The Rising Risk of Operational Costs for Direct-to-Consumer Lenders

By Josh Lehr, Director of Technology Alliances, Total Expert

Experts have predicted that 2022 will bring a year of transition for the mortgage market – moving from a refinance market to a purchase market as rates rise. Even more challenging, the overall market is expected to soften.

For direct-to-consumer lenders, this spells trouble. Many have relied on the booming refinance business to carry their bottom line – and the layoffs announced at and Wyndham Capital Mortgage are likely to be just the beginning.

It’s a perfect storm for consumer direct and it requires swift action from leaders to quickly adapt to the transitioning market. This goes beyond right-sizing staff, but also looking at how lenders can stay operational.

Use Automation to Increase Touches and Reach More Consumers with Less Staff

Doing more with less – it’s an old adage, but it still remains true as we look at what 2022 will bring for consumer direct lenders. An all-in-one sales and marketing automation platform can help lenders reach more consumers more often, even with less staff.

As a single source of truth, the platform can manage all contacts in your database and trigger communication based on specific demographic or behavioral data. The end result? The ability to personalize at scale with email and SMS communication distributed to contacts at the right time via the right channel with always-on nurture functionality.

In addition, sales teams can become more productive – 15% more productive with Total Expert – with the ability to manage contacts and leads in one system; giving them access to prioritized lead lists and in-app dialer capabilities.

Leverage Tools to Build Realtor Connections and Increase Purchase Conversions

It’s not the year to put a stake in the ground and go at it alone – the most successful direct-to-consumer loan officers will need to have a strong purchase muscle to be successful in 2022.  To build this muscle, loan officers need to focus on building partnerships with real estate agents. Much like reaching out to consumers, leveraging a software solution like Total Expert to manage co-marketing and share consumer shopping and loan updates can simplify the process and make it easier for both parties.

From managing connections with real estate partners to co-branding without having to worry about RESPA compliance to tracking pipeline, using co-marketing software can give you the competitive edge necessary for today’s market.

Dig Into the Data to Know When to Connect with Consumers

Each year, trend pieces highlight that this is going to be the big year for data. And, 2022 will follow suit, especially as we look at direct-to-consumer lending and the competitive landscape. Data will be imperative across operations:

  • Using a customer experience tool on websites and landing pages can give lenders the ability to increase click-to-lead and lead-to-app conversions, helping drive down the rising costs for lead acquisition
  • Automating surveys to interact with stale leads and get feedback on where they are in their purchase journey and leverage the output to inform your next marketing and sales action
  • Integrating data into a single solution like Total Expert can advance understanding of consumers and where they are in their financial journeys; leveraging a solution that offers more than 50+ industry-leading integrations can drive better personalization at scale
  • Leveraging a consumer insight solution can help lenders understand when previous leads and customers are transacting – fueling the focus on the highest priority leads – but also reducing overall acquisition costs and helping to increase retention rates

For direct-to-consumer lenders, focusing on maximizing lead channels will be paramount. Leads entering the database will have to receive different messaging based on channel to maximize lead conversion. Using intelligent automation to power automated communication can ensure that leads are getting the right message at the right time, all which can be determined based on lead channel.

In addition, knowing lead conversion rates will be important as costs rise. Understanding which channels are performing the best will help lenders know where to invest; and, understanding marketing campaign success to convert deals while decreasing cost per funded loan (CPFL) will be necessary for lenders to adapt to the changing market conditions.

Lastly, this is only the start – we’ll continue to see this market shift and change over the next few quarters, so the sooner lenders can leverage an all-in-one sales and marketing automation platform to support their lead acquisition and conversion goals, the faster they’ll realize the competitive advantage in the tightening market.