NMP - October 2016 - 74

Increasing Sales Requires Front-End Muscle By Chris Backe ome readers may be too young to remember, but back in the 1970s, the American automobile industry went through a rough period similar to what the mortgage industry is going through today. That's when new, more restrictive emission limits became law at the same time automakers were required to start using larger, heavier bumpers to make cars safer. There was also an oil crisis brought on when OPEC cut exports to the U.S. As a direct result of these events, compact, fuel-efficient, mostly foreign- S OCTOBER 2016 ■ /BUJPOBM.PSUHBHF1SPGFTTJPOBM.BHB[JOF ■ NationalMortgageProfessional.com 74 made cars became the rage. American automakers were forced to innovate and build safer, cleaner vehicles to keep up with the new standards-and the competition. "Muscle cars" like the Pontiac GTO and the Dodge Challenger disappeared while others, like the Ford Mustang, were downsized, losing power and performance- and sales. Similarly, in the mortgage industry, recent events have forced lenders to reinvent themselves and improve their back-end processes. With stricter lending criteria and the risk of loan buybacks, plus Dodd-Frank and the Consumer Financial Protection Bureau (CFPB) to make sure they follow the rules, lenders really have no choice. As a result, many lenders have upgraded their loan origination systems, loan auditing tools and other technologies to minimize risk and operate more efficiently. In the push to create better, safer mortgages, however, some lenders are not matching these back-end expenditures with similar investments in their sales and marketing teams. At times, it seems as if the need to create high-quality mortgages is more important than actually selling them. For sure, loan quality and compliance are important. Yet many mortgage professionals are struggling to succeed in a rapidly changing market with the same contact strategies and tools they used more than 10 years ago. By neglecting the latest sales technologies, lenders risk losing out to the growing number of competitors that are investing money into sales engines that actually fuel growth. Front end spending is growing Earlier this year, my company, in partnership with Velma Marketing and Mortgage Coach, conducted a survey of more than 500 lenders and mortgage professionals that delved into the reasons behind how growing lenders reinvested in their businesses. According to the results, a growing number of lenders are in fact planning to increase spending on technology to improve sales. Despite all the attention being placed on compliance, many lenders plan to spend more on sales and marketing than on tools to improve loan quality. Specifically, lenders with significant purchase loan volume have invested in or plan to spend on lead management, referral management, analytics and marketing automation tools, in that order. According to our survey respondents, the most popular reasons behind their investments are to drive growth, improve sales processes and increase customer retention, also in that order. Compliance was the fourth most popular driver behind respondents' technology investments. The survey results were very insightful. On one hand, they reflect the fact that the purchase loan market hasn't been as strong as many had hoped. Lenders that need to grow in an increasingly competitive market understand they must maximize their existing leads and convert them at a higher rate. But the survey also showed that consumer-direct lenders had already invested significantly on sales technology and, coincidentally or not, had grown at a much faster rate than retail lenders. These lenders have embraced the Internet and new technologies such as lead management software and automated dialers much earlier and faster than the rest of the market. To me, these results are a wakeup call for retail lenders, especially those that are not reinvesting in sales and rely too heavily on referral strategies. If they hope to compete in an age of the always-online consumer, retail lenders and their sales teams need to invest as heavily in the front end of their business as they do on the back end. Speed is top priority Our survey results also suggest that speed is important to lenders. I see two trends driving this demand. One is that lenders have now replaced real estate agents as the initial point of contact for most consumers looking to buy a home. Because financing has become so complicated to the consumer, it's more important to know if you qualify before going to look at homes. Second, research now shows that a majority of borrowers now start their search for a mortgage online. Most borrowers know they can get pre-approved online in just minutes, which means they are http://www.NationalMortgageProfessional.com http://www.findmortgagejobs.com/

Table of Contents for the Digital Edition of NMP - October 2016

Table of Contents
NMP - October 2016 - Cover1
NMP - October 2016 - Cover2
NMP - October 2016 - 1
NMP - October 2016 - Table of Contents
NMP - October 2016 - 3
NMP - October 2016 - 4
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NMP - October 2016 - Cover3
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