Written By: Steve Kropper

Steve Kropper is SVP at Equinox, which provides mortgage business process outsourcing as well as the next generation of customer acquisition and retention services called SmartAcquisition and StopRunoff. He lives in Lexington, MA, and can be email at skropper@equinoxco.com.

The trouble with Internet mortgage leads is that people don't like to eat dough. The average Internet lead is not cooked properly, just a name, not even a lead, cetainly not a prospect.

The average web lead converts (to funding) at less than 3%. This low yield is not compatible with the way most lenders operate. These leads are too cold. A typical inbound call converts at 10-20% for mortgage brokers. If one in ten off-line leads is a winner, why buy web leads that take thirty calls before closing one deal?

In 1993, at my first company we thought we were selling bread, but we were selling warm dough. We faxed leads to top lenders (GMAC, BoA, Countrywide and Chase) that resulted in closed loans at a $600 acquisition cost. That was about half of their cost. But the conversion rate was just 3%. That was not compatible with the consumer direct operations of these top lenders. My leads converted at 3%, but lender practices were geared to 20% conversion. Big gap!

So, fast forward to 2004. Same problem with Internet leads. Low yield, big gap. Most lenders are burned out on Internet leads. Internet leads are like dough, a product released prematurely.

Stand back for a moment as I illustrate how most internet lead generation schemes work, to demonstrate how they are not ready for prime time in 2004.

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