The Hard Reality of Low Production Numbers

A recent analysis of loan officer performance for a mid-Atlantic state in 2016 revealed shockingly low production numbers. According to the data, the state had approximately 9,000 originators but only 300 originators produced $10 million in annual volume. In the past, $10 million in annual volume was not considered exemplary performance but in a refinance-driven year, many originators cannot even seem to reach that production level. Of course, many of the originators could have been producing managers, processors or part-timers and may not have actually originated, but the fact remains that 3% or a very small number of originators are generating $850,000 monthly volume or more. This data is unsettling to say the least. What does this mean as the mortgage marketplace shifts to purchase money with interest rates on the rise?

Since refinancing will inevitably be a smaller portion of the marketplace in 2017, many sales teams will be in for a tough time in the new year. Senior managers will need to determine whether low production is rooted in originators who lack consultative selling skills or those who lack the innate sales talent needed to succeed. While skills-deficient producers can benefit from sales training, originators without sales talent should be replaced or moved into other positions. In my view, addressing the sales talent issue is priority number one for all sales organizations.

So what are the most common reasons companies are not addressing mediocre or underperformers? In my sales consulting practice, here are the scenarios I frequently encounter:

• The decade-long refinance environment has enabled companies to delay facing tough decisions and enforcing performance standards that would generate a profit. Many companies have performance standards but never enforced them because the need for warm bodies to handle the refinance volume was so urgent. As a result, a refinancing marketplace has masked order-takers where producers appear to be matched to self-sourcing but really are not. Order-takers spend time with daily pipeline management tasks but will not prospect for new business, even if they are provided with training. Managers who fail to admit that a producer is not a match for a position will pay the price in the long run in terms of lost referral business and revenue.

• The false belief or justification that a new CRM or better products will prompt experienced but underperforming originators to boost production. This is wishful thinking that rarely happens because the core issue is caused by the individual’s lack of sales talent, not external circumstances or factors. I like to call this the “Jay Cutler complex.” Jay Cutler, the Chicago Bears quarterback, has been recognized by many as overrated when you look at his performance numbers, but he is paid like a top-tier quarterback. I think too often when managers evaluate sales talent, their emotions dominate because they want the new employee to succeed but they are not objective and are afraid to be tough in the interviewing process.

• Finally, the lack of willingness to accept or recognize that large sales forces with uneven messaging and performance results are the biggest roadblock to meeting customer demands in the new marketplace. The trend line is clear that smaller but better quality sales teams should be the new mantra at every company. Creating a better sales force requires an investment in sales and management training as a minimum. It requires rookie salespeople who can use technology and are willing to follow a structured sales process. The change to smaller staffs has been seen in other industries, especially communications and technology but has not been widely accepted in mortgage banking. Why? Many believe their sales force is “not broken so why fix it”; “it has always been done this way;” or “time is on our side.”

Just look at the recent Macy’s store closings where the retail giant is finally admitting that Amazon has changed retail space forever. Macy’s has tried to play catch-up by making incremental changes but obviously they have not been enough.  Mortgage banking is in a similar situation where the future is evident. Quicken’s phenomenal rise to the top in market share and customer satisfaction by structuring each part of the sales process is the winning strategy. Quicken’s biggest claim to fame is that they leave nothing to chance in the sales process. Their originators must contact a lead within a certain timeframe are they won’t be working there. A lender who thinks a laissez faire sales force strategy will continue to be successful is dreaming. Customers have spoken: they want to see appropriate options for them presented by knowledgeable salespeople; they want to be updated in the mode of communication tools they use and they want continuing advice on their largest investment — their home.

Is your sales force up to the challenge of prospecting for today’s customers and referral sources? The hard decisions need to be made this year as the marketplace is changing rapidly.