Loan officers are always getting hooked into expensive lead-generation tactics that seldom pay out instead of focusing on the one tried-and-true method that always works.
If you want your mortgage business to be consistent (instead of up and down), you need to have a steady stream of new clients coming in. Of course that sounds obvious, but it is much easier said than done because getting new business is hard.
So, what is that tried-and-true method we mentioned? It’s getting more business from the people you know—that’s right, referrals. Let’s explore WHY referrals are so great, WHEN you should choose referrals over lead generation, and HOW to kill it with referrals.
WHY Referrals Are Great
Referrals Already Trust You
The easiest client to close is the one who already knows, likes, and trusts you. These people don’t need to be sold to because they’ve connected with you on a personal level.
People trust their friends and family for recommendations, so if someone has recommended you, they probably already like you. It won’t take too much work on your part to turn these referrals into closed clients.
A cold lead, on the other hand, will require that you prove your value to them. They immediately come with their guard up. There is nothing tying them to you, so you have to work extra hard to create that personal connection. Until you do so, you can’t be sure that they will pick you over someone else.
Referrals are Cheaper to Acquire
Lead generation can be expensive. Most of the time, you’re spending $50–$100 for a lead that may or may not pan out.
Referrals, on the other hand, are much cheaper to get. Sure, it costs money to stay in touch with your past clients, but it’s not nearly as expensive as lead generation. And your chances of closing a referral are MUCH higher.
Referrals are Exclusive
If you’re purchasing leads from a third party, there’s a strong chance that lead is not going to be exclusive. It’s likely being sold to multiple loan officers simultaneously.
Referrals are usually given exclusively to you. If your past client used you and was satisfied, they’re not going to recommend three or four lenders, they’re going to recommend one—you!
WHEN You Should Choose Referrals Over Lead Generation
The short answer is that you should ALWAYS choose referrals over lead generation or, at the very least, choose them FIRST.
When You’re New to the Business
The truth is 85% of all mortgage closings come from referrals. That’s right—85%. Based on that stat alone, it’s obvious that referrals should take precedence over lead generation.
If you want to do a lead generation campaign, you should go for it. But you should only do it after you have a solid referral marketing program that’s already working for you. It’s so much more expensive to get leads than referrals. Get the easy wins before you go for the much harder ones.
When You’re Losing Business that Should Be Yours
But many loan officers don’t invest in referral marketing. They spend nearly all of their marketing budget on the next great lead generation system and leave very little left for referral marketing—the thing that always works.
Successful loan officers know the best business comes from referrals so they invest accordingly. Successful loan officers also know that there’s a right way and a wrong way to do referral marketing.
Lead generation is often high-risk and doesn’t usually work. Go back to the basics before and make sure your referral marketing you spend a lot of money on the shiny object.
HOW to Kill It with Referrals
Effective referral marketing strategy includes
- a great website
- email marketing campaigns
- blog content
- social media
These pieces work together to help people remember you (and the fact that you do mortgages) on a regular basis.
You might think that if you’re good enough at what you do, word of your expertise and value will spread on its own. That may happen some, but if you invest in being remembered, it will happen so much more. If people can’t remember your name, it doesn’t matter how good you are.
Regularly giving your clients useful information with your name on it is the best way to cement you as their go-to lender. It’s as simple (and as hard) as that. Good referral marketing is the fuel that grows your business.
Need Some Help?
It takes a lot of time to do referral marketing the right way. This article says that small businesses average 20 hours a week on marketing. It’s unlikely that you have anywhere near that much time to spend on marketing. Even if you did, it’s time you should probably spend doing other things, which means that you need someone else to do your marketing.
If doing referral marketing the right way sounds too overwhelming to you, check out Sidekick, our mortgage marketing product. It does everything for you—website, blog content, emails, and social media. Sidekick gets you the referrals you’re missing out on takes away the burden of marketing each month so you can focus on money-making activities that grow your business.