There is a beautiful thing about numbers. An old philosopher named Pythagoras summed it up with “number rules the universe”. Basically, numbers can tell you what you need to know about your business. But what numbers should you track? There are only four numbers you need to know. The question is what to do about what they show you.

So I was talking with a loan officer who said he needed more leads. I asked him to show me how many leads he had coming in – that’s the first number you need to know. If you aren’t bringing in enough leads, then it’s all about lead generation activities. (Read Crushing Call Reluctance to learn more about that.)

For example, we’ll say he was bringing in 100 leads / month. Out of those 100 leads, my next question was how many leads were turning into applications – that’s the second number you need to know. Let’s say his answer was 50 leads were turning into applications. That is a soft spot in his business because he should be getting about 90 out of those 100 leads turning into applications. If that number of conversions isn’t happening (anything below 60% of your leads is an indicator something is wrong), there are only two things that could be the cause:

  1. There’s a bad source of leads. I’ll share a personal example with you. I once bought a spot and set up a table at a flea market. Did I get a boatload of leads? Yes. Did they convert? Well, let’s just say that was the last flea market I did with my business.
  2. The follow-up from leads to application is too long. If people have to wait, they’ll go somewhere else because it’s more convenient and they’re ready to get rolling. So if they get your voicemail, or you’re in a closing and they wait 3 – 4 hours before you can get to them, that’s a problem. You need systems to help you turn those leads into apps – somebody to answer your phone or handle your voicemails immediately, or even an online system.

So for this loan officer, he doesn’t need more leads – he needs to increase his conversions to applications. That right there will make a big difference in his business. But let’s keep going.

Once we have the 90 applications a month, the next number to track is how many of those are pre-approvable. Ideally, you want 45-50% of those applications to be pre-approvable. If that pre-approvable number is low, it means you’re fishing in muddy water (aka, flea markets). I once had a referral partner, a real estate agent, who I thought was the best because I was getting TONS of leads – until I figured out that they weren’t converting to apps, much less being pre-approvable. Your numbers will tell you what you need to know about your business. In this case, you need a good lead source.

Moving on… once you have your 100 leads a month, of which about 90 turn into applications, of which about 40 become pre-approvable, then it’s about how many are going to close. That’s the fourth number you want to track. About 50% of your pre-approvables should go to close. If you have pre-approvable apps that aren’t closing, there is only one issue – follow-up.

So you can see that having enough leads is not always the issue; instead, it can be about what you’re doing with the leads you already have coming into your business. You need good lead sources, systems for quick and convenient follow-up, and then to continue that follow-up through the close.

Now, getting leads in the door, converting them to applications, getting those to be pre-approved – all those happen immediately. But your closes will lag behind your pre-approvables by about 90 days because people don’t always buy right away.

Frankly, I talk with loan officers all over the U.S. every day. From what I see, 25% of loan officers have issues in each area – leads, apps, pre-approvables and closes. So 25% of loan officers think they need more leads, 25% of loan officers aren’t getting enough apps from their leads, 25% aren’t getting enough pre-approvables and 25% of loan officers aren’t getting the closes they should from their business.

Do you need a big fancy system to track these numbers? No. (Now, I do have to say my team does because you know I am transparent with you – but you don’t need it.) Just get out paper and a pen and make chicken scratches next to each of the four numbers: leads, apps, pre-approvables, closes. Then watch your percentages – if you aren’t getting a 90% conversion to apps, a 45-50% conversion from apps to pre-approvables, and a 50% conversion from pre-approvables to closes, you have a lead source issue or a follow-up issue.

The good news is that you might be getting plenty of leads to be successful in your business. The uh-oh news is that you might not be giving them what they need to stick with you. But that’s where me and my team can help. If you want a 1:1 strategy session to help sort out what’s happening in your business, reply to this post and let me know. We’ll be in touch.

Carl White, Chief Officer of Coolness
Article Originally Published on LinkedIn

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P.S.! Come hang out with me for 3 Days in beautiful Clearwater Beach!
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