don’t have the right staff to take full advantage of it
- And finally, lenders that have data and have a team that knows how to deal with it but don’t have all the data they need to make their efforts translate into real lending opportunities
Let us face it: the main reason for acquiring and analyzing data – for every lender – is to generate leads. In order to build an efficient lead generation engine you will need:
- Acquired data
- People that know how to use the data (and perhaps some AI to remove the constant need for engineers that are hard to find in the marketplace)
- Clear methods and discipline
- A user experience that creates an intimate and engaging relationship with those who are looking for home improvement loans – this is key for retaining and convincing customers while collecting real-time, user-generated data
Every lender must have data on the assets they are lending money for. They need data on cars if they are lending money for car buying, and they need it on housing if they are lending for mortgages, remodeling, and even HELOC loan. So it is imperative that lenders lease or acquire that data in order to have the right depth to make things happen. And the more finite and up-to-date the data, the better the lead conversion is.
Some lenders spend significant amounts of money buying high-quality leads but find their conversion rates are still extremely low. Why? Because the lead source is selling the same data to every lender, making for a highly competitive situation that impacts and lowers the funded loan conversion rate.
The best move is to either acquire the data yourself or partner with a data firm in order to focus dedicated effort on generating exclusive leads.
Smart Data Team
Finding a data scientist with not only the technical know-how but also a great business sense is not easy. We all know that expert data scientists are hard to find, and the ones that are out there are more interested in working with high-paying employers on the cutting edge such as Amazon and Google. This makes it hard for lenders to build their own smart data teams, so it is usually best to find a firm that knows exactly how to deal with data and outsource the work to them.
Methods and Discipline
Putting data and people to work together can produce insights and leads, but it needs to be disciplined and well-targeted. I have seen many organizations with smart people and good data, but they lack the discipline, rigor, and methods. As a result, their efforts tend to be suboptimal and produce ineffective results. You must build a leadership team that knows how to deal with the data in a methodical and rigorous way – and hold them accountable for the results.
If you want to thrive in the consumer space, you need to understand human psychology and biases, and how people interact with your site. The right user experience will delight your customers and convert them to your business. The right user experience will also allow you to better understand and (regularly) adjust that experience to match your customers’ interactions with your offers. Finally, since data is king, the right user experience will allow you to collect real-time data that, when added to your other data, can give you incredible insights into your customers’ needs, wants and propensities.
Data can get stale, so you have to be acquiring fresh data on a regular basis in order to keep it current.
Let’s walk through a use case for home loans, whether it is a refinance, a HELOC, a 203k or a personal loan.
Knowing the housing data and the current LTV ratio are key to recognizing whether the house or the owner will be needing a loan. Having more information about the homeowner will help you identify whether she can afford the loan you want to offer.
Now imagine that you know that this home has 50% equity already built-in. You also know that the homeowner is in the market to remodel her kitchen, that she wants a more modern, open space and that she will need to spend 80k to get the kitchen of her dreams. Let’s go further and find out whether she has remodeled any other part of her home in the past 10 years and what else she would need to get to modernize that house. Let’s imagine that you can easily inform her that her HVAC is nearing its end and that her roof will have to be replaced within a year or two.
You are probably already guessing where I’m going with this. The reality is that you can offer your customers a larger loan while being helpful and informative. You just built a compelling and close relationship with your customers that will inspire loyalty for the future.
Now let’s take that example and apply the four components needed to generate great leads:
- You will need data on the home’s condition, and what is new and what is old.
- You will need a data expert who can analyze the data to determine what else you can tell the customer about their home, driving toward a larger loan value in a concrete way
- You will need the right methods and tested algorithm to extract the right intelligence
- Finally, your user experience should bring you more information on the customer needs, intentions and limitations so you don’t waste your time selling the unsellable
In order to intelligently compete for the right leads, today’s lenders must own part of the experience. Buying leads from referral sources that also sell to many other lenders is an expensive and competitive waste of your efforts. Lenders owning their part of the experience must own the data, the customer, and the lead.