LEAD GENERATION - Mortgage Strategy

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					MS_p01_suppcover_07.05.07_ed   30/4/07   4:54 pm   Page 1

 MAY 2007                                                   FIRST FOR MORTGAGE STRATEGISTS

                                                            S U P P L E M E N T
                                                              IN ASSOCIATION WITH:

                                                              The evolution continues

                                                              SPONSORED BY:

                                                              G    Expert analysis
                                                              G    Round table event
                                                              G    Exclusive survey
MS_p03_suppcontents_07.05.07_ed                1/5/07       3:18 pm     Page 3


    LEAD TIME                                                                             NET GAINS
                       The lead generation market has battled many of its                                   Most households in Britain have internet access and
                       demons – or the reputable players have. Their policies                               more people are getting online and recognising its full
                       for invalid leads are clear, not many recommend paying                               potential. For many the internet is the first port of call
                       for leads upfront and cold calling is out, which should                              to source information – 84% of mortgages are researched
                       deter some of the less professional operations.                                      online but only 4% are actually purchased through the
                           Of course there are still rogues in the market that, in                          internet. While we can say this fast-growing medium is
    Stephanie Spicer,  the words of Leadbay operations director Simon Baker,              Vanessa Blount,   here to stay, how do you get access to it?
    supplements editor are out to “make a fast buck”. And as he points out, it            head,                 Perhaps you have thought about setting up your own
                       doesn’t take much to set up a website and promise leads.       website and using one or more search engines but
        So brokers must take care when selecting a lead generator to do busi-                               realised unless you have a dedicated marketing depart-
    ness with, read the small print of invalid lead policies and make sure                ment the work involved is endless, difficult and needs constant attention.
    what the company offers is flexible enough for your needs.                                The lead generation industry has come about in response to this need.
        What can only help brokers is that there are a variety of options from            Trying to generate a steady stream of good quality leads is a full-time job
    providers for them to choose how they source leads. There are auction                 in itself, so why not leave it to the experts?
    and bidding routes to leads, subscription and pay as you go options – an                  That’s why brokers are increasingly turning to internet-generated
    approach to suit most business models in fact. This in itself serves to               leads from a third party supplier. This seems the perfect solution when
    emphasise the need for brokers to carefully consider how big a part of                you consider you can select the size of the area from which you wish to
    their business they want leads to form. Some rely solely on leads, some               receive leads, the specific lead type (adverse, buy-to-let, remortgage, life
    on leads and the referrals they get from them, some keep bought leads as              assurance etc), that you can determine the price you will pay and the vol-
    a source of new clients compartmentalised alongside other marketing                   ume of business, and you only pay for the leads you need.
    and client database servicing activities.                                                 All this enables brokers to sit back and let the third party supplier
        Whichever way it is done, there is much to be gained with the right               deliver the leads directly to their PC or increasingly to their phone. This
    selection of leads and provider, the right measure of costs weighed                   marketing initiative gives you control and flexibility, making internet-
    against potential gains, and realistic expectations on the part of brokers.           based leads a hard medium to ignore.

    FEATURE                                           4-5    FEATURE                                         14-15     ADVERTORIAL                                   20-21
    The regulation debate surrounding lead                   Brokers need to ask lead generators tough                 An innovative model for the lending market
    generators rumbles on                                    questions when it comes to compliance                     will create new business for finance
                                                                                                                       providers, says The Help Group
    ROUND TABLE                                     6-13     ADVERTORIAL                                     16-17
                                                             Firms cannot afford to ignore the potential of            FEATURE                                          22
                                                             the internet, says                           Building a relationship with a firm of will
                                                                                                                       writers can offer advisers a great
                                                             SURVEY RESULTS                                  18-19     opportunity to generate a supply of good
    Leading players discuss how the market is                Brokers see the value of leads in generating              quality leads and get access to clients who
    developing                                               business                                                  need their services

    Mortgage Strategy, 50 Poland Street, London W1F 7AX. Tel: 020 7943 8000 Fax: 020 7970 4906 Email:
    Subscriptions 020 7292 3754 Editor-in-chief Robyn Hall (020 7970 4601) Deputy Editor (Production) Tara Srinivasan (020 7970 4753) Supplements Editor Stephanie
    Spicer Art Director Stuart Woodward (020 7970 4602) Advertisement Manager Scott Wendes (020 7943 8010) Business Development Manager Vanessa Tole (020
    7943 8022) Business Development Sales Executive Alana Heaton (020 7943 8019) Division Production Manager Simon Hadley (020 7943 8004) Deputy Production
    Manager Nita Patel (020 7943 8003) Circulation Manager Lisa O’Rourke (020 7970 4215) Publisher Patrick Ponsford (020 7970 4527) Publishing Director Tim Potter
    ISSN 1475-651X. Published by Centaur Media plc. Printed by Pensord Press. Registered with the Post Office as a newspaper.

    May 2007 Mortgage Strategy Supplement                                                                                            3
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    The regulation debate surrounding lead generators rumbles on, albeit a bit more quietly as many in the industry
    now believe a form of trade association or self-regulation would be a better solution

                                                                                             he last year could be looked back upon as a semi-
                                                                                             nal one in lead generation history. It has been the
                                                                                             one in which brokers who want to use lead gener-
                                                                                       ators have come to terms with what they are looking for
                                                                                       in a provider and how they want to incorporate leads
                                                                                       into their business.
                                                                    Stephanie Spicer,     At the beginning of the year lead generators were
                                                                    supplements editor running short of brokers and had to turn customers
                                                                                       away as the interest rate rise in Janary sent consumers
                                                                    diving to the internet looking for mortgage advice. Brokers were urged
                                                                    to cash in on mortgage leads.
                                                                        “Some may say we are victims of our own success but I believe this
                                                                    situation highlights that lead generation is one of the most effective tools
                                                                    brokers can use in building up their business,” says Vanessa Blount,
                                                                    head of
                                                                        And obviously with more leads prices were better.
                                                                        “This is the perfect opportunity for advisers to make a substantial dif-
                                                                    ference to their business figures at the start of the year without having
                                                                    to spend the amount of money normally needed to secure extra leads,”
                                                                    Blount adds.
                                                                        In the middle of last year there were broker calls for regulation of the
                                                                    market and while the Financial Services Authority hasn’t said outright
                                                                    that it won’t regulate the market, one can easily predict it won’t in the
                                                                    foreseeable future. Lead generators are not keen on the idea, neither are
                                                                    some brokers, while the industry is now focussed on some form of self-
                                                                        “I think the downside of regulation from a broker point of view is
                                                                    cost,” says Simon Glastonbury, director of SPACEmortgages. “As soon
                                                                    as it becomes regulated there is going to be a huge cost issue. We are all
                                                                    going for the same goal and that is not somewhere we want to go.”
                                                                        However, one area which may attract the attentions of regulators is
                                                                    over telephone-generated leads.
                                                                        “There is a bit of a regulatory issue over the transcripts debate,
                                                                    although I think it is a dangerous area to go into,” says Glastonbury. “I
                                                                    don’t like telephone-generated leads. If we are going to go down that route
                                                                    and it becomes an issue that more telephone-generated leads are coming
                                                                    on board maybe the FSA will have to look at it. At the moment there isn’t
                                                                    any governing body saying exactly should happen about them. But I
                                                                    think regulation is more of a downside.”
                                                                        Simon Baker, operations director at Leadbay, doesn’t anticipate reg-
                                                                    ulation happening but he can see why there are concerns about the
                                                                        “I get a call every couple of weeks from the press telling me about

    4                 www. m o rtg a g e stra te g y . c o . uk                                            Mortgage Strategy Supplement May 2007
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    some dodgy lead generator that has taken lots of brokers’ money and run                “We can start setting these types of guidelines between ourselves and
    away, either not delivering the leads or delivering poor quality leads or          why not? It seems like a good idea,” he adds.
    in a non-compliant manner,” he says.                                                   This was something Glastonbury would certainly welcome.
        “There are lots of reasons for that – low cost of barrier to entry is one          “Some form of roundtable meeting from the main lead providers ini-
    of them. Almost anyone can put up a website and it can cost them less              tially would get the ball rolling,” he says. “What happens in the future
    than £100 to set up and say ‘glamorous mortgage leads here’. There is lit-         who knows? But whether these meetings are once or twice a year, the
    tle I can do to stop that happening, other than give advice on what to look        people who mean business will want to get on board. And then you can
    for in a lead generator.                                                           pick and chose who joins.
        “As far as regulation goes the FSA has a lot of problems coping with               “I would like to think everyone in the industry could get together and
    its current remit. I have seen breaches in financial promotions and the            say ‘this is good practice, this is not’, and it would certainly give us bro-
    FSA doesn’t seem disinterested but, it has too much on its case book.”             kers more confidence.”
        Lead generators, those running legitimate operations anyway, have                  Glastonbury says that if such a formal association cost brokers and
    long been happy to talk about the idea of some form of regulation, if not          clients more money it would not be of such significant amounts that they
    FSA regulation, which given that lead generators don’t give advice is              would start noticing.
    understandable. But some form of self-regulation has not been ruled out.               “If it was the FSA regulating we would start noticing, but I would be
        In the recent Mortgage Strategy round table discussion on lead gen-            disappointed given the amount of money brokers are putting in to the
    eration, highlights of which are featured in this supplement, Warren Pin-          market anyway that providers wouldn’t put their heads together for
    ner, operations director of Mortgageangels, proposed the establishment             some form of self-regulation. It happens in every other industry and I
    of a quarterly meeting.                                                            think lead generators should be doing the same thing.”


                            Payam Azadi, head of marketing, The Mortgage Times         anywhere, don’t use that provider again. If you think they are great
                            Group                                                      because they are good quality leads that is good because it is a starting
                            The main focus is to find out where the leads are          point. But if you are giving bad advice it doesn’t matter if it is a client of
                            coming from and how long the lead is taking. Never         20 years or a new lead.
                            ever pay upfront for leads, because what those lead
                            generators do is take the money and use it to pay for a                       Neil Walkling, head of compliance services, Sesame
                            campaign on Google or something, so you are never                             The only guidance we give members is from a
        sure where the lead is coming from. You need also to find out if leads                            compliance perspective and the relevant thing there is
        have been generated in a compliant way by looking at the application                              the FSA’s cold calling ban. The thing mortgage
        form and at what questions were asked to get the leads.                                           advisers need to be careful about is that they are
   figures show out of 10 leads, three will convert and                             dealing with unregulated introducers who don’t have
        brokers will get one referral from it. But you are not going to convert                           any incentive to worry about the cold calling ban
        every lead. One of the main points about lead generation is if you are         because they are not the ones who are going to be in trouble if that is
        buying 10 leads and only three of them are converting, put the other           broken. The FSA will go after the regulated firm rather than the
        seven in the database.                                                         unregulated introducer, which it has no control over.
            You have paid for those leads so try and covert them by other                  The onus has to be on advisers to be careful about who they are
        means, by sending a mail-shot or emailing them. Don’t waste them               using and to check out how it works to satisfy themselves the provider
        because they don’t want a mortgage, they might want some insurance             is doing it in an ethical and legal fashion. If it is an internet-based
        later on, so it is working the leads through the database.                     provider try it out yourself by pretending to be a customer.
            Put in a procedure to run it like a business, like you would with a
        normal referral. Measure the leads and if they are not converting change                           Peter Ransome, sales and marketing director, Mortgage
        the supplier. Our business has three lead generation firms on its                                  Support Network
        preferred provider list –, Leadbay and Mortgageangels                                 Many of our members starting new in the business rely
        are the three we recommend our brokers use.                                                        on lead generation. We try and help them by ensuring
                                                                                                           any leads they generate are taken through a proper
                          Ian McIver, managing director, Whitechurch Network                               process to completion. The point is you are trying to
                          “From a network point of view we don’t care if our                               move away from blank leads and you have to look at the
                          members go to a lead generator for leads – all we are        referral system across those clients you are selling. I have had
                          interested in is the advice they give. That is essentially   appointed representatives on board who have been with us for four
                          what it boils down to. I am not a great lover of networks    months and have had to stop buying leads because they have their own
                          providing services like lead generation. I am more           little referral process already working.
                          interested in knowing when someone is using a lead                Lead generation is a means to an end. As a network we don’t
        generator, when they follow up the leads they give good advice.                provide leads – it is too much of a friction point because the quality of
            If any network is saying to its members it will only allow them to go      the leads you can generate can vary but people only remember the good
        to a certain lead generator what they are really saying is they get a back-    ones. We have contacts instead with lead generation companies we can
        hander from them. Lead generators have a service to offer and I say to         recommend our members to. These are Leadbay, and we
        my members use them or don’t use them but if you think they are no             are testing out LeadPoint. They are the three that work for our members
        good because the leads they give you are awful and they don’t go               and on whom we have received good feedback.

    May 2007 Mortgage Strategy Supplement                                                                                           5
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    The lead generation market is evolving and Mortgage Strategy gathered key players in this industry to discuss
    the issues facing it, including regulation and targeting sub-prime clients compliantly

    Attendees (from left)
    Simon Baker, operations manager, Leadbay Matthew Rhodes, mortgage consultant, New Leaf Financial Services Philippa Colley, managing director, Pure Mortgage Solutions
    Simon Glastonbury, director, SPACEmortgages Vanessa Blount, head, Nicola Tait, operations director and adviser, Indigo Mortgages John Elder, principal, The
    Help Group Warren Pinner, operations director, Mortgageangels
    Photography by Jason Andrews/UNP

    6                                  www. m o rtg a g e stra te g y . c o . uk                                                       Mortgage Strategy Supplement May 2007
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                                                                                                                   ROUND TABLE

    Mortgage Strategy: Has the lead generation market finally lost its repu-                        Matthew Rhodes: I run my business pretty much off
    tation for poor service and lack of provision of good leads?                                    Leadbay. I get lots of referrals but you have to under-
                                                                                                    stand how the Leadbay system operates. I get leads for
    Simon Baker: Yes, at last the reputation of bad service and provision of                        £6 to £8 from Leadbay. I ignore all the information in
    poor quality leads has decreased. Before Leadbay came into the market                           there, all I want is a name and a telephone number to get
    there wasn’t much choice and flexibility on the types of leads brokers                          in front of clients.
    could buy. We allowed brokers to pick the leads they were interested in.
    We have a large helpdesk so if brokers have questions about how the sys-       Colley: Leadbay is our main source for leads but we don’t get enough to
    tem works or problems with the service they can contact us during office       sustain the number of advisers we have now and we are trying to grow.
    hours and someone can talk them through any problems they have. Some
    small lead generators can’t provide that sort of service.                      Baker: There are seasonal variations with lead generation. Lots of peo-
                                                                                   ple look for leads in January and I can provide you with as many leads
    Philippa Colley: I don’t think there have been any changes in the lead         as you want but come April and May it starts to get a bit scarce on the
    generation industry over the last two years. Companies such as Leadbay         ground – that is down to seasonal demand. We do our best to ensure sup-
    have made efforts to improve but broker feedback shows they are frus-          ply and demand is balanced but when it does not balance you see prices
    trated and believe that the poor reputation of the industry is justified.      creeping up because there is more competition. But it is a fair and open
                                                                                   system run on the a level playing field and brokers can see the prices rise
    Vanessa Blount: It is not for lead providers to judge whether they have        when demand is scarce.
    got good service, it is for brokers to judge that. As far as is
    concerned we concentrate on fairness, transparency and innovation, and         Glastonbury: From a business point of view it is scary to use just one
    that is what we would like to be judged on. But we are not in a position       source of business and rely on that for your business model going for-
    to force people to judge us on that so we set our stall out and stand by       ward. From a broker’s point of view quality is a major issue but we also
    what we believe in and let our advisers know what to expect.                   fall back on that and say “the leads are not good, it is a quality issue”
                                                                                   when in fact it depends on the adviser and how they good they are. Some
    Simon Glastonbury: From a broker’s perspective, having used a num-             brokers I can give leads to and they will sell to everyone, others you can
    ber of lead generators, it is nice to have firms that are confident in their   give 10 leads to and they will pick and choose.
                                  abilities and are providing innovation. But          Quality is a difficult thing, but I would interested in what the lead gen-
                                   there are a lot of lead generators giving the   erators are doing to promote leads and attract brokers. I am a broker who
                                    sector an awful reputation.                    spends extensively on leads because it is all we do and I don’t see any pro-
                                                                                   motion for us. I would like lead generation firms to say – “Come on we
                                   Baker: I have spent a lot of time detailing     want your business and this is what we can do for you.”
                                   some of the things brokers should look out
                                      for when choosing a lead generator. I        Blount: Internet lead generation in its core form is a marketing initia-
                                          can’t force brokers to assess lead       tive and you should look at more than one source of marketing initiative
                                            generators by all the criteria I       in the year. In January, February and March we have huge volumes of
                                             think they should be looking for      leads. Whenever there is a sporting event or the sun shines there is a dip
                                              in a lead generator but I can        in leads and that is when you should be relying on your other initiatives,
                                               give advice. Things like            such as existing clients.
                                               whether the firm has a fair and         You should be looking at how much your leads are going to cost in
                                               transparent valid lead policy is    January and February and how much the gain in clients going to cost
                                              are key and whether leads            throughout the year and then set your marketing plan accordingly. But
                                              delivered in real time and are       none of us around the table can produce magic at Christmas. If you want
                                              exclusive are musts.                 a 1,000 leads on Christmas Day or 10,000 it is going to be difficult or the
                                                                                   price is going to be too high. We accept that and promote what we are,
                                              Colley: One solution would           which is a marketing initiative.
                                            appear to be that we go to lead gen-
                                           erators that provide good leads and     Rhodes: I have found taking leads on a drip basis of one a day more effec-
                                         have an innovative policy. But the        tive than buying five in a batch. I discovered, by helping some of my col-
                                         problem is that we can’t always sus-      leagues new to the industry to get going, that by taking one decent lead
                                         tain our requirements from one lead       a day leads to a lot of business to work with by the end of the week. I don’t
                                         generator and we have to look at          find dumping batches of leads on brokers effective at all.
                                         numerous sources – that’s where the
                                          frustration occurs.                      Warren Pinner: The industry has changed quite a bit over the last cou-
                                             If we could have one source that      ple of years. We try to work with brokers to show we understand their
                                        could consistently deliver the number      needs and can tailor a business that suits them. Mortgageangels is not
                                       and quality of leads we require we          an auction-type business, it is done by a quota of leads per month. Our
                                      wouldn’t need to go anywhere else and        main business model is a monthly subscription one and it is in our inter-
                                     rogue providers would fall by the way-        est to ensure the leads work for advisers.
                                     side. Unfortunately until that happens
                                    we will always be looking for other            Elder: It is too easy to appoint blame for the quality of leads coming

                                    sources of quality leads.                      through. It is important brokers understand the lead generator’s

    May 2007 Mortgage Strategy Supplement                                                                                  7
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                                                                                                                    ROUND TABLE

         model and how they can max-                                                                                     are trying to hook clients, and maybe
    imise the potential. Relationships                                                                                   that should be regulated in some way.
    have to become closer and there has                                                                                  Maybe it is an issue for the Office of
    to be a better understanding.                                                                                        Fair Trading or Consumer Credit Act
        A lot of brokers have stepped back                                                                               as opposed to an FSA one.
    from the internet and e-commerce,
    and have left it down to the likes of                                                                            Rhodes: In some other financial mar-
    Leadbay to determine where the                                                                                   kets they have exchanges which are
    leads are coming from. They don’t                                                                                recognised or designated and regula-
    understand the quality or the cus-                                                                               tion is light, so they can keep costs
    tomer journey and these are things                                                                               down.
    that need to be addressed as the mar-                                                                               I wonder if as a concept you could
    ket evolves.                                                                                                     have a central lead exchange with an
                                                                                                                     order-driven system, almost like a
    MS: How are lead generators meet-                                                                                stock market with different lead
    ing the charge of cold calling – should                                                                          providers put into this system and
    generators provide transcripts of                                                                                then it is a free market economy with
    calls to brokers and are they?                                                                                   buyers and sellers. The more volume
                                                                                                                     you get the better the pricing and the
    Colley: We have had seen conflict                                                                                more transparent the pricing. We
    regarding what our clients are telling us and what the lead generators           could have the London Lead Exchange.
    are telling us. We have been requesting transcripts because of the extent
    of the conflicts and have been refused them. I find that worrying because        Colley: Excuse me, some of us are much further up North.
    under the Financial Services Authority we have an ownership of due dili-
    gence and when there are areas where we feel unsettled transcripts               Rhodes: Okay, the Bradford Lead Exchange.
    should be accessible to us. We have to justify what we have done to
    ensure the leads given to us have come through a compliant route.                                 Colley: The principle of lead generators being regulated
                                                                                                      by the FSA is fantastic. But it is never going to happen
    Blount: This is dear to brokers’ hearts. All we can do is explain our client                      and the downside is the cost, which will get passed down
    process and the questions that are going to be asked because it is the                            to us and ultimately to customers. We have to do the due
    expectations of what will actually be delivered to brokers and what they                          diligence.
    can expect from the client that makes that sale even easier once the bro-                             More open access and assurances that the format and
    ker understands the client process. For me it makes good business sense          the ideology of regulation is open to us, so we are assured that is taking
    for the calls to be recorded so we can transcribe them if needed.                place should in principle be all that is required. I would like to see lead
                                                                                     generators come on board and help us do that so there is not going to be
    Colley: That to me is an excellent policy. If we know what has been asked        any pressure to go down the regulation route.
    and as long you can assure us that quality has been sustained there can
    be no criticism of the lead generator.                                           MS: How far off is a lead generator association – how would that work
                                                                                     or be of benefit and would it appease critics of the market?
                     Baker: Transcripts are important but from a compliance
                     point of view we have to look a bit wider. It is not just the   Colley: I would love to see it. It would make it easier for us brokers to
                     transcript of the final call before a consumer is put in        establish who is confident in what they do to make themselves a mem-
                     contact with a broker. You have to look in detail at the        ber of a body.
                     process from the initial contact with consumers all the
                     way to the end.                                                 Pinner: As lead generators it would endorse what we do and give confi-
        We do that. We launched a telephone-generated lead category recently         dence to brokers. It comes back to the FSA question as well. We have
    to give brokers the choice of these types of leads. They are welcome to          always advocated that we should be regulated in some shape or form
    come in and bid on those types of leads separately, but we will only allow       because that gives us more power and advisers the confidence to buy
    telephone-generated leads into Leadbay if the process from beginning to          leads. But equally, there are lead generators that have been created in
    end has been looked at and approved by two compliance officers.                  the last couple of years that are perhaps not as good as we are and test
                                                                                     the limits of what they should and shouldn’t do.
    M S : Should lead generation be regulated by the FSA – what benefits                 Unfortunately advisers who can’t afford to pay for leads get drawn to
    would it give the industry and what is the downside?                             them because of the cost, only to find they have paid for leads upfront
                                                                                     which aren’t delivered. If we were regulated in some way it would get rid
    Nicola Tait: I don’t think it is necessary. Lead providers shouldn’t be          of those types of lead generators. There would perhaps be a cost impli-
    giving advice so shouldn’t need to be regulated as far as I am concerned.        cation because we would have to take on costs to adhere to guidelines
                                                                                     we set ourselves. But the confidence to buy leads and get conversions
    Elder: It is indirectly policed anyway, isn’t it? The hook isn’t but the end     from them would grow. So it makes a lot of sense.
    catch is, so indirectly it is policed. And you are policing it at the funda-
    mental stage rather than at the interest stage.                                  Glastonbury: We all have the same goal so going towards an association

       But there is an issue regarding the messages going out and how they           or body whatever it may be, and having discussions like this would

    May 2007 Mortgage Strategy Supplement                                                                                 9
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         be helpful for us. It doesn’t have to be an official body, but an initial   basic standards rather then everyone trying to come up to yours. It is
    friendly meeting could turn into a great thing. Some new lead genera-            about a minimum level that us as brokers, us as consumers of your ser-
    tors can look attractive and I can see smaller brokers using them. I have        vices should be able to expect.
    tried a number of them and they are horrendous and give everyone a
    bad name. So if you set up some form of an association I would definitely        Blount: The issue here is that the devil is in the detail and it is only by
    be a supporter.                                                                  looking at the whole process, the journey clients undertake to become a
                                                                                     lead that you can understand whether that could be defined as a good
    Baker: The FSA has a lot of problems coping with its current remit, so I         lead and whether that company has good business practices. We have
    think regulation of the lead generation industry isn’t going to happen.          seen many of these companies come and go.
    As far as an association goes, at Leadbay I think we have high standards
    regarding what we consider to be a good lead and unless other lead gen-          Colley: With our money.
    erators are going to come up to our standards I am not sure I would want
    to be in an association with them. Potentially that association would be                        Blount: But look at what has happened to brokers who
    putting its seal of quality on that lead generator.                                             have had their money taken. They have probably been
        For members of an association to look at the process from beginning                         cold called and coerced into these leads that have been
    to end and ensure new lead generators are bona fide companies that are                          promised will convert at a particular rate. The broker
    going to deliver leads in a compliant manner is a big overhead. But I                           hasn’t spoken to another lead provider for a benchmark
    am willing to sit down with the other main lead generators to informally                        because if they had spoken to anyone round this table
    discuss what is best practice and maybe give out warnings of websites            they probably would have chosen not to go with the lead generator that

    we have come across recently that might potentially not be delivering            first phoned them up. I don’t see how we are going to stop that. Brokers
    leads properly.                                                                  have got to take some responsibility – if the leads sound too good to be
                                                                                     true they probably are.
    Colley: The problem with that is the advice comes after the event and
    we still have no course for redress. And what if it is one of those lead sup-    MS: Does the lead generation market meet the needs of sub-prime cus-
    pliers that we want the redress from?                                            tomers and how are lead generators targeting them compliantly or are
                                                                                     sub-primer clients largely out of this loop?
    Baker: Who do you want the redress from – from the body, where does
    it come from?                                                                                      Elder: It is hard to establish that because you don’t
                                                                                                       realise whether a customer is prime or sub-prime until
    Colley: The association could put some sort of sanction or pressure on                             they have applied. Also, when the individual is filling
    a company if they are doing something seriously wrong. Or membership                               in an application form if they are asked whether they
    could be revoked. If they don’t have membership surely that would send                             have got mortgage arrears or County Court judgement,
    the message to brokers that they shouldn’t deal with that company                                  they may remain silent on that question and prefer to

    because they haven’t been able to uphold the standards. It is about some         deal with it later on in the process.

    10                       www. m o rtg a g e stra te g y . c o . uk                                                      Mortgage Strategy Supplement May 2007
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                                                                                                                   ROUND TABLE

             But while they might think they are being clever they are creat-       our leads or filter out sub-prime. We are trying out a new business model
    ing a hurdle for us. This is where our proposition takes advantage of that      to qualify the leads before we sell them.
    because we have direct contact with all customers beforehand and can                We will do a mini fact-find to filter down and find out what the
    filter them and match them to a specific requirement of brokers.                requirements are and if they are sub-prime, adverse or just on the bor-
                                                                                    der line. If we can find out enough information before we transfer that
                      Tait: I don’t have much experience of sub-prime but I am      information to brokers it will give us an idea of what the client’s require-
                      getting more now and I know other sub-prime brokers           ments are. We will then speak to the broker to find out whether that fits
                      do a credit check almost immediately and get enough           their criteria and whether they want that lead. We can do it that way, but
                      details, which then qualifies the lead so they know it is     it is hard.
                      going to go somewhere.
                         Sub-prime clients need to speak to someone and there                          Glastonbury: My experience is that a lot of the time peo-
    is a massive market in sub-prime lead generation because those are the                             ple think they are sub-prime when in fact a mainstream
    people who are utterly lost. The average person with half a brain can                              lender would be happy to accept them because they have
    work it out – if they have three payslips and good credit that they might                          only missed a couple of credit card payments.
    not have to speak to a broker, although I hope they do.                                               And a lot of these leads are going to brokers who will
                                                                                                       only deal with the heavy adverse side of the market.
    Elder: It is important not to take advantage of those people by putting a       When they are paying four or five times more than the price of a stan-
    square peg in a round hole. If you have just bought x number of leads and       dard lead, i.e. £200 or £300 per lead, are they going to go to a lender they
    it has cost a lot of money to do that, the incentive is there to look at cap-   don’t know or have never used or will they put them with their sub-prime
    italising on your expenditure to increase your conversions which is             lender they have happily used for years and know inside and out? Who
    wrong. It should be fact-driven not profit-driven.                              is going to raise the question, certainly not the lead generator. Their com-
                                                                                    pliance department should raise the question if they are directly autho-
    Tait: And what is defined as a prime and sub-prime case? One little credit      rised and do their own compliance but who is asking them? People are
    hiccup that shouldn’t be sub-prime but now is, so it is an interesting mar-     buying sub-prime leads that are not necessarily sub-prime.
    ket and if I was a lead generator, sub-prime is where I would be heading.
                                                                                    Colley: Does that not mean that you are filtering out leads so you can
    Colley: My concern is that the costs of sub-prime leads dictate that those      charge more for it?
    buying them are purely out to increase profits. My experience has been
    that a lot of brokers targeting sub-prime leads are those using a limited       Pinner: No, because at Mortgageangels we just charge one price for all
    number of lenders. They use three or four sub-prime lenders so no mat-          leads.
    ter how bad the credit history of that individual they are not necessarily
    being given best advice.                                                        Colley: What about the lead generators taking the stance that as they’re
        I realise that is an issue for the FSA but it is being compounded. We       the ones taking the details at the outset. They can do quality checks
    tend to avoid buying sub-prime leads even though sub-prime business is          directly with the client, maybe eight to 10 weeks down the road regard-
    about 15% to 20% of our business. We won’t buy the leads, not because           ing whether they were happy with the service and if you have got a
    of the expense but we don’t charge our                                                                       repeated quality issue with a particular
    clients any differently and we still use                                                                     broker?
    whole of market sources and treat them the
    same. My worry is sub-prime clients                                                                            Pinner: We are incorporating that and it is
    require more of a duty of care. I know it                                                                      paramount because we only want to sell
    won’t happen but I would like to see lead                                                                      leads to advisers who get good scorings
    generators accept more responsibility over                                                                     with clients.
    who buys those leads.
                                                                                                                   Elder: Our model is fact-driven, not profit-
    Tait: It is hard, from a lead generator’s                                                                      driven. If we receive a lead and it is adverse
    point of view. How are you supposed to                                                                         or prime there is no financial advantage to
    know when someone is telling you they are                                                                      us to sending it to a sub-prime or prime
    sub-prime when they are not? Do lead gen-                                                                      route because the price doesn’t change
    erators favour whole of market brokers                                                                         either way.
    versus brokers that you know have limited                                                                         But there is responsibility on all lead
    panels?                                                                                                        providers to screen leads to avoid the
                                                                                                                   wrong lead going to the wrong adviser. It
                     Pinner: When we sign up                                                                       needs fine-tuning and tightening up.
                     advisers our registration
                     process obviously makes                                                                       Tait: Sub-prime can be harder to convert.
                     sure they are FSA compli-
                     ant and checks all the reg-                                                                   Colley: They are more time-consuming but
                     istration details with the                                                                    you are rewarded as advisers get higher
    FSA. What more can we do? If we know                                                                           proc fees, but it still has to be the right
    of certain practices that are not favourable                                                                   advice and my concern is we don’t protect
    maybe we can field that. We don’t filter                                                                       sub-prime clients.

    May 2007 Mortgage Strategy Supplement                                                                                 13
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    To avoid wasting time and money, brokers should ask potential lead generation partners some tough questions
    when it comes to compliance and the quality of the service they can expect

                                                                                                 any of the problems in the lead generation mar-
                                                                                                 ket are being addressed. An increasingly com-
                                                                                                 petitive market has helped in this, as has the
                                                                                        professionalism and innovative offerings of some of the
                                                                                        leading players.
                                                                                           Nobody disputes that there have been some disap-
                                                                     Stephanie Spicer,  pointments in the past about service from lead genera-
                                                                     supplements editor tors and despite the sharpening up of sourcing, some
                                                                                        leads still fail to make the grade.
                                                                         Seasoned brokers know the score and that they have a big part to play
                                                                     in the successful conversion of the leads they acquire. But for newer par-
                                                                     ticipants, education is needed to establish what to expect from leads and
                                                                     how to get the best out of them. The same goes for how they should select
                                                                     their lead generator and what they should expect from it.
                                                                         Lead generators are often asked by potential broker clients what their
                                                                     conversion rate is. One could argue that this is an unfair question. At its
                                                                     root is the suggestion that if the conversion rate is low, this is the fault
                                                                     of the lead generator. But it takes two to tango in the lead generation mar-
                                                                     ket and the hottest lead in town won’t convert unless the broker handling
                                                                     it does this properly.
                                                                         Simon Glastonbury, director at SPACEmortgages, gets a lot of leads
                                                                     for his company from Leadbay, among others, and is prepared to admit
                                                                     that the charge of poor quality can be an excuse on the part of brokers.
                                                                         “You can give leads to an adviser and it might be that he is having a
                                                                     bad day – if he’s got 10 leads and has had an argument with his wife,
                                                                     there’s bound to be a so-called quality issue,” he says.
                                                                         Simon Baker, operations manager at Leadbay, admits he doesn’t like
                                                                     answering the conversion rate question.
                                                                         “Conversion rate is basically a statistic and you know what they say
                                                                     about statistics,” he says. “Conversion rates given by leads firms are gen-
                                                                     erated and interpreted in different ways. When a broker is given a con-
                                                                     version rate they need to ascertain what period it relates to – two years
                                                                     is a long time on the internet so there’s no point quoting a conversion
                                                                     rate that relates to 2004.
                                                                         “Also, ask if the conversion rate given relates to appointments or
                                                                     written business. Some lead generators quote a 60% conversion rate but
                                                                     when you look into this they mean the conversion of leads to appoint-
                                                                     ments or even contacts, not to written business.”
                                                                         Baker’s advice to brokers is to ascertain the sample rate of any con-
                                                                     version statistics and which type of leads they refer to because some lead
                                                                     types convert better than others. He says it is far better to assess return
                                                                     on investment or profit.
                                                                         “There are many variables with internet-generated leads, not just in

    14                www. m o rtg a g e stra te g y . c o . uk                                             Mortgage Strategy Supplement May 2007
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    quality but also in cost, type, whether a fee is charged or not and finally     WHAT TO LOOK FOR IN A LEAD GENERATION FIRM
    the sales skills of the broker involved.”
        Baker gives the example of a fee-charging broker who buys 10 first-         G Is the lead generator you are interested in a UK-based company with a
    time buyer leads at £10 per lead then converts only one of them.                phone number that is answered by a person during office hours?
        “That’s a conversion rate of 10% which seems poor but the likely            Research the company you are considering buying leads from. Check
    return on a lead of this type including broker fee, proc fee and additional     it exists at Companies House and that the details given match the
    insurance sales is about £600, which is a return on investment of 500%,”        contact details on its website.
    he says. “The cost of acquisition is as important as the conversion rate.”
        Baker concedes the cost of dealing with all 10 enquiries has to             G Does the firm’s website look professional?
    be taken into account but says the example above still shows that               It is possible for a firm that has not invested in creating a
    conversion rate is not the only way to measure lead generation compa-           professional-looking website to deliver quality leads but mostly this
    nies’ performance.                                                              just indicates that a firm is out to make a fast buck.
        When it comes to managing expectations, brokers must decide how
    they will factor lead generation into their business. Vanessa Blount, head      G Are there any references available?
    of, emphasises the need for brokers to embrace the inter-          Ask other brokers, your network or a good trade body about your
    net, which produces many of the leads they go to lead generators for.           prospective lead firm. If nobody has heard of it, take care.
        “Brokers must consider the internet as a source of gathering clients,”
    she says. “For a small firm, internet-based lead companies are the best         G Are leads delivered instantly and are they exclusive?
    way of getting to market and if they don’t have a marketing initiative in       It is not in good lead generators’ interests to send leads to more than
    place that involves internet leads, they will be left behind.”                  one broker as this decreases the quality of leads. Also, check that
        But Blount does not lay all the responsibility at brokers’ doors.           leads are sent out instantly – an hour after a client submits an enquiry
        “Lead generators have work to do,” he says. “We must look at how we         is an hour too late. Ask your provider if it has the facility to send text
    are perceived and try and influence this because we must woo brokers            messages when leads are sent if you can’t always check your email.
    and show them the potential of internet-based leads.”
        To avoid disappointment when doing business with lead generators,           G What choice do you have with the leads you receive?
    there are certain steps brokers must take. If they have had problems with       Check whether you will have the flexibility to purchase leads on a
    invalid leads in the past, this is something brokers must get on top of         number of levels – both geographically and in terms of only buying
    from the outset when doing business with a new lead provider.                   lead types you are interested in receiving. Also, can you differentiate
        “You have got to look at lead generators’ invalid lead policies,” says      when it comes to loan sizes?
    Baker. “Read policies and understand what they mean to you when you
    are receiving the leads. What kind of leads can you pass back? If you can’t     G What obligation will you be under to buy leads?
    get in contact with a client should you have to pay for that lead?              Check the small print of any agreement you sign regarding your
        “Also, look at things such as express consent – is the right consent        liability when it comes to purchasing leads.
    being obtained before consumers submit their details? If you use a net-
    work, see what it has to say about lead generators and what has been said       G What is the provider’s invalid lead policy?
    in the press. Also, listen to what your peers are saying. Do some research      All lead generation companies should have invalid lead policies –
    before you start parting with money.”                                           find out what these are before signing anything.
        The lessons for going down the lead generation route for the first time
    or dealing with a new lead generator for the first time are common for          G How and when do you pay?
    brokers at whatever stage in their careers.                                     Paying by credit card or direct debit can offer some protection.
        “For advisers who are starting to buy leads – say, those who have been      Paying upfront is not recommended unless you are sure about a lead
    in the industry for a long time and are looking for a business top-up –         generator’s reputation.
    expectation is the hardest thing to pitch,” says Warren Pinner, opera-
    tions director at Mortgageangels. “When someone buys a lead for the first       G Where are the leads sourced and what is the provider’s compliance
    time they are unlikely to understand how things work. Education is              knowledge?
    needed concerning what internet leads are and how they are sourced. We          Lead generators need to demonstrate competence when it comes to
    can help advisers by educating them via forums and also by managing             compliance to protect their broker clients.
    their expectations.”                                                            Source: Leadbay
        Even brokers who use lead generators regularly think education
    should be a part of the process when it comes to dealing with leads, as
    not all brokers work in the same way.                                            Phillippa Colley, managing director of Pure Mortgage Solutions,
        “Brokers need training in how to handle leads,” says Matthew              agrees.
    Rhodes, mortgage consultant at New Leaf Financial Services, and a reg-           “My advisers are only given a name, an address, the client’s existing
    ular user of lead generation companies.                                       lender, an appointment time and date,” she says. “The idea is that they
        Rhodes has his own tried and tested approach.                             do a proper fact-find which normally takes two or three hours. After this,
        “I take leads from every category and virtually ignore the informa-       they should come back and spend a week putting their recommendations
    tion that comes though with them,” he says. “It’s down to us to talk to       together.”
    clients, warm them up and see them. I don’t like qualified leads or              Glastonbury emphasises that every broker’s model is different.
    appointments. The less intervention the better because the telephone             “We do all our deals over the phone and never see clients,” he says.
    conversation I have making an appointment is where half the deal is           “My brokers get as little information as possible. I don’t want them to
    done. I don’t want someone doing that for me.”                                know too much as a lot of information must come from the client.”

    May 2007 Mortgage Strategy Supplement                                                                                    15
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    With consumers’ use of the net increasing fast and the benefits web-based lead generation companies can now
    offer brokers, it would be a brave firm that ignores the potential of internet leads, says Vanessa Blount

                                                                                                obody could accuse the lead generation market of
                                                                                                standing still. It is almost unrecognisable from its
                                                                                                early days. When launched five
                                                                                        years ago it offered just one lead type – mortgages. Now
                                                                                        it offers 15 types split across 10 categories ranging from
                                                                                        mortgages to pensions.
                                                                      Vanessa Blount,       When it started, was one of a few play-
                                                                      head,             ers in the market and where pioneers tread, others fol-
                                                                  low. But as a broker, how can you ensure that this
                                                                                        marketing initiative will work for you? And after that,
                                                                      how can you ensure that the lead provider you choose will deliver the
                                                                      goods, or should I say clients?
                                                                          Before you embark on any marketing initiative you need to establish
                                                                      answers to the following questions:
                                                                      G What is my core business?
                                                                      G What is the aim of this initiative?
                                                                      G How much am I prepared to spend?
                                                                      G What catchment area am I prepared to travel and work in?
                                                                      G What return on investment am I likely to receive and over what time
                                                                      G Where can I attract the clients I am after?
                                                                      G How will I measure the success of the initiative?
                                                                          Once you have answered these questions you can decide what form
                                                                      of advertising and marketing is most likely to suit your needs. I recom-
                                                                      mend you dismiss traditional forms of marketing because if you choose
                                                                      the right lead provider, the advantages it will bring will far exceed other
                                                                      marketing methods.
                                                                          For example, you might not want to work outside your postcode. This
                                                                      could restrict your options when choosing where to place your adver-
                                                                      tising in a local paper. If this is the case – and it is with my local paper,
                                                                      in which there is no finance section – it means you will either have to
                                                                      advertise in the main body of the paper or in the property section. Nei-
                                                                      ther of these is particularly targeted if your core business is adverse
                                                                      mortgages, for example.
                                                                          But with leads from you can be specific. Dealing with
                                                                      us gives you the freedom to specify the area in which you wish to work
                                                                      and the type of lead you want – if you want adverse leads in Birmingham,
                                                                      that is what you’ll get. The hassle of finding leads is taken away, as
                                                             captures all the information needed to provide the leads
                                                                      you are looking for (see Graph 1).
                                                                          If you are yet to be convinced by internet-generated leads, consider
                                                                      this – between 2001 and 2006 the proportion of adults in the UK using the
                                                                      web increased by a quarter, from 48% to 60%, according to the Office of

    16                www. m o rtg a g e stra te g y . c o . uk                                               Mortgage Strategy Supplement May 2007
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    National Statistics. This growth cannot be ignored as more and more                                      WHAT PAALEADS.COM CAN OFFER BROKERS
    clients gain access to this medium.
        Once you accept the internet is a viable option for sourcing clients                                 If you want to write more business and not spend half your time
    you are left with two choices. You could set up your own website, includ-                                finding it, is the perfect solution for you.
    ing designing and hosting it, but these are time-consuming activities.                              is the exclusive retailer of leads and the only source
    The issue you are then faced with is – how do you drive prospective                                      of leads from but it also sources leads from
    clients to your website? And even assuming that you can do this suc-                                     other leading UK websites. This gives brokers access to the top
    cessfully, the question becomes – how do you turn a click into a client?                                 comparison website and a growing band of high quality third parties
        You need a capture form of some description or to find some way of                                   including This is Money, Your Mortgage and Fair Investment. It is
    making potential clients profitable. What happens when you want to go                                    by far the largest mortgage leads retailer with a large number of
    away for a weekend or you receive client details from someone in Edin-                                   regulated brokers and IFAs buying leads every day.
    burgh when you are based in Portsmouth? It’s hardly convenient.                                              Mortgage leads are not the only leads on offer. With a portfolio of can bring benefits by providing client details in a location                                15 products such as loans, term assurance, private medical
    that suits you.                                                                                          insurance, savings, investments and pensions there are leads
        Because has one of the most varied lead category                                        available to buy whatever business you are in.
    options, it can ensure you get the lead type most suited to your business                           believes in making things simple. It makes no
    model whether this is loans (secured or unsecured), or term assurance.                                   bones about its sources and has designed its business around the
    These are differing product sectors but all lead types have a relatively                                 needs of brokers. Brokers can select the type and location of leads,
    quick turnaround on investment. This can have an effect depending on                                     there are no lock-in terms and buyers only pay for leads when they
    your present business circumstances (see Graph 2).                                                       get them.
        When looking at mortgages, more choices are available with                                               Brokers have various options. They can opt for a standard’s most recent innovation – Qualified by Telephone. This                                      package which allows them to buy leads at a fixed price or use the
    product will deliver clients straight to your phone but what does this                                   bidding system. Auto-bidding makes life even easier. Brokers
    mean, and is it good for your business? The plus points are that QbT will                                can select the maximum they are willing to pay for each lead.
    do what it says on the tin and deliver clients to your phone. It also means                     will only charge £1 more than the next highest bidder.
    you do not have to trawl through 10 internet leads to convert three, thus                                For example, if a broker chooses to pay £75 for a lead yet the next
    saving you time and resources. conversion rates are typi-                                    highest bid is £45, the price of that lead to the winning broker will be
    cally six or seven out of 10.                                                                            £46 rather than £75.
        So is QbT the answer for everyone? Not necessarily. For example,
    consider a new intermediary looking to build a client bank. It could be
    better for that firm to take traditional internet leads although the con-                                GRAPH 1
    version rate is likely to be substantially lower than QbT leads at first.
    This way they will gather client email addresses that they can use to mar-                              30
    ket to in the future.                                                                                   25
        Where else do you get a free medium to continue to market to prospec-                               20
    tive clients? Certainly not from traditional marketing techniques. This                                 15
    means that in the longer term return on investment is likely to be much                                 10
    higher than with QbT. This highlights that return on investment and
    thinking about the aims of an advertising campaign are important (see
















    Graph 3).













        In summary, brokers must carefully consider the business model that



    suits their business and realistic timescales in which to achieve the
    growth they expect. They must allocate a budget and measure response.                                    This graph shows the various lead prices you can typically expect to pay in specific areas with a
    There are many marketing methods available but it would be a brave                                       proven conversion rate of one in 10 on average.
    firm that ignores the power of internet-generated leads.

      GRAPH 2                                                                                                GRAPH 3
      50                                                                                                    £70.00
      30                                                                                                    £40.00
                       ■ % Number of Leads
      20                                                                                                    £30.00
                       ■ Average Lead Value
                                                                                                                                                  ■ QbT
      10                                                                                                                                          ■ Internet
      0                                                                                                          £0
           Apr 07 May 07 Jun 07 Jul 07 Aug 07 Sep 07 Oct 07 Nov 07 Dec 07 Feb 07 Mar 07                                 Sep           Oct           Nov           Dec            Jan           Feb           Mar
      This graph shows typical lead prices for the term assurance by month for the last year. You can see    This graph shows the price when comparing traditional internet leads with the new QbT service
      that as lead volumes decrease, average price increases, obeying the laws of supply and demand.         offered by

    May 2007 Mortgage Strategy Supplement                                                                                                                                       17
MS_p18_piecharts_07.05.07_ed             2/5/07     09:53      Page 18


    Mortgage Strategy’s exclusive survey on the lead generation market shows that brokers generally value the
    business they generate from leads although they say their quality has deteriorated over the past two years

    Q1: What proportion of your                                                    Q4: Would your business be
    business comes through                                                         sustainable without leads
    lead generation?                                                               from lead generators?

    I Up to 25%              60%                                                   I Yes                    60%
    I 25%-50%                40%                                                   I No                     40%
    I 50%-75%                 0%
    I 75%-100%                0%

    Q2: Is this an increase or                                                     Q5: Should lead generators
    decrease on two years ago?                                                     provide brokers with
                                                                                   transcripts of calls to
    I Increase by 25%        40%                                                   potential leads?
    I Increase by 50%        40%
                                                                                   I Yes                    60%
    I Increase by 75%        20%
                                                                                   I No                     40%
    I Increase by 100%        0%
    I Decrease by 25%         0%
    I Decrease by 50%         0%
    I Decrease by 75%         0%
    I Decrease by 100%        0%

    Q3: Is the standard of leads                                                   Q6: Is the market for leads
    available through providers                                                    on secured loans of
    better or worse than two                                                       sufficient quality and
    years ago?                                                                     standard?

    I Worse                  80%                                                   I No                    100%
    I Better                 20%                                                   I Yes                     0%

                                     0        20       40        60     80   100                                  0    20      40      60       80     100
    18                      www. m o rtg a g e stra te g y . c o . uk                                                 Mortgage Strategy Supplement May 2007
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    Q7: What other products                                                     Q9: Is competition from new
    would you be interested                                                     lead generators in the
    in getting leads on?                                                        market a good or bad thing?

    I None – I just want leads                                                  I A good thing – it will keep
      on mortgages            100%                                                quality high and leads
    I Motor insurance           0%                                                competitively priced      60%
    I Pet insurance             0%                                              I Bad thing – the focus will be
                                                                                  too much on price and
    I Critical illness insurance 0%
                                                                                  quality will slide       40%
    I Life insurance            0%

    Q8: Are leads priced                                                        Q10: Should the lead
    sensibly?                                                                   generation market be
    I No, unjustifiably
      expensive                 60%                                             I Yes                      60%
    I Yes, the price is right   40%                                             I No                       40%


             he Mortgage Strategy survey on lead generation generated 1,500         A contentious issue has been broker access to transcripts of calls
             responses from brokers. Overall, brokers heralded the impor-       to potential leads. When asked if lead generators should provide bro-
             tance of lead generation although there were some points of        kers with such transcripts, 60% say they should, while 40% say no.
       dissension.                                                                  Another gripe in the industry has been over leads for secured loans
           A quarter of the business of 60% of broker respondents to the sur-   and whether these are of sufficient quality. Rather emphatically the
       vey comes from lead generation, while 40% of brokers see 25% to 50%      response from our brokers is no, 100% no.
       of their business come this way. For 40% of brokers the amount of            When brokers are asked if they would be interested in leads from
       business through leads has increased by 25% on two years ago and for     other sectors such as motor, pet or critical illness or life insurance,
       another 40% of brokers business from leads has increased 50%.            100% of brokers say they only want leads on mortgages.
           For 20% of brokers the increase in business from leads has been a        When it comes to the pricing of leads 60% of brokers feel they are
       significant 75%. The fact that no brokers using lead generators have     unjustifiably expensive, while 40% feel the price is just right. Of
       seen their business from this source decrease shows how important a      course, what could help this is more competition in the market, as
       route to new clients it has become.                                      when brokers were asked if competition from new lead generators was
           Of some concern is that the standard of leads available is worse     a good thing or a bad thing, 60% say it’s a good thing because they feel
       than it was two years ago, according to 80% of respondents. Only 20%     it would keep quality high and leads competitively priced. Just 40%
       thought the standards were better.                                       of brokers feel competition is a bad thing in that it could mean the
           While brokers may be increasing the amount of business they get      focus would be too much on price and quality would slide.
       from leads, they are not relying on lead generation for the success of       Finally, the running debate in the lead generation market is over
       their business. When asked if their business would be sustainable        whether it should be regulated or not, with 60% of brokers saying it
       without leads from lead generators 60% say it will, while 40% would      should be regulated and 40% against regulation.
       struggle, saying business would not be viable without leads.                                                                 By Stephanie Spicer

    May 2007 Mortgage Strategy Supplement                                                                              19
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    An exciting model for the lending market from The Help Group will create new business for finance providers
    through the sharing of media spend and knowledge

                                                                                                     etting new customers through the door is the key
                                                                                                     objective for most businesses. This is especially so
                                                                                                     in the financial services sector. As more compa-
                                                                                              nies are offering financial products directly to the con-
                                                                                              sumer, this has created a competitive marketplace. In
                                                                                              turn, the cost of acquisition is on the increase.
                                                                            John Elder,           Help Media Solutions has created an innovative
                                                                            principal,        approach. Its main objective is to reduce the cost of
                                                                            The Help Group    acquisition for companies that operate in different sec-
                                                                                              tors of the same market, while at the same time increas-
                                                                            ing conversion. The principle is based on a coalition. Companies
                                                                            maximise the potential of their media campaigns to obtain new cus-
                                                                            tomers by working together through marketing a consumer-facing super-
                                                                            brand, The Help Group.
                                                                                 In this way, a broad spectrum of customers can be targeted because
                                                                            the members of the Group cover the vast majority of the financial mar-
                                                                            ket, from prime lending through to debt help. It is an all-encompassing
                                                                            proposition that has benefits for all sectors of the loans market, includ-
                                                                            ing first mortgages and individual voluntary arrangement firms.

                                                                            The super-brand difference
                                                                            The Help Group is not a lead generator, where leads are paid for without
                                                                            knowledge of the customer’s journey. Nor is it a comparison site, where
                                                                            position in the rankings and advertising is purchased. In effect, it is a
                                                                            match-making service for the financial services industry, where con-
                                                                            sumers benefit.
                                                                                When a customer applies for a lending product, The Help Group car-
                                                                            ries out a full fact-find to establish their needs and determine where they
                                                                            sit in the credit hierarchy. They then pass the individual on to a mem-
                                                                            ber company seeking this type of customer. The benefits are significant
                                                                            for both consumers and member companies. Both save valuable time
                                                                            searching for each other in a crowded marketplace, with costly and time-
                                                                            wasting mismatches avoided.

                                                                            Pay only for leads that meet your criteria
                                                                            Money normally spent on individual marketing campaigns may yield a
                                                                            large number of leads, but a proportion won’t fit the company’s target
                                                                            customer profile and will be discarded. With the new model, member
                                                                            companies only pay for leads that meet their criteria.
                                                                               For example, if a bank normally pays £10,000 to advertise and only
                                                                            20% of the willing applicants fit its criteria, it would be fair to say that
                                                                            £8,000 has attracted the wrong kind of customer. The Help Group model
                                                                            enables the bank to pay nearer £2,000 of the advertising costs while a sig-

    20                www. m o rtg a g e stra te g y . c o . uk                                                     Mortgage Strategy Supplement May 2007
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    nificant portion of the remaining £8,000 is covered by the other sectors         THE BADGER BEHIND THE SUPER-BRAND
    that want the applicants that didn’t fit the bank’s profile.
        Take this illustration of a bank that normally spends £10,000 per                           The Help Group is delighted to welcome Ruth Badger
    month on marketing. This may well generate as few as 100 useable leads                          from BBC television’s The Apprentice. Ruth sees great
    through to completion. So if The Help Group had five companies operat-                          potential in The Help Group’s offer. Having worked in
    ing in different sectors of the same market, with an overall combined                           the financial services industry for many years, she is
    spend of £50,000 they could each expect to acquire 500 good, useable leads                      keen to support the brand.
    for a similar cost.                                                                  Ruth joins as a professional involved in developing the business,
        At first glance, this appears to be a basic 5 x multiplier. But when you     and not as a celebrity figurehead. She is synonymous with being
    break it down and realise there is little cost attributed to the additional      down to earth and trustworthy, key values adopted by The Help
    leads, it becomes a cost-effective model that cannot be ignored. Where           Group that its target audience will recognise and appreciate. What
    else can you look to offset about 80% or more of the risk when you put           does Ruth see as the major strength of The Help Group?
    money into a marketing campaign?                                                     “Getting new customers through the door is the key objective in
                                                                                     most businesses,” she says. “But it’s just as critical to attract the
    No more wasted leads                                                             right customers. The Help Group is a matchmaker, matching
    The Help Group has developed a state-of-the-art Decision Tree Matrix             customers to the finance companies they want, and matching finance
    that members help to evolve by defining their own products. Each mem-            companies to the customers they want.”
    ber’s criteria are carefully defined. Once the Group has identified an               “What’s more, Group members only pay for leads that meet their
    applicant’s circumstances, it can direct them to a suitable provider.            criteria,” Badger adds. “For example, let’s say a bank normally pays
                                                                                     £10,000 to advertise, but only 20% of the willing applicants fit their
    Accurate, honest, transparent                                                    criteria. This could mean that £8,000 has attracted the wrong kind of
    Data reliability is perhaps the biggest challenge a product or service           customer. The Help Group model pools marketing resources from
    provider faces when using lead generators and comparison sites. Data is          companies in different sectors of the same market.
    supplied from a variety of sectors and not all sources can guarantee the             “This would enable that bank to pay nearer £2,000 of the
    best quality data as the customer journey has not been determined.               advertising costs while other members who want those customers
        To ensure data reliability, The Help Group employs a specialist team         could cover a significant portion of the remaining £8,000 – a great
    of advisers who are trained to glean a full and accurate financial history       step forward on the road to treating customers fairly.”
    from applicants. This is key to avoiding costly mismatches between cus-
    tomer and lender. Their focus is to provide first generation leads.
        Costs are shared out between individual Group members on a clear             WHY THE HELP GROUP IS DIFFERENT
    and fair basis and 10% of the media spend is accounted for as The Help
    Group profit. The total marketing campaign costs are divided by the total        To the customer, it is the guiding hand of the financial world, the
    number of leads generated. They are allocated to members who are only            consumer champion that provides them with the best match in the
    invoiced for the proportion of leads they receive.                               market.
                                                                                        To the financial services sector, it aims to reduce the cost of
    The advantages of becoming part of The Help Group super-brand                    acquisition and increase conversion.
    G Targeted leads                                                                    It works on the premise that companies operating in different
    G Increase in conversions                                                        sectors of the same market work in coalition. The aim is to maximise
    G Pooled resources and intelligence                                              the potential of their media campaigns and intelligence to obtain new
    G Media spend managed similar to investment portfolio                            customers under one umbrella brand.
    G Creative and media management                                                     The Help Group is not a lead generator. The Help Group is not a
    G Decrease in delinquents                                                        comparison website. The Help Group is the collaboration of financial
    G Reduced back-office requirements (for failed applications)                     service providers joining forces to create a more effective lead
    G Greatly reduced customer disappointment                                        generation model to develop a super-brand.
    G Longer-term customer loyalty
    G Understanding of customer journey
    G Cross-sector marketing                                                         TRADITIONAL LENDING MARKET                   THE HELP GROUP MODEL
    G Huge reduction in call centre costs
    G Reduced marketing risks
    G Access to new advertising media                                                            20%                                        20%             20%
                                                                                               USEABLE                                    USEABLE        LEADS FOR
        Other markets are also showing interest in the proposition, includ-
                                                                                                LEADS                                   LEADS FOR YOU     SECTOR B
    ing insurance and utilities. And when that interest starts to broaden, the
    opportunities for cross-selling mean this model is more lucrative. So,                                                                20%                    20%
    members of The Help Group can look forward to reducing their costs                                 80%                             LEADS FOR               LEADS FOR
    instead of boosting someone else’s profits. The leads they acquire will be                        WASTAGE                           SECTOR E               SECTOR C
    first generation. They will know where they came from and know the                                                                             LEADS FOR
    nature of their applicants’ needs and credit status. Why not team up with                                                                       SECTOR D
    The Help Group and be a part of the UK’s newest super-brand?
                                                                                          Pay for 100%, use 20%                         Pay for 20%, use 20%
                                    To hear more, contact Emma Lamb or Neil Gee on   Illustration based on a traditional market   Illustration based on a five-sector market
                                    08450 55 66 99 or visit

    May 2007 Mortgage Strategy Supplement                                                                                                  21
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    A WILL...
    Building a relationship with a firm of will writers can offer advisers a great opportunity to generate a supply of
    good quality leads and get access to clients who need their services

                              ost of us engaged in any form of sales are always      life assurance, moving plans, cheaper mortgage costs and home improve-
                              looking to find new clients, especially when we        ment plans, mortgage or remortgage opportunities (including time scales
                              are selling services such as insurance, mort-          for implementation), reducing monthly expenditure or debt consolida-
                     gages and investments. Many professions have a need to          tion and many other areas.
                     get in front of the right types of clients at the right time.       We cannot and do not advise in these areas but we do note that advice
                        But who is the right type of client? Most of us would        is needed. This is what makes these clients so valuable to our associate
    Neal Astbury,    probably agree that it would be a client who has the need       companies. We have information that covers almost every area of the
    director,        for our products or services and the ability to proceed         client’s financial planning.
    Heritage Wills   now or in the near future with buying our products                  With the consent of our clients we arrange for our associate mortgage
                     and services, and if possible one who is sitting in front       or financial advisers to call the clients at a mutually agreed time. This
    of us right now.                                                                 gives clients the chance to get their finances in order and helps build a
        The next logical question is how do we get in front of more of these         client consultant bond from the first meeting because there are no sur-
    right types of clients and this is where working with an established will        prises as the client and the consultant are aware of the clients’ needs.
    writer can be of great benefit.                                                      What do will writers ask in return? Arrangements may consist of a
        Working with a firm of independent will writers who only specialise          payment for leads or will leads given in return for mortgage leads.
    in the writing of wills and trusts and do not get involved in financial ser-         Some may arrange to have an introducer status with a broker and be
    vices or mortgages can offer a great service to professionals working in         paid commission from business that is written by the financial adviser.
    financial services. This is because will-writing firms have a huge client            Buying leads from lead sales companies or from the many internet
    base that creates a large source of new lead generation.                         sources may be a way to get new leads. This can be expensive and some-
        When we arrange wills for our clients, they will discuss with us             times it is a lottery whether the lead turns out to be a good lead or a bin
    details of the friends and relations they wish to name as executors and          liner.
    guardians to the will.                                                               So it may also be worth considering building a working relationship
        When our forms are completed we have a natural opportunity to con-           with a will writer who may not have an endless supply of leads but who
    tact the executors and guardians. We always ask our clients for permis-          could generate a supply of good quality and qualified leads.
    sion to contact their friends and
    family, executors, trustees, guard-        WITNESS LEADS
    ians and anyone else mentioned on
    the instruction form or in the will.       Another source of leads                                                        people will most probably
        The majority of our clients are        comes from the will itself in                                                  need your service. Asking for
    happy for us to make contact with          the form of witnesses. All the                                                 referrals is a tried and tested
    these people and it gives us a chance      wills we write are sent out with                                               way to get to new people who
    to confirm their understanding of          our notes explaining how a                                                     need your services.
    what they need to be aware of as an        will should be witnessed and                                                       This should give your
    executor, trustee or guardian.             once this has been done it                                                     business a boost and help to
        It also gives us a prospect to tar-    provides at least two more                                                     keep you in front of the people
    get for a will appointment and this        potential clients for us to                                                    who need your services.
    is why we have such a large client         contact.                                                                           If you follow this system of
    base.                                          Helping your business                                                      working you will have a
        It is easy to see that a will pro-     grow will depend on how                                                        constant supply of leads that
    duces several new selling opportu-         many people you are talking                                                    will soon see you building a
    nities. The will instruction form          to. It is worth remembering                                                    strong platform for the growth
    covers many areas of financial plan-       that seven out of every 10                                                     of your business.
    ning such as family protection or

    22                       www. m o rtg a g e stra te g y . c o . uk                                                      Mortgage Strategy Supplement May 2007

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