Brokers looking to generate leads from the Internet may ultimately find it easier and, indeed, cheaper to hand the job to one of a growing number of online referral agents, suggest brokers now winning as much as a 50-percent conversion rate. Still, even then, success largely depends on one thing: rate.
“Like many other brokers, I initially started out paying for Google Adwords space,” Paul Poirier, a top 20 broker with Dominion Lending Centres based in Toronto, told MortgageBrokerNews.ca. “While that got my site very high up on Google searches and people were clicking onto my landing page, the lead conversion rate was very, very small. Ultimately, out of a 1,000 clicks, I only developed 25 leads and one ended in a funded deal – I just broke even.”
The broker with DLC - Eagle Group eventually opted to sign on with one of a growing number of online referral agents specifically focused on generating “quality leads” for mortgage-broker clients by offering Internet users a daily comparison of their clients’ rates and then linking them to an individual broker’s website. Fees are entirely based on leads and not just the number of clicks to the client’s landing page.
Poirier is now working with relative upstart RateHub.ca, although has been with two other agencies. He conversion rates have been as high as 50 per cent of leads, although the more recent average is closer to 30 per cent.
“What we’re getting is fewer leads, but the quality of the lead is better,” he said. “They’re perspective buyers who are genuinely in the market for a mortgage.”
Other brokers are reporting similar gains.
“It’s pretty effective tool, if they’re funnelled through a Ratehub.ca or RateSupermarket.ca,” Theresa Shaw, broker of record at Finder Financial Services Ltd. in Vancouver, told MortgageBrokerNews.ca. “They’re educating users about the services of the broker channel and that helps us to close a deal. If they’re just going to your site because it is placed high on Google Adwords, then they may not have the knowledge base.”
Those online referral sites are increasingly connecting with younger buyers, more inclined say surveys from Genworth Financial , CAAMP and CMHC, to search online for both the home and the mortgage to pay for it.
According to RateHub.ca’s founder, Alyssa Richard, mortgage brokers are attracted by the time-saving aspect of hiring a service like hers, which offer varying rates -- in Richard's case between $50 and $65 per lead.
“We like to think of ourselves as outsourced search engine optimization and social media,” she said, “because online is our full time business, we are able to rank for competitive search terms like ‘mortgage rates Canada.’”
But the specifics of their Web searches – rate comparisons – may point to the limitations of relying on Internet-generated leads, said Poirier.
“At the end of the day, I found that I got the lead if my rate on that product was the lowest on the (referral site) that day,” he told MortgageBrokerNews.ca. “People online are looking at rate, first and foremost. They’re not like referrals from clients. Here the rate has to be the lowest or very near the lowest to get the lead.”
Brokers using the online referral agents often buy down their rates, a compromise balanced by higher volume numbers and the benefit of winning another referral source.
“They might be interested in rate,” said Shaw, “but they’re no less inclined to refer a broker to friends or family if they’re satisfied with the service.”