Last week, while visiting clients in Dallas, I shared national information regarding the performance of originators in our industry. The data shows that the top 10 percent of producers at any mortgage company originate a whopping 39 percent of the volume. (See attached slide). The remaining 90 percent originate the rest of the volume. In other industries, there is growing evidence that the 80/20 rule is also being replaced by a smaller number of producers.
As if these numbers aren’t disturbing enough, the percentage of originators making budgeted goals at many firms is less than 60 percent, even though sales management often adjust individual sales quotas in order to match the expected selling potential of originators. Sadder still is that most companies don’t track this measurement of how effective their sales managers really are. In other words, managers dumb down the budgets to have more originators make the goals.
Obviously, these numbers emphasize the importance of recruiting top producers. The problem is that top producers don’t easily leave their current employers. Unless an event occurs (e.g. the lender exits the business), it may take a company 12 to 18 months to recruit a top performer. Sometimes, it can take three to five years before a top sales professional will move on to a new lender.
Because of these recruiting challenges, the reality is that most companies are depending on middle-tier players to reach production goals. Middle-tier producers are what they are—especially if they have been in the industry for a long time. They are comfortable with their current income and a new lender is not going to see a different rate of production. Only a declining interest rate environment will make a change possible. When rates rise, all bets are off with these types of producers.
This situation reinforces why having a rookie program is more important than ever. Attached is a PDF of key rookie program elements. We have conducted many of these programs for lenders and I would be glad to discuss it with you.