Wake-Up Call: Why are Retail Originators at 2.5 units per month?

Recent numbers from the MBA and Stratmor show that the average production per originator has fallen dramatically from the refinance era to a new low of 2.5 units a month. Bank originators have a slightly higher average primarily because they receive leads from the company. These numbers are a wake-up call to lenders that improvements need to be made quickly or fatal financial consequences will occur. Both banks and independent mortgage bankers are facing the reality of new marketplace dynamics that will not support status quo practices. It is clear that lenders and originators must change their selling practices. So what does it take to transform lackluster sales performance?

Certainly, many management teams are counting on new technologies that speed up the closing and processing in mortgage origination. Making the lending process fast, easy and painless is fundamental to improving the customer experience. But the issue of lead generation is still left up to the originator. Someone needs to influence buyers and referral sources and that is where the problem lies.

When helping sales organizations improve performance, I see a chronic lack of prospecting by originators and failure on the part of managers to ensure that prospecting activities are being done.

The lack of prospecting by originators is due to two issues. First, producers must have the sales talent required to excel at prospecting.  Being a self-starter, disciplined and having exceptional   relationship skills are among the personality characteristics necessary for sales success. The truth is that not everyone is matched for the originator position. There is no question that prospecting is hard and can be an emotional roller-coaster. The good news is that this issue can be fixed by identifying and hiring sales candidates who possess these innate traits.

Obviously, just because an originator has the right characteristics doesn’t mean that he or she knows how to prospect in today’s new world of selling. Sales training on effective prospecting techniques can make a difference but the new learning must be reinforced so that it becomes second nature.

Now, to address the first-line manager’s role in overseeing prospecting efforts. In mortgage banking, pipeline management is a part of a manager’s position, but too often it is used as an excuse for why the manager does not have time to train or coach their staff on the latest sales skills. Deals definitely need to be looked at and monitored but with volume being lower in the current marketplace, shouldn’t managers spend their time on high-value activities that have an exponential impact on performance?

The industry has a long history of overvaluing producing managers’ selling skills and undervaluing their managing skills. This has left us with a total sales performance that is currently dismal and alarming. An average production of 2.5 units per loan officer is not only unprofitable but it will not generate enough revenue to make the technological investments needed for a company to thrive in the future.

While the go-to strategy of many sales organizations is to hire more top producers, the reality is that there are not enough of them out there. Waiting for a top producer to change lenders can take a month of Sundays as every recruiter knows too well. A strategy that focuses on recruiting superstars who will turn low volume around for a sales organization is like a football executive hoping to trade for Tom Brady. The likelihood of this coming to pass is slim to none.

So, we need to get more from our “A & B” players and that only happens from training and coaching efforts. While there are “A & B” players that don’t want to be coached and trained, the ones that do can make all the difference to a sales group’s performance.

Isn’t it time that we require first-line managers to train and coach? When there is nothing in the pipeline, it seems ridiculous having managers spending their time on pipeline management. Now is the time to get serious about improving sales skills — especially prospecting — and making managers oversee originator’ prospecting efforts.