Things are great, right? Now, more than ever, prospective mortgage buyers and refinancers are everywhere. Just recently, industry experts identified more than 19 Million individuals with highly qualified credit that are eligible to refinance. Throw a rock in a crowded space and you’ll be able to hit multiple people who benefit. Hiring is happening all over the mortgage industry as people flock to take advantage. Why should anyone consider changing their marketing strategy?
With opportunity comes challenges. Many conversations at most mortgage companies are focusing on one topic: How to scale. It is an enormous problem; however, companies are taking varying approaches to solve it. For some, offering escalating salaries, sign-on bonuses, or other incentives is the solution. For others, recruiting and training are how they will create (eventual) capacity. Finally, certain companies are also pursuing internal options to squeeze as much juice out of existing resources as possible.
The reality is the third option, specifically identifying and implementing smart ways to drive results from existing resources, is the best short-term choice. One strategic lever clients are pulling is to maximize marketing. Getting the most out of each Loan Officer is smart while you scale around these valuable resources. With the right approach, you can increase conversion percentage, improve the quality of leads, and ensure capacity is valued.
What’s the catch? Why isn’t everyone doing this if it’s so easy? The simple answer: it costs more. For most markets, optimizing costs is the right play. The majority of leaders in the mortgage industry know this, as it’s how you run a successful business. However, there are times, like now, where you have to measure other costs (opportunity cost, for instance) into your equation. What is the time, energy, resource and financial cost of hiring new people (plus lag time) to fill the capacity/demand you now have? What is the price of not using your available capacity as you grow?
Said differently, looking at the straight acquisition cost per loan and managing to a hard number will limit you in times of high growth. While getting additional person-hours is a strategy that most will need to tackle, limiting short term opportunities and not taking advantage of the capacity you have is short-sighted. I believe the old saying is penny wise, pound foolish.
But does it cost more? The reality is this is a company-by-company question, and the answer is not straight forward. It’s an activity we often talk owners through, however, for most small to medium-sized companies that have not scaled quickly and experienced the challenges, scaling marketing over adding headcount is the right first move. Hiring quickly while minimizing other costs creates friction and slows momentum. It is the opposite approach (short term) smart operators are looking to achieve. Capturing market share during this time, much like interest rates, is a time-sensitive opportunity. And the reality is if you don’t take it, someone else will.
And there are potential other benefits of focusing on fewer higher quality leads. The choice to hire experienced LOs versus training new ones is something that each business has distinct opinions around. Recruiting LOs by showing the quality and conversion of your leads is always going to be well received. Not to mention, a healthy pipeline is a great retention tool to ensure people don’t walk away!
In all fairness, please do not take away from this that you should throw caution to the wind and ignore marketing costs. Instead, look into which costs you can increase intelligently and create capacity. Grow, but grow intelligently. Always keep an eye on optimizations. Believe me, there will come the point in the next few years where it will be necessary to embrace the cost optimization approach. Have a plan and understand what triggers you need to watch to switch back when needed. But do not limit your growth potential short term while trying to adhere to a business plan that does not account for the current opportunities.
Are you looking to up your marketing game? We can help. Talk to us about how you can use direct mail to increase revenue. Monster Lead Group offers award-winning, turn-key consumer direct marketing solutions for mortgage lenders.