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The Big Story: Online lead generation

Once dismissed as a last-ditch effort to retain customers, a growing number of brokerages are using online lead generation websites. They dangle rock-bottom rates on the Web to attract shoppers. It may work in the short term. But ultimately, this is a race to the bottom. Brokers need to focus on their value proposition to clients say some brokers. On today’s Big Story we spoke to Drew Donaldson, an agent with Verico Safebridge Mortgage Solutions, Nick Kyprianou, CEO of Equity Financial Trust and Brad Compton, an agent with Invis. Some feel however, that experienced brokers who know how deal with rate shoppers and offer them more than just a mortgage, but a financial plan, can use these online leads to their advantage. Find out on today’s The Big Story, on MortgageBrokerNews.ca TV, your home for industry news, opinion and analysis.

Video transcript below:

John Tenpenny:  Hi, I’m John Tenpenny, Editor of CMP Magazine and welcome to the Big Story on Broker News TV.
Once  considered a last ditch effort to retain customers, a growing number of brokerages are using online lead generation websites.  They dangle rock bottom rates on the web to attract shoppers.  It may work in the short term, but says Nick Kyrianou of Equity Financial Trust this is a race to the bottom, brokers need to focus on their value proposition to clients.

Nick Kyrianou, CEO, Equity Financial Trust
Nick Kyrianou:
 So I think the challenge that mortgage brokers have with the online lead generation and buying down mortgage rate is they make it all about the rate.  And when there is a race to the bottom about the rates all the time, the mortgage brokers will not win over the long term competing against the banks.  The banks have multiple products [to cross all clients]  making their money other ways, but mortgage brokers just have the mortgage product.   And I think that mortgage brokers need to spend more time on focusing on their value proposition, how they can make the life easier for the client, how they can give them products that satisfy the clients needs.  On the B side of the business, focus on getting them money, you know when a client’s been turned down by a bank, the clients purpose isn’t to the lowest rate, the purpose is to get the money, they have been turned down by a bank.  So the purpose is to get the money.  So I find with this race to the bottom of rates, through buying down rates or online lead generation and making everything about the lowest rate in the marketplace, I think it comes back full circle and bites you because the mortgage broker can’t beat the bank on the race to the bottom.  I think that they have got to re-look at their business, how to be a value proposition, building client bases, building relationships and building their business that way and not make everything about the rate, whether it’s A business or B business.

John Tenpenny:  However there are experienced brokers who know how to deal with rate shoppers and offer them more than just a mortgage, but a financial plan.  They can use these online leads to their advantage says mortgage agent, Drew Donaldson.

Drew Donaldson, Agent, Verico Safebridge Mortgage Solutions
Drew Donaldson:
 The way the online lead generation works for us and it’s a good marketing program because it does get the name out there, it gives recognition and you know generates more leads to our website, but at the end of the day the leads come in you really have to be experienced with that because the clients that you are working with, they immediately see rate.  So that’s the first thing they say and when they get on the phone with you, so you have to educate the client, you have to look at what are their dreams, what are their goals to really map out a financial plan, that’s not just about the mortgage.  At Safebridge we do mortgage centred financial planning, which is we look at the entire financial aspect of the client and then come up with the right mortgage solution to fit their needs.

John Tenpenny:  Invis agent, Brad Compton has tried these sites, but brokers should use the Internet to position themselves as experts rather than just have the low rates.

Brad Compton, Agent, Invis
Brad Compton:
 I had used lead generation sites in the past with varying degrees of success.  One of the main problems with those sites is the fact that they turn our business as a mortgage broker or a mortgage agent into nothing more than the lowest rate.  I use the internet quite a bit to market my business, I don’t use the lead generation sites anymore, but I do use the internet to position myself as an expert in my field, letting clients know the service that I provide not only before the mortgage, but after the mortgage as well and I never ever say that I am going to have the lowest rate possible.  Obviously I have a competitive rate of course but when it comes down to competing against banks or other brokers, there’s always going to be someone that can buy it down more than you.
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