Happy Sunday Everyone:
Warning-this is 100% Loan officer related to metrics-might not be interesting if you’re not a loan officer, or in sales.
I mentioned last week I’m not really into new year resolutions anymore, I’m not, but it doesn’t mean a new year isn’t an opportunity for a fresh start. I’ve been doing very basic business planning w/ loan officers, and I’m always surprised how many of us don’t know the value of an opportunity (aka, a lead). It’s not the value of a closed loan, or a pre-approval, or a credit pull, it’s the very front-end opportunity you get to work with a potential client. It’s a simple calculation, your income as a loan officer, divided by the # of opportunities you’ve received in a year. I’m going to keep this high level, but our team has been tracking our data for years, I can tell you our opportunities are worth approx. $1000/each. Each time I receive an opportunity from a business partner, a past client, a current client, a friend, whomever, that opportunity, on average, is worth $1000. That data is a matter of fact. When I know my data, I feel so much more in control of my business and where I need to allocate my time.
A few thoughts on the value of an opportunity:
- Work to shift your language from a lead to an opportunity, not only does it sound better to a business partner but eventually it starts taking shape as to how you handle the opportunity. 15 years ago, my first opportunity with a tenured Realtor, I called to thank him for the “deal” we just closed. He said “Hunter, these people just purchased a home for their family, it’s not a deal, its much bigger than that”. Thank you, Jack S, I’ve never forgotten that message.
- When you know the value of an opportunity, you know where you need help:
- How do I increase the value of an opportunity per opportunity? From an industry perspective, I think $1000/opportunity is on the high side. If my business model was buying leads (which I hate and wouldn’t do), my value per opportunity would be much lower because the conversion ratio would suck i.e. I get a 300 leads a month from an online group, I close 10 of them for an avg commission of $5000, value per opportunity-$166, some people might say it’s worth it. side note-those would be leads, not opportunities and I’d need to factor in the cost of buying those online leads, which would further decrease the value. Even w/ skipping the online example, this forces me look at our business. If we keep the same number of opportunities but increase our conversion ratio, the value of the opportunity goes up. Question then becomes what are business practices we can implement to increase our conversion ratios?
- How do I increase the number of opportunities I receive? My typical answer is do better at the first question and you will have more opportunities i.e., the proof is in the experience. With that said-sales people are emotional beings, we need motivation, we need a reason to make a call, to get out of our comfort zone, when I monetize the value of an activity, it helps to push through any self-sabotaging mindset I might have at a given point in time. Activity creates activity. More intentional you are with those sales activities, the more likely you are to increase those $1000/opportunities to come in the door.
- Mindset on answering a call-I’m going to call a spade a spade, we don’t always want to answer that call, fair? When I flip the switch and say, “this call is worth $1,000 on average”, it changes my mindset and gets me excited to answer a call or make a call.
- Mindset on gratitude for referral partners: I’ve said many of times to a business partner “You’re handing us your livelihood on a silver platter when you give us an opportunity” and its true. “Hi Hunter, I’m sending John Smith over to you, he will be calling you tomorrow”….On average, that business partner just handed me a $1000. Do they deserve a response beyond “thanks”. Gratitude can’t and shouldn’t be faked, but considering exactly what someone just handed you every time, makes sure you don’t forget what they just gave you.
It’s amazing how much doing all this planning with other people makes me want to be better with my own business. $1000 per opportunity is a number we know to be true, but it’s a number that isn’t discussed enough, and it will be moving forward in 2024. Know the value of an opportunity, know what you need to do to increase the value of an opportunity, and know what you need to do to get more opportunities. Measure it monthly and you will have a better business, guaranteed.
Have a great rest of your weekend.