Why your mortgage business isn’t (and won’t) grow: The Referral Virus
Most mortgage brokers are one-man bands. And most will never grow beyond this because they’ve been infected with the referral virus.
You see, when you’re first getting started referrals are awesome. They cost nothing and they bring in business. You start with family and friends, then graduate to partnerships with real estate agents, accountants, financial planners, etc. You give them a share of your commission in exchange for the customer – not a horrible exchange.
Within a couple of years, you can be getting 4-6 new clients every month from your referral sources and make a decent living for yourself. The problem appears when you try and grow your business.
In order to grow your mortgage business, you need a consistent and predictable source of new high-quality leads coming in – this is where referrals let you down.
Because they can’t be predicted, nor scaled at will. You have no levers to pull down on to produce more customers. You are simply at the mercy of fate and forced to deal with whatever chance happens to send your way that month.
This leads to the kind of feast or famine income and work cycles that most have become accustomed to, and accepted as the nature of the business.
However, it doesn’t have to be with way…
You see, in order to solve this problem, all you need is three things.
- An audience that is going to be interested in what you have to offer and the ability to target that audience with a compelling message.
- A system to convert that audience into a qualified lead.
- A system to convert that qualified lead into a high-value client.
Here’s the good news…
We have the solution to 2/3 of the required parts.
We know how to put a compelling message in front of an audience of people who are interested in what you have to offer.
And we also know how to turn that into a qualified lead.
The third part – converting that qualified lead into a high-value client is your job as the mortgage broker.
For example, let’s say you want to go from 5 deals per month to 10 – you want to double your business, so you can bring in some more staff and really begin to grow.
You could go out and make more partnership agreements, attend networking events, ask (beg) your database for referrals…
Or, you could spend around $2,500 per month on advertising.
With that $2,500 in advertising, you could generate 50 high-quality leads.
Of those 50, 5 would convert into high-paying clients within 90-days, and 5-10 more would convert over the next 6-12 months.
Then, in 3 months’ time, if your ready to scale again from 10 deals per month to 20, you could simply spend the required amount in advertising and know that you’re going to get the amount of high-quality lead required to get the extra 10 deals per month.
In conclusion, there is nothing wrong with referrals – they are an integral part of every mortgage business. However, they cannot be relied on to produce rapid growth because they are not predictable or easily scalable.
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