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Special Reports
Lead Generation
1-800-FOR-RATES Launch 10 Years In the Making
By Joshua Brustein
NEW YORK-Ken Brown has been sending out about 1,000 faxes a day to brokers nationwide
since mid-May. He is preparing for the launching of 1-800-FOR-RATES, a new lead generation company. Mr. Brown hopes
to reach 40,000 brokers, forming an initial base of 100 brokers to receive leads from 1-800-FOR-RATES.
Mr. Brown's new company, which will be a phone-based system for generating leads
for brokers exclusively, has been 10 years in the making.
In 1993, Mr. Brown acquired the phone number 1-800-FOR-RATES to draw customers
to his own brokerage, Evergreen Mortgage. After ABC Radio offered to give Evergreen free radio spots in exchange
for a portion of the revenue generated, the company's phone lines were overwhelmed with telephone calls.
The project was put on hold, pending the development of interactive voice recognition
technology needed to handle such large volumes of calls. When that became possible, the number was relaunched in
the year 2001. It has succeeded in helping Evergreen Mortgage turn a profit for the last two years.
Now, Evergreen is closing its doors and Mr. Brown is going to operate 1-800-FOR-RATES
as a lead generation company for brokers nationwide.
After waiting eight years for its development, Mr. Brown decided that IVR wasn't
the best option. In its place, 1-800-FOR-RATES will use another relatively new technology that allows a direct
connection between customers who want loans and brokers who want customers.
"In this day of technology, being connected immediately to someone who is
really knowledgeable is the height of technological sophistication," said Mr. Brown.
When a customer calls 1-800-FOR-RATES, the phones of all participating brokers
in the area will ring. The first broker to respond is connected directly.
Aside from the personable service that has been made possible by advanced technology,
Mr. Brown says that customers will be attracted to a business model that can provide a better value than LendingTree.
Mr. Brown refers to LendingTree as the "specific gravity of leads," since it has been the leader in the
field. LendingTree has generated over eight million leads worth over $48 billion in closed loans over the past
four years.
When a customer calls LendingTree, they are then contacted by four lenders, who
"compete" for their business. But Mr. Brown points out that these lenders aren't necessarily the cheapest
available. They have, after all, paid LendingTree for the lead. The average broker, says Mr. Brown, works with
dozens or hundreds of lenders without such an obvious conflict of interest, increasing the competition significantly.
Mr. Brown claims that while his model increases competition for the benefit of
the customer, it simultaneously reduces the competition for the purchaser of the lead. Unlike LendingTree, 1-800-FOR-RATES
leads are exclusive, going only to the broker who answers the phone first.
LendingTree had a 12.9% conversion rate in the first quarter of 2003. But
Mr. Brown says that only translates to about 3% conversion for each of LendingTree's
lenders, who pay for leads that they then have to compete for. If 1-800-FOR-RATES can convert the same amount of
exclusive leads, he says, the conversion rate per client will be four times as high.
Tom LaMalfa, managing director of Wholesale Access, a mortgage research and consulting
firm, believes that Mr. Brown's model has the potential to provide a superior service to customers and mortgage
businesses. But the main problem, he said, is that most brokers aren't interested in paying for leads. He added
that many lead generation companies, especially those targeting brokers, fail.
Mr. Brown is undeterred, though he concedes that many brokers may not be attracted
to 1-800-FOR-RATES.
"There are over 50,000 brokers in the United States," he said. "All
50,000 of them are not interested in getting leads. But if one half of one percent are (interested), then we really
have fulfilled our goal." He added that he expects 1-800-FOR-RATES, which will launch in mid-June, to turn
a profit immediately.
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