• by Marc Diana , May 2, 2008

The 2007 mortgage crisis impacted many aspects of the economy, from real estate to consumer confidence. As the lending industry regroups, it must examine how to find the right customers, as well as make better loans. Unfortunately, the industry has an uphill battle in the customer relationship realm. Many lenders, reminded of the disastrous impact of bad loans, are no longer the only ones wary of them. Fearful of foreclosure and destroying their credit, customers no longer trust many lenders. As such, lenders must do all they can to ensure better loans, credibility and stronger customer relationships.

Focusing on customers may seem rather touchy-feely in a time of economic uncertainty. However, it could help the mortgage industry climb out of its current crisis. One way that lenders can not only rebuild customer trust, but also get the wheels of profitability turning again, is by employing targeted lead generation.

Lead generation may not seem like an obvious choice, as historically it has suffered a less than stellar reputation, due in part to an inability to filter out bad and target good quality leads. Oddly, this poor filtering has positively impacted mortgage lenders in recent years because they began lending to any and all borrowers. However, with the recent troubles, the lead generation industry has come under fire from those who point out its part in inviting the sub-prime borrowers to the table.

Such companies are now paying their dues, along with the rest of the lending industry. When the mortgage crisis hit in July, it was the death knell for many lead generation companies. The government has even begun scrutinizing the lead generation industry as a whole, examining new regulations and programs, such as the new government refinancing plan FHASecure.

However, the crisis was also a wakeup call to the lead generation companies that survived. Lenders are paying closer attention to acquiring the right customers, focusing on quality rather than quantity. As such, lead generation companies have to examine ways in which they can provide higher quality leads. Data segmentation is proving to be a necessary tool to accomplish this.

Data segmentation targets the proper customers, which, in turn, increases return on investment for lenders because they aren't forced to spend money on leads they can't use. It also builds the quality of leads overall, as market forces reward lead sellers for bringing in quality leads while disincentivizing those that sell leads of lesser quality. Segmentation allows loan officers to focus on different types of customers for different types of loans, and if a lender can target the right leads more cost efficiently, it can service loans that it was previously unable to service.

Until recently, there was a lack of innovation in data segmentation from lead generation companies. Lenders were required to purchase leads in batches at fixed prices, regardless of quality or the specific details in the lead. New developments in lead generation, like the lead exchange, for example, make quality control, increased segmentation and variable pricing possible.

The mortgage lending industry can rebuild its reputation, in part, through this improved data segmentation. In fact, companies that began segmenting data and focusing on quality early fared better when the mortgage crisis hit. By targeting higher quality leads and rejecting lower quality leads entirely, mortgage lenders can rebuild their businesses and improve customer perception quickly. Customers will begin to regain trust and their current wariness will dissipate. Hopefully, using targeted lead generation as one of the tools, the mortgage crisis will repair itself and the economy will reap the rewards.