• MPColetti

Breaking Away From the Pack: Quicken’s Lead Gen Contest Could Leave Your Mortgage Team In The Dust

Quicken Loans, the largest US mortgage lender by volume in 2018, is at it again. This time they’re coming straight for your mortgage customers with a clever campaign coinciding with the Kentucky Derby, called the Homestretch Sweepstakes. You can view the promotion at www.homestretchsweepstakes.com. What makes this promotion so clever?

1) The obvious: (a) There’s no purchase required; (b) There’s big money at stake with a $250,000 grand prize; (c) twenty randomly selected winners and one guest each will win a 4 day / 3 night “VIP” trip to the Derby; and (d) the promotion runs for a limited time.

With the obvious identified, now here’s why this campaign is actually brilliant:

2) The Timing is Impeccable. I assure you; it’s not a coincidence. Rates are stabilizing after a trough in ~Q4 2017, which means refinance volume could trend upward with most loans having seasoned since refinance volumes were last active meaning that they could be ripe for a refinance. Also, March is the unofficial start of house-hunting season. Drive by any open house in a desirable major metro area between now and September, you’ll see what I mean. So, Quicken is stimulating interest in both purchase and refinance activity as we approach the start of peak season. I guarantee they’re capturing the interest of your existing client base.

3) People Will Clamor To Volunteer Their Information Without Awareness That They Are Feeding A Lead Generation Machine. To enter the contest, you answer four questions. The first is whether you’re an existing client. Behind the scenes, this answer will segment you in to one of two buckets with action determined by the next question. You’re next asked whether you currently own or intend to purchase in the next 12 months. Quicken now knows whether you’re an existing client or new prospect, and whether you’re more likely to be a purchase or refinance customer. You’re then asked about whether you want to be contacted by phone. It doesn’t matter what your response is here because, this isn’t the end-game for Quicken. Instead, you’re next prompted to supply your complete contact information for entry purposes. There it is. That’s the beauty.

You’ve now given yourself over to the marketing machine. By supplying that information to compete in the contest, you’re effectively creating a profile of yourself in the Quicken customer relationship management (“CRM”) system which they’ll use for future sales solicitation. (I would confirm this for certain but the URL for the Quicken privacy link is non-functioning in the official rules, something they may want to discuss with whomever did the editing of the official rules.) With this simple demographic information, Quicken can turn to third party sources for endless data and insights about you as an individual which they can use in strategizing future targeted campaigns, e.g. first time home buyer offers, or rate promotions on vacation homes for a more established household. Without this contest, Quicken might never know you exist. Now, they could have greater insight into your household than your own family members. How exactly? For one method, see my other post here.

4) The Relative Cost Efficiency Practically Assures Loan Production Far Exceeding That of the Most Elite Loan Originators for an Equivalent Cost to Produce. This program is going to cost Quicken ~$420,000 in prize money and rewards. That’s the $250,000 plus the disclosed cost per person (x20) of $8,450 for travel to the Derby. Now, Quicken originated 395,648 mortgages in 2017 as the #2 overall lender in the US. Quicken is a direct platform. Unlike most other banks and mortgage lenders, it does not rely upon mortgage loan officers to source mortgage loans. Instead, those funds go directly into marketing.

By comparison, in looking at the top producing mortgage loan officers in the US last year, we can get a sense of the scale of the production in relation to the cost to produce. After removing the first two individual loan originators as outliers, the average production of the number 3-22 top producing mortgage loan officers in the US in 2018 was 474 units for $212,000,000 production for an average of $447,257 per loan. If we assume the average mortgage loan officer is paid 1% of each mortgage originated, then the top producing mortgage loan officers in the country were paid individually on average a gross salary of $2,120,000 for 474 mortgage loans.

Let’s assume – for convenience sake - that Quicken commits another $1,600,000 in marketing expense for TV, radio and social media sponsored ads. (I saw the commercial myself while watching Sunday Night Baseball on ESPN.) Now, on a per unit basis, assuming the same average dollar amount per loan, it would need to only result in ~.12% (=474) of its 2017 production to source the same volume of loans as the top producing loan originator in the US. Let that sink in … Quicken would need to only generate .12% of its annual production in this campaign to match the output of one of the most elite loan originators in the country at the same cost to produce using a hypothetical ~$2,100,000.

Now, let’s carry the comparison further for perspective. An article from ESPN in 2017 suggests average Sunday Night Baseball viewership is 2,257,000 viewers. Let’s assume Quicken commits $1,400,000 of its marketing expense to television advertising on ESPN prime time and this results in maybe 20 individual commercial air spots. Let’s assume at the same viewership rate then that the commercial is viewed 45,000,000 unique instances, perhaps by some repeat viewers. That would mean that Quicken would only need to convert .001% of that viewing audience into the average closed mortgage transaction to equate to the same production as the average of the 20 top loan producers in the United States could produce. To me, that seems like a pretty low bar for Quicken. Meanwhile, it was a feat that only .004% of mortgage loan officers in the US were able to accomplish in a given year when you assume that there were 502,000 individually licensed loan officers in 2017 in the US. In other words, the direct channel can accomplish the result extremely easily at $X, whereas the indirect channel at $X has a remote chance.

If we’re placing bets, I’ll say the odds are better that Quicken can convert 450 of 45,000,000 viewers into a mortgage transaction in a year before the average loan officer at the average bank can reach the same production as a top performing loan officer in the US to hit that unit target.

5) It has the potential to captivate an audience. The best part is buried in the official rules. This contest isn't based upon pure dumb luck. Rather, the contestants are assigned a horse. If the horse wins the race, then the contestant assigned to the horse wins the $250,000 prize. You can enter through the site, or through a sponsored Facebook ad, meaning Quicken also invested marketing dollars in a sponsored ad. So, now not only are social media circles cheering for a horse for their individual pools at home, they’re cheering for a horse in hopes their friend wins the grand prize. If we assume the average person has 500 people in their social networks, then this is another 10,000 with a vested emotional interest in the outcome of this campaign. As we know, emotion sells.

The whole concept is just brilliant and should be imitated. There's no shame in that.

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