Do you have a lead problem?

Do you have a lead problem? Or could it be something else? 

Most people want more leads, and let’s face it, more leads are generally a good thing. However, if you don’t know your three key ratios, it may be costing you, big time. 

A typical mortgage broker with a referral-based business will convert about 50% of their leads into applications, and they will then convert about 50% of those applications into closed loans. 

Leads × 50% = Applications; Applications × 50% = Closed Loans. 

Another way to think of this is that about 25% of leads will eventually be converted into closed loans. 

These ratios can vary, depending upon the skill of the mortgage broker and the quality of the leads. 

I believe it is important to know these ratios, so you can decide where you should spend your limited time and energy. 

Let me demonstrate with some simple math,based on the above ratios. 

100 Leads → 50 Applications → 25 Closings

Now, let’s assume that you increase the number of leads by 20%, and everything else remains constant. 

120 Leads → 60 Applications → 30 Closings

This translates into five more closings a month. 

That’s not bad, but how would an increase in the lead-to-application ratio of 20% affect the closings? 

100 Leads → 70 Applications → 35 Closings

That is 10 more closings on the same number of leads. 

Finally, what would happen if you increase your application-to-closing ratio by 20%?

100 Leads → 50 Applications → 35 Closings 

I like to review this with brokers because, maybe it isn’t a lead quantity problem, but maybe it’s a lead quality problem. 

Or perhaps it is a conversion problem?

More leads doesn’t always equal more money in your pocket. 

If you want to be a master of your business, I recommend tracking these ratios, and then focusing on improving the weakest link. 

I recorded a short podcast where I break down these three ratios in more detail: 

→ How to Analyze Your Business Using 3 Important Ratios (13mins)

I would love to hear which ratio you are going to focus on for the rest of the year. Comment below!