After three quarters of consecutive growth in mortgage refinance originations, loan rates are now edging higher and the refinance market is expected to slow. At the same time, home buying has picked up and is projected to be 14% higher than in 2014. Not long ago, online real estate services like Zillow and Redfin were just launching, and the concept of a “multi-screen environment” wasn’t mainstream. Prior to the introduction of the iPhone in 2007, people were still only viewing online material on their desktops. But to find success in today’s purchase dominated home lending environment, financial institutions must take advantage of digital marketing innovations and begin to market to their consumers 1:1.
The Challenges With Traditional Marketing Strategies
Historically, targeting has been one of the main problems with building direct marketing programs for consumers looking to purchase a home; usually you wouldn’t know someone was in the market for a mortgage loan until they walked into your branch and applied. However, targeting for refinance has always been pretty straightforward, with rich data on mortgages and property values available publicly.
Purchase behavior on the other hand is very hard to predict because there are so many factors that go into the purchase of a home. The triggers that do exist – listing a home for sale, large cash transfers, and credit bureau hard inquiries – either lack sufficient volume and/or leads to very aggressive sales tactics by lenders because the home buying process is already underway. These data triggers may work for some mortgage bankers (e.g., those with a highly commissioned sales staff), but are not typically suitable for most banking organizations. When you combine inadequate targeting with cost of traditional direct marketing media you yield a very unfavorable return on marketing investment.
New Opportunities with Digital Marketing
Today, with the innovations in digital marketing, the economics for direct marketing in the purchase mortgage space has improved significantly. Purchase intent can be directly inferred with search engine marketing. Third-party data and audience segments are available to target consumers exhibiting home-buying interest with display ads – e.g., running geo-targeted ads on a site like Zillow. These tactics are typically good starting points when you need to get up and running quickly to supplement declining refinance volume. However, these channels must be complemented with other strategies that are enduring, harder to duplicate by competitors, and provide greater value to consumers.
1. Build Engagement Mechanisms That Provide Targeting Intelligence
The National Association of Realtors reports that the average length of time to purchase a home is 10 weeks and 92% of home buyers use the internet in some way and 50% use a mobile web site or application. There many opportunities to engage consumers with digital tools and provide valuable assistance.
Engagement mechanisms can be introduced throughout the home-buying process and embedded in your online experience. Examples of engagement devices are home price tools, financial product guides, e-newsletter content on buying/selling homes and tips for mortgage borrowers. Start by mapping out the home buying process and designing and customizing tools and online content for your customers through each step. These mechanisms can help you identify who is in the market for a new home and where they are in the home buying process.
Not only will these digitally-focused tools give you the granular data you need to measure and refine your marketing communications, they will deliver real value to your customers and reinforces your brand.
2. Establish a Tagging and Remarketing Strategy
In some cases you may capture contact information with your digital engagement tools, but in most cases users will be anonymous. The key is to segment behavior to guide marketing messages across all retargeting media. For example, an individual that read an article on how to prepare a home for sale should be communicated to differently than someone who was reviewing mortgage product information.
Having the ability to identify your own mortgage customers via customer service tools will provide an added benefit to your remarketing strategies. Knowing that someone is an existing customer versus a prospect can play into your marketing communication and bidding strategy. Start with simple remarketing strategies based on most recent individual interactions and evolve to multi-touch attribution where a longer event stream can be used to drive remarketing strategy and conversion.
3. Implement Advanced Segmentation
Once a tagging and remarketing strategy is in place, there are opportunities to define advanced consumer segments. Site behavior can be matched up with CRM data to provide a richer view of the customer. Not only do you know that the customer was specifically looking for a mortgage, but in combining CRM data you have a better picture of their needs. Matched CRM data may tell you the consumer is a renter located in a low-to-moderate neighborhood which would indicate that future product communication should focus on low down payment and FHA programs or if you knew the consumer was an existing mortgage customer with a jumbo loan a better suited message might be around refinancing. The goal is to drill down deeper, to target your marketing messages with a greater degree of precision and contextual personalization.
4. Creating Your Initial Marketing Plan and Generating Top-of-Funnel Awareness
Once you have mapped out your engagement devices and your remarketing strategies based on interactions with those devices, you need to focus on getting the messages in the market to your target audience. This is both a go-to-market planning process as well as an iterative process of testing which engagement devices work best and where. Email is both an efficient channel for generating awareness and provides specific individual level response events that can be further modeled. Display advertising with social networks and programmatic buying also provide efficient targeting capabilities and ability to control cost and frequency to generate the initial awareness.
The combination of lower cost digital media with enhanced targeting capabilities and the ability to market and capture early engagement across the home buying process now makes it possible to build successful direct marketing programs for purchase mortgage. Start to apply these steps with structured testing and measurement plans and you will generate purchase leads for your call center and retail loan officers. Email and telemarketing nurturing programs can keep them engaged throughout the home buying process and convert them to customers.