We’re thrilled to have had a chance to interview Dustin Sheppard, a leader at APM, tasked with driving our key strategy related to consumer acquisition. In his day job, Dustin runs Element Mortgage, a division of American Pacific Mortgage, with branches in California, Hawaii, Washington and Colorado.
One of the things we talk about often is how to generate leads as a loan officer, so we are excited to learn from Dustin’s expertise in the mortgage industry.
APM: Dustin, tell us a little bit about your role with Element Mortgage and what you do.
Dustin Sheppard: I’m the VP for Element Mortgage, and we’ve been with American Pacific Mortgage for five years. My role for APM in building out loan officer lead generation includes developing internal strategies for us to generate our own leads as well as ways for loan originators to nurture those prospective clients.
By build out our own lead generation, we’re not necessarily beholden to the major lead aggregators like Zillow, realtor.com, etc. That doesn’t mean that we’ll put all of our eggs in one basket. Part of my role is to manage vendors and test different mortgage lead generation methods and strategies. The cost per lead definitely comes into the equation. Ultimately, we will build a process that stands on its own so we’re not dependent on a third party for our mortgage leads.
APM: So, tell us a little bit about your mindset as you invest in lead generation for the loan pipeline for your branches. That’s an important piece.
Dustin Sheppard: Absolutely! And it’s not for everybody. You have to be honest with yourself about what you hope to get from a lead right off the bat. If you think you’re going to buy a lead and one lead equals one closed loan, lead generation is not the game for you. The return on investment will come in a more long-term way.
I’ve come to call it a supplemental lead program. It’s not the only way we generate leads. We are still very true to the core lead generation models and strategies that I learned at APM. Our lead generation program enhances our loan officers’ ability to direct and give business to the real estate community.
If they’re a new loan officer, our program gives them some income stability by providing them with opportunities. I remember what it’s like to be brand-new, 24 years old, single dad, trying to figure out where my next customer was coming from. I would have cut off a body part to have these strategies when I was first starting my career!
There are two things. One, you’re going to close some loans from it, and two, you’ll go through the learning process faster because you’re getting in front of people. So instead of taking three years to learn the process of finding mortgage leads, it’s going to take you a year or less. If you’re a seasoned loan officer, it’s another source of leads in your already structured business. You can feed real estate referral partners and go deeper with those relationships.
APM: Lead generation is scary when you’re new to the industry because it’s a financial investment. So how do you advise someone just getting started to think about investing in generating leads?
Dustin Sheppard: Not everybody comes into this industry with a cushion. If you’re new, having a little bit of a nest egg is smart, but not everyone has that luxury. We have a budget for lead generation included in our business model. When someone new comes in, a lot of times they want a base pay. We give you leads instead. Instead of paying you $3,000 a month, we’re going to spend $3,000 on leads for you. We’ll find out if you have what it takes before long by seeing that return on investment.
Either you’ll master this and have deals in the loan pipeline right away, or you’ll find that this isn’t the game for you. For managers, leads are something tangible to invest in. We will always own this database of leads we’ve acquired, and we’re not just paying someone hoping they’ll do their job. We’re asking them to do something we can monitor, and we make sure to follow up with them about how working those leads went.
We’re pretty methodical about how we hire newbie loan officers, as well. We coach them, give them time, and then bring in the next round of new mortgage professionals.
APM: Tell us a little bit about how you determine how much to spend on lead generation per month. Do you go off a percentage of your revenue, or do you determine return on investment first and then invest?
Dustin Sheppard: We’ve gotten to a place where it’s based off a percentage of revenue, so it’s somewhere between 10 to 15% of total revenue for us. It’s a pretty big number. We started slowly, and some of the best converters in our office and I worked those leads together. We didn’t just buy mortgage leads; we put ourselves in the driver’s seat and tested it. We started at around $1,000 a month and within a few months it was $3,000. We spend a lot more on our loan pipeline now.
We’re really good at tracking the return on investment on the leads in our loan pipeline that close, but there’s a secondary return on investment that we don’t track all that well. It’s hard because it’s the organic business we win from the new sphere of business we’re plugged into, the new agent we got exposed to, and the organic referrals we win. That’s where the real return on investment is, and it’s not necessarily on the leads you buy—it’s the audience and relationships that come from it.
Even though generating mortgage leads costs us money, we’re giving income to our loan officers and giving them opportunities to cultivate new organic referral relationships. That’s where return on investment grows strong. It’s when you take a lead and win over a referral partner, and now you’re closing 10 to 15 deals a year with the referral partner that have nothing to do with the lead. The return on investment is incredible.
APM: What systems help support your lead generation?
Dustin Sheppard: AP Connect has been huge with this, as well as our mobile app and Total Expert. That’s all integrated into how we respond to leads and communicate with our clients, because initial customer communication speed and building rapport is critical. AP Connect—I think it’s one of the most underused consumer acquisition tools at APM. (AP Connect is a proprietary system developed by APM.)
This goes back to my initial comment about mindset with leads. People get impatient and want instant results with consumer acquisition. But you can’t do that. If you’re not willing to commit for 6 or 12 months, don’t do it. Come up with workflows that work on the lead source and get amazing results. Don’t just pull out of the system because you’re doing yourself a disservice. You can always modify the workflows and the scripts with AP Connect, and it’s an incredible resource our loan officers get access to. We’ve leveraged it to win over massive accounts.
APM: What is your process with AP Connect and how it supports you in the industry?
Dustin Sheppard: Without getting too in the weeds, we have some customization for the audience. Depending on the lead source, it automatically goes to AP Connect’s system. At that point, there are rules set in the system where it says “Call this lead immediately or “Call lead in 24 hours” if we want the real estate agent to make contact first. We decide what the rules of engagement are for each contact.
As for the scripting process, where did the lead come from and what kind of opportunity is it? We’ll modify our scripts according to the specific consumer. After that, it’s just long-term follow-up and the LO doesn’t need to be doing that. The lead comes in, you make your initial contact as an LO, and we let AP Connect do our long-term follow-up. It’s our insurance policy to make sure we’re not letting business slip through the cracks.
APM: What do you say to loan officers who are considering investing in lead generation? What do they need to know, and how should they shift their mindset to come up with a manageable way of generating mortgage leads?
Dustin Sheppard: First, define your budget. Commit to something you can do for 6 or 12 months. Don’t make it so you have to have instant results because there is a learning curve.
Next, loan officer marketing is pivotal. Make sure to define your social media marketing strategy or find a vendor to help you. Creating a digital marketing campaign can engage a large audience and result in prospective clients. What do you want to achieve with these marketing dollars? If you have $1,000 a month, you need to generate x number of leads from either a marketing campaign or lead generation.
Last, don’t remove yourself from the process. Be active and get involved in working mortgage leads from the beginning. There’s a lot of learning that happens at the beginning, and you’ll want to be able to tweak the process according to what you learn. Make some of the client phone calls yourself! You can always step back from the process later.
Then be patient…it doesn’t happen overnight.
Thanks so much for your time, Dustin. We really appreciate you sharing your expertise about loan officer lead generation with us. Lead generation continues to change with advances in marketing, but we have so many tools for finding prospective clients that we can use to help you with your efforts to grow your mortgage career and earn more business.