Clarifying your pipeline with KPI

by MPA09 Sep 2014
By Adam Stein
Special to MPA

Editor's note: Over the next few weeks, we'll be running expert online origination advice from Adam Stein, CEO of LoanTek.

Measuring a few common pipeline events, Key Performance Indicators (KPI), will provide clarity on what is occurring with your marketing budget and what you can reasonably expect as a return on investment. When these key performance indicators are applied and measured across both the lead sources and the sales force the performance of your pipeline becomes apparent. Last week we studied ‘Assigned’ and ‘Contacted’. This week we’ll follow up with a look at ‘Application’, ‘Qualified’, ‘Converted’, ‘Processing’ ‘and ‘Closed Won’.

Applications: 'Qualified vs. 'Converted

Qualified and converted leads are never a poor indicator of salesmanship or lead quality. These statuses represent the most mature key performance indicators and the highest potential conversion in your pipeline with the exception of ‘In Processing’ and ‘Closed Won’. The only difference between ‘Qualified’ verses ‘Converted’ is the consumer’s communicated intent. By differentiating the client’s expressed indication of intent to move forward the loan officer has clarity as to whom to follow up with first.  It’s rare that a lead source or salesperson that creates qualified and converted consumers does not equate to closed business.

'In processing' vs. 'Closed'

Similar to Qualified and converted leads ‘in Processing’ is never an indication of poor lead quality. It can be a misleading indicator of lead production, however, if the deals ‘in processing’ predominantly fail to materialize to ‘Closed’. The typical attribute of the phenomenon has to do with the sales person’s file preparation and their need to convert sales. The typical mindset that creates the poorly packaged result is something like this:
“I have cobbled a package of information together that I hope will become a loan. I firmly believe that -Independent of the known qualification issues that are apparent in the package - if I throw the file at processing, and pray, I might get paid.”

“I have cobbled a package of information together that I hope will become a loan. I have no idea what qualification issues are actually represented in the package - if I throw the file at processing I will get paid.”

Most operations managers and processors will alert you to the issue of poor file quality as it affects their performance. Your ability to ascertain the file quality that underlies your pipeline reporting is no less important than the lead quality at the beginning of the process. The quicker you regulate the quality of the initial file submissions the better. You will have a much higher probability of success and actually closing the transactions that you’ve invested in.

Intelligent Design

Scaling your online business is no accident- it cannot be achieved without accurate information to act upon. By using the strategies listed above you can act intelligently based upon the information and the KPI represented in your pipeline. Measuring and acting upon key performance indicators provides a firm grasp on your cost of customer acquisition and a well-managed sales effort. Now that you know you have both the leads that result in closed loans, and a well-trained sales staff, you are in great position to scale profitable internet mortgage origination!

Adam Stein is the CEO of LoanTek.



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