Lendingtree™ has a current market cap of $3.68 billion dollars, which is almost exclusively driven by pay-per-lead advertising.
Lenders would not be allocating their marketing dollars to Lendingtree if it did not generate an ROI. However, the question that should be asked is, whether or not that return could be higher elsewhere?
As I have stated in past articles, I did not start in the lead generation / adtech business.
Prior to getting into tech, I was a money manager. I looked at marketing and advertising dollars as a highly appreciating asset class.
Once you find the right mix of advertising and marketing methods, there is no better investment in the entire world.
What other investment vehicles could you invest $1 in and make back $2, $4 even $20 in return…and repeat this a hundred, even a thousand times per day?
Not even the smartest quant funds on the street can generate this return…And lendingtree™™ knows it. They profit from what’s called, lead arbitrage. Buy a lead for X and sell that to another party for more with limited risk.
The problem the consumer faces with Lendingtree™ and any lead vendor, without even knowing it, is that the lead vendor will dictate the return.
They manipulate the price to maximize the profitability for THEIR shareholders.
So while you may be eking out a small return when paying them for leads, you also limit your upside return and scalability.
So why do so many lenders still rely on Lendingtree™ to fuel their pipeline?
It is the only way they know and up until 5 years ago; building a fully systemized, data-driven, and tech-enabled lead generation platform for your business was complicated and out of reach for most lenders.
Not anymore. In this short article, I will discuss the flaws with Lendingtree™ and lead vendors in general, followed by how any size lender, from a one-person shop to 5,000 loan officers, can build their OWN Lendingtree™™ without having to take out a second mortgage.
How much does Lendingtree™ cost?
From sources, I have confirmed that Lendingtree™ charges:
- $10,000 Set-Up Fee
- $5,000 Deposit For Leads
- $8 Avg. Per Lead (Sent to 3-5 other brokers)
- $400 Per Closed Loan.
Problem #1 Non-Exclusive
If you’ve bought leads before, you probably have called a “hot” lead to find out that 5 other LO’s have already reached out to them!
How is this good for you? You compete not on the expertise you have taken so long to craft, but solely on your ability to reach them first.
71% of buyers do business with the first person they speak with – Zillow™
Problem #2 The consumer hates it.
Have you ever filled out a form at Lendingtree™? Don’t do it. You will receive calls, texts, and emails for months. These leads are resold and recycled, so you will never stop receiving calls. How enthused will your next lead be when you are the 5th person that has called them in the last hour?
This leads to low conversion, constant chasing and time wasted.
Problem #3 Speed to Lead
How long does it take you to get a lead delivered?
Without owning the lead generation process, it’s impossible for you to know if these leads filled out a form in the last 60 seconds, or in the last 7 days.
If you follow up with web leads within 5 minutes, you’re 9X more likely to convert them -Hubspot
Zillow recommends following up with mortgage leads within 30 seconds in order to have the highest chance of a conversion.
Why is that?
Well, if Joe is searching for a mortgage online and fills out a form, and doesn’t get instant feedback that you’re there to solve his problem; he is going to keep searching for solutions. In today’s internet age, there is too much noise, and too many options…immediate follow up is crucial if you want to see ROI!
Modern consumers (Millennials especially) want to be reached through different channels: text and messenger chat.
Yet after filling out over 350+ forms on Realtor and Lender sites, we found the average response rate was 48 hours.
A study by the Harvard business journal found that 72% of online leads ARE NOT EVEN CALLED!
As the great Ricky Bobby Says: “If you ain’t in first, you’re last.”
Problem #4 Transparency
Where do they get these leads from? How do I know they aren’t using shady sales tactics to get the forms submitted? Are they recycling these leads to multiple LO’s in order to maximize the money they make from each one?
The fact is this- if you don’t own the digital assets (websites, ads, etc.) that are generating these leads, and you are on a platform with thousands of other Loan Officers, there is no way to be sure that leads aren’t being recycled. You also don’t really know that they aren’t using shady tactics to generate those leads. Now, this does not hold true as much for Lendingtree™, but could possibly for the other 500+ shady lead vendors whose bait and switch ads you will see all over the internet.
Problem #5 Paying to promote another brand
When you pay Lendingtree™ for the leads they are using that revenue to further extend THEIR brand. After doing this for 23 years.
This has lead to millions of people organically (without paying for ads) visiting their site. This produces free leads.
By advertising through Lendingtree™ or Zillow, you lose all branding power.
Let’s say you run an advertisement for new home buyers for 12 months on Facebook and spend $30 a day. On average that is 365,000 impressions of YOUR brand being shown to your local market every year. Over time more and more people will see & SHARE your Facebook ad with their friends and family. If done correctly, social sharing will produce FREE leads every day. These are the same FREE leads Zillow produces and then charges you for.
So what is the solution?
Build your own systems to generate your own leads by tapping into data and networks that hold a billion people?
Let’s face it. Facebook, YouTube, Twitter, and Google ARE the internet.
To access this vast consumer data set you will need to pay the toll.
That’s what paid advertising is…but it is not as easy as throwing up an ad on Facebook, sitting back and counting your money.
That is why 10,000 Millennials every day sign up for courses and start their digital marketing agency. Then the next day when they launch their “business” they try to charge you $1,000 to $2,500 a month. Advertising online takes time, money, patience, and multiple failures before you figure it out…until now.
Arlo completely rethinks everything about online customer acquisition. Re-imagined for the modern age, it transforms the way you attract, pre-qualify and communicate with new prospects.
Arlo delivers the on-demand experience borrowers expect, on the channels they prefer.
Forget chasing bad prospects, overpaying marketers, or sharing marked up leads with competitors…Hire Arlo.
Arlo will set up proven ad campaigns, uncover the most profitable market segments, pull credit, pre-qualify and manage all your follow up, 24/7/365, so you can focus on building relationships, closing more deals and expansion.
This is how it compares to Lendingtree™ and other lead vendors.
100% Exclusive & Transparent.
Arlo launches proven ad campaigns from your brand. These leads are never shared with any other broker. You generate the leads at cost and can see first hand how these leads are being generated directly in Facebook’s dashboard.
Credit Qualified – Arlo then will credit-qualify each lead with a FICO and full credit report in realtime, with just their name and current address.
Arlo will follow up with credit qualified leads across text, Facebook Messenger, email and voicemail drops until they book a call. We are automating everything from Lead to Loan.
Your Page. Your Data
Every ad placed by Arlo is through your page so you get the benefit of increased exposure. One customer just this week generated 14 FREE credit-qualified leads JUST from people sharing his ad post on Facebook. We have developed a method that will train your Facebook pixel on how to target the BEST possible prospects in your market quickly, while you still maintain 100% ownership.
We provide full customization so that you can ensure every ad and page is fully compliant under your companies guidelines. These best practices have been adopted by working with some of the largest lenders’ legal teams. Since you are generating these leads yourself, using Arlo, you have full control over what is seen by the public helping defend against any arbitrary complaints.
And drum roll please…CONSUMERS LOVE IT!
They are provided an instant pre-qualification decision and moved to the next step in your process. 84% of qualified leads are booking appointments themselves so you do not even have to pick up the phone.
NO Set Up Fee or Closed Loan Cost.
On average we have seen leads cost $4.34. Of these leads, 38% have above superior credit. If you invested the $10,000 set up fee + $5,000 deposit you would be paying lendingtree™ and re-invested it in ad spending on Facebook and Instagram you would:
- Generate 3,456 leads.
- 1,313 of them would be qualified.
- Show your brand & offer close to 500,000 people in your area who are actively searching for a home.
How many of these leads would you need to close to make 2, 3, even 10X your earnings?
So does Lendingtree still bare fruit? Yes.
If I was to compare Lendingtree™ to one fruit it would be Wine grapes.
- They take a lot of maintenance, time, and hands-on effort to cultivate.
- It costs a small fortune to maintain production year after year.
- With just one seasonal weather change you could lose your entire harvest.
- Once the grapes are ready for harvest they still need to be made into wine.
- After you have crafted your first vintage you HOPE it will sell and when it does you have to pay a large part of your margin to a distributor.
Our goal is for Arlo to become every MLOs and Realtor’s most valuable digital partner, and we are doing everything we can to help you maximize advertising ROI….Can you say that about Zillow™ or your current lead vendors?