Two Sales Metrics that Really Matter in Origination

This year, a projected 20% reduction in volume is forcing many sales organizations to address difficult issues in order to improve sales results.  Traditionally, mortgage firms have attempted to increase production by hiring more originators. Others are counting on technology to make the difference in reducing costs and generating more business. In my opinion, the elephant in the room is senior management’s failure to hold the sales force accountable through metrics that can measure effectiveness in originating loans. The two metrics that I want to discuss are lead yield and activity/outcome analysis.

Lead yield is a sales metric calculated by dividing sales revenue by the number of leads generated. It helps determine which customer segments are most valuable and can inform the salesperson where to spend his or her time. Whether an originator is working bank customers or provided leads by their company, understanding lead yield is critical for success in loan production.

So why does lead yield need to be measured when sales organizations have commission-based producers tasked with generating their own business? Historically, self-sourcing has been the originator’s responsibility but this is changing to where a few salespeople generate their own volume and others need help in the form of bank customer leads or purchasing from a third-party lead generator.

Too often, at mortgage companies where leads are provided, the originator cherry-picks who they want to contact and ignore the rest. This is a colossal waste of money as lenders are paying for expensive leads and not generating any revenue from them.

Some originators believe this is the company’s problem but in reality, it underscores one of the biggest differences between the best originators and everyone else. Top producers diligently track where their business is coming from so they can better target these segments. Average originators go after low-hanging fruit and don’t have a strategy on where to direct their efforts for maximum impact. That’s why lead yield is so important.

Similarly, monitoring sales activities and their correlation to outcomes is essential. As any originator will tell you, producers are busy all day long. Top sales professionals have identified the right mix of sales activities to achieve the outcomes that they want. Whether the outcome is a certain income level, lifestyle or reputation in the community, they know what activities need to be accomplished for them to reach their goals. On the other hand, average originators are often uncertain about which specific actions will help them improve sales results. Successful originators develop detailed action plans that dictate what they need to do in order to have a certain number of active referral sources.

Both lead yield and activity/outcome analysis are core drivers of predicting what volume will look like for an originator. When management teams ignore metrics and direct managers do not hold salespeople accountable, it is evident that a sales group is not well managed and their results will reflect it.