Do You Pay for Leads?: A veteran broker seeks the opinion of our online community about this controversial issue.

McC: If you have been in business a number of years, it makes absolutely no sense to have to buy new leads.

Your best and cheapest leads come from marketing to your past customers. You have already sold them on you; now all you have to do is ask them to spread the word about your services.

Frankly, if I have to resort to buying my leads at this stage of the game, then it is time for me to admit that I have done a lousy job of marketing myself to those who already know what I do. The people who shop the Internet for mortgages are not interested in service. They are only interested in the cheapest price. If you have to cut your margin to the bone in order to turn the lead into a sale, how much have you really made?

Al Gore: McC, I'm going to have to disagree with you, and I'll explain why with one word: McDonalds.

Alan B: I agree with you that if you've been in the business for a long time and you aren't getting a large percentage of business from repeats and referrals, the you are doing something wrong. However, if you are an owner and employing several loan officers, then you need to get them leads until they can build their own referral network.

McC: Al, as you can see from today's newspapers, McDonalds is failing. Cutting margins to the bone is resulting in a negative balance sheet for the company.

Alan, I agree with you totally if you have new loan officers. You need to get them leads. You do not need to get yourself leads.

Quickfix: Except if you're going to expand from one niche to another, such as A paper to subprime, as I'm doing. But your point is well taken.

Jfowlermtg: McC, Mickey D's is most certainly not failing, they've had some isolated problems and the overseas thing has hurt them, similar to Coke. I'll agree with my friend Gore on this one.

JM: While I seldom disagree with McC, in business you grow or die.

12aces: McC, There is certainly merit to your point. I on the other hand think a balance between direct marketing and customer retention should be exercise.

I recall you holding "Bridal Showers" in an attempt to attract new business. Do you not consider that paying for a lead?

Sinjap: McDonald's had its first quarterly loss since going public. I think they are doing ok all things considered

Al Gore: I could have used GM, or Bank of America or Honda, or any one of the thousands of companies that spend money advertising. Buying a lead is the same thing, you're spending money to attract business. It may be different from how you operate, but that doesn't mean that it won't work or that there is anything wrong with it.

Secret!: How many long established (bigger than Mom & Pop) businesses inside or outside this industry, do you know that do not advertise?

Living off your former customer is a perfect formula to stay small. I'm NOT knocking being small - just expanding a bit on Al Gore's point above.

McC: Growing your business will require you to hire additional staff, whether you like it or not. After that, do you really earn all that much more money after deducting out the salaries you now have to pay?

In response to the Bridal Fair, yes, it is marketing that I pay for. The purpose of the Bridal Fair was to expose my business and that of my originators, to a new sector of the public who has not been exposed to home buying in the past.

Each new person from the Bridal Fair will now become part of the chain of lasting consumer referrals.

Unfortunately, I tried to buy into the "lead for sale" thing when I first started out. I had to shave my margins to near nothing in order to get the sale. In addition, I have found Internet shoppers to not be the kind of people who will refer their friends, relatives and coworkers to you.

I prefer to spend my marketing dollars on those things which will bring me into someone's concentric circle of influence. If I can't do three deals from each new deal that I bring in, then the money I have spent would not be worth it.

12aces: There are a great deal of people who frequent this forum who adhere to a by referral only business model. This is certainly a good business model. I have employed a component of customer retention/referral business for the last couple of years. I had closed a loan for one person in particular three times. I have only been in business four years. Must say these are the easiest leads to covert to paying clients.

What many of you who adhere to this type of campaign neglect to mentioned - it's a cultivation process that can take up to six months (sometimes longer) before you start to see any real payoffs. Secondly, many of the clients your advocates refer to you are not doable deals.

I cannot understand that if many of you who adhere to the referral only business model benefit from having low overhead - Why not give some type of direct marketing consideration in an attempt to create a synergistic effect.

Momortgageguru: 12aces, I have been with BRO for about 18 months now and they do have an entire library of marketing programs for those that want to generate Now business. I have mentioned them a few times here. It is more direct response marketing using 800# call capture, free reports to a certain extent and using scripts to help improve your call through rate on the ads you do run. They refer this to a volume knob- turn it up when you need it turn it down when you don't. Mine has been turned way down ever since I got in it.

Luckily, I haven't had to use it much. My referral business has kept me plenty busy and it continues to grow and grow. I am bringing on an assistant June 2, to follow up on all the buyer leads I do generate. These are generated with a homes magazine ad with listings from the agents I deal with, advertising monthly payment (being careful to adhere to RESPA) I can put up to 16 listings on a page and the 800# rings off the hook with potential buyers. Some have a lender- I try to convert them to use me, some have agents if they don't I get them pre-approved and refer them to the agent whose listing they called in on. I have had some success with this and I am hiring the assistant to implement my follow up program and funnel those to an application with me.

I also use a handwritten "ugly" yellow sign in the yards of listings (could be in FSBO's also) with a call capture and web site address. I get probably 10 to 15 calls per sign for the first two or three weeks it is in the yard. After that the call volume drops.

There are post card mailing campaigns targeting just about any niche you want plus hundreds of kind of off the wall ideas. All the campaigns that are available for use have been tested all over the country and return a minimum of $15 to $1 or they don't get put on the site.

My experiences tell me that $15 to $1 return is LOW!

I hope this sheds a little light on how many of us BRO members work.

Randomcombination: All I can tell about the BRO system is it appears to have a MLM component to it. Since you two seem like you are taking a lot of time to "sell" us something that on the surface it appears merely to be just a collection of obvious and readily available techniques.

Do you get residuals for signing new members?

McC: RC, I am not a BRO member. The way I conduct my business is the way I have done it since 1988. I am not a follower of any particular person or method. I choose what works for me, that's all.

Momortgageguru: RC, No I don't get anything from referring people to BRO. I come to this site to try to help people that are asking for help. I have had several pieces of valuable info given to me from 12aces so I tried to thoroughly answer his question.

If these techniques are so readily available why are so many 'Viners buying leads that will beat up their bottom line so much they have to work harder? I don't believe anyone has said these are revolutionary ideas just has been put into a complete system so some of us don't have to reinvent the wheel.

All I get is a little satisfaction that maybe I have helped someone improve their business and their profitability.

I have helped a few 'Viners off the 'Vine and they seem to be enjoying the benefits of referral based marketing.

To this date only one joined BRO. The ones that haven't I trust have found that I will take the time to try to help them. What I don't get RC is why so many here seem to make this business so hard. I too used to work so very hard in this business and I wish someone would have helped me see the light much earlier in my career.

I missed out on eight years of clients that were happy with the services I offered because I didn't do the things I do now. So I guess I see a little of myself in some of the posters and I am just trying to help.

You know RC some of us actually like helping people without expecting something in return. Someone once said if you help enough people get what they want in life you will get what you want in life. That is not a slam on you RC, a majority of your posts are helpful though a may not agree with them all, but it is obvious some are here for other things than just to get or give help.

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