Mortgage Brokerage Business - cost of marketing leads?

[UKmortgageguy]

Hi,

Just wondering if anyone can help answer a few questions?

I have been a mortgage broker for around 5 years now, and went self employed 2 years ago with leads provided to me by the company.
I am wanting to set my own brokerage up as an appointed representative and have a few quesitons:

LEADS/MARKETING
I do not have much of a client bank, simply becuase I am not allowed to contact any of the leads provided by the current company.
I am wanting to go down the route of pay per click google ads and paid social media marketing.
I will be looking to market in Bristol, Cardiff, South East and am telephone based, although face to face meeting can also be facilitated.
I am looking to market for FTB, homemovers and BTLs and looking to charge between £299-£499 dependent on the complexity of the case.
Do you know roughly how much google ads cost per lead, and how much social media marketing costs per lead, as well as rough conversions.


APPOINTED REPRESENTATIVE COSTS
Do you know what the costs are for being an AR?
I heard many charge around 15% of gross bankings.

Any help is appreciaited.

Thanks,

 

[Mark T Jones]

@tony84 is your man here

 

[tony84]

Networks charge between 10-15%, some will just take a straight cut but a lot are starting to go down the combination of %age and monthly fee route. I would imagine with no client bank, networks will be more inclined to go down the fee & %age route to ensure they actually get something from you.

As for leads, I am afraid I am not much use I have not bought leads in for 8-9 years now. I know a lad who does do leads but he has to spend £500-1000, in order to see a return. I could never get leads to work, but I would pnly buy £50-100 a month. PPC, I think unless you know what you are doing it is a good way to lose a lot of money, it might be worth getting a PPC manager in. They will charge but a good one will do the research and get the basics right (putting in negative key words for example).

I get the wanting to set up on your own (I did it myself 10-11 years ago), but I had been generating 90% of my own leads where I was working (and handing off around 60%!). I knew when I left if I could generate half of what I had been generating I would still be better off. Maybe you should look at trying to self generate a few leads first to see if you can do it.

The last thing you want to do is to leave your current position and find you have no idea how to bring business in. It is definitely the hardest part, especially in the early days.

Last year, I had to dip into savings for the first time since in 11 years! Its picked up this year but the next 12 months could go either way. It might not be the best time to be looking at leaving the guaranteed wage/leads.

 

[Paul Carmen]

Mortgage lead generation is ultra competitive, the best method is a combination of existing customers and targeted leads; e.g. remortgages, organic SEO leads and carefully selected PPC. There are bought leads too, but most of these are poor quality and can be a race to the bottom.

As you are starting out and can't bring business across, PPC may be the only option. However, there is no such thing as rough cost per lead, as the industry average numbers will mean PPC leads are likely to be very expensive, as the average CTR (click through rate) and conversion rate will be very low (3-5% click & 4-5% conversion). However, those doing it well will have really high CTR and a conversion rate 3 to 4 times higher.

You need to do some research and target very tightly, all your examples are way to broad and will not lead to good results. The CPC (cost per click) varies heavily by keyword, time of day etc. A do it yourself campaign is likely to waste a lot of money for limited or no return.

Also think about the conversion rate after they've contacted you; e.g. first time buyers tend to be a long lead time and many haven't found a property or fail affordability in the current market.

You will need a really strong proposition, marketing message, and access to a good range of lenders. Otherwise you'll struggle to get a good Google Ads conversion rate and to turn contacts/conversions into real leads and mortgages.

Before you commit to going it alone, you need to research it and create a marketing plan with a reasonable budget, or get someone to help you and understand the costs and options.

 

[UKmortgageguy]

Networks charge between 10-15%, some will just take a straight cut but a lot are starting to go down the combination of %age and monthly fee route. I would imagine with no client bank, networks will be more inclined to go down the fee & %age route to ensure they actually get something from you.

As for leads, I am afraid I am not much use I have not bought leads in for 8-9 years now. I know a lad who does do leads but he has to spend £500-1000, in order to see a return. I could never get leads to work, but I would pnly buy £50-100 a month. PPC, I think unless you know what you are doing it is a good way to lose a lot of money, it might be worth getting a PPC manager in. They will charge but a good one will do the research and get the basics right (putting in negative key words for example).

I get the wanting to set up on your own (I did it myself 10-11 years ago), but I had been generating 90% of my own leads where I was working (and handing off around 60%!). I knew when I left if I could generate half of what I had been generating I would still be better off. Maybe you should look at trying to self generate a few leads first to see if you can do it.

The last thing you want to do is to leave your current position and find you have no idea how to bring business in. It is definitely the hardest part, especially in the early days.

Last year, I had to dip into savings for the first time since in 11 years! Its picked up this year but the next 12 months could go either way. It might not be the best time to be looking at leaving the guaranteed wage/leads.

Thanks Tony, really helpful.
For the PPC side of things, I would definitely hire a ppc manager to run any campaigns, but was trying to establish rough costs to acquire a lead. I have a healthy budget for lead spend. I have heard from some people, that it can be up to £70 per lead so wanted to run some figures.

How do you self generate your own leads, if you don’t mind me asking?
It’s not a bad shout, although I want my business to predominantly gain leads from website clicks.

And yes, last year was tough.

Thanks again

 

[pentel]

I have a relative who did this.

They did most of their marketing via facebook, instagram and tiktok.

When they first started they had a part time job to supplement their income.

 

[tony84]

I do not really want to explain how I generate leads, nothing personal and nothing special or unique in all honesty. I just do not want the extra competition.

More than happy to help in any way, but thats something which could have a negative effect on me being able to pay my bills.

Is it £70 per converted lead or £70 per lead? I only ask as there is a big difference. I know when I bought leads, the conversion rate was well below 10%, so you could be looking at £700 per conversion.

 

[Mark T Jones]

The starting point - as with all marketing - is to get known for something & build your reputation as an expert in the field.

Random examples:

Self employed
HNW
Poor credit.
Self-build

The list goes on.

Each will require a slightly different approach.

If you go out as a generalist, I can guarantee that you will be flooded with cr@p.

 

[Paul Carmen]

Is it £70 per converted lead or £70 per lead? I only ask as there is a big difference. I know when I bought leads, the conversion rate was well below 10%, so you could be looking at £700 per conversion.

As @tony84 says this is the key, we generate leads via SEO and PPC for a variety of mortgage, finance and other high ticket businesses. The cost per lead most people quote is the cost per conversion from the PPC; e.g. the cost of the number of clicks they had versus the number of form fills or calls (or the cost per bought lead).

This isn't the real cost per lead, these are relatively cold leads and some of them you will never speak with. A lead is someone you speak with who is interested in your services, a warm lead. These are the real cost per lead.

The actual cost per sale is what Tony refers to and this is the key metric for your profitability. If you only speak to 33% of your leads and they've cost £70 per conversion, the real cost per lead is £210. You then have to convert those into mortgages, again if you convert 33% of these, the actual cost per sale is £630.

This is why being ultra targeted about your mortgage services, keywords/search terms you go after, and then testing and honing the actual marketing process is key. You need to specialise in areas that can be used to generate leads at a sensible cost and good return; e.g. contractor, self employed etc.

In Google Ads, a QS (Quality Score - the metric Google use to assess the quality of your keywords/ads for each search) of 10, costs around half that per click of a QS of 5.

Our extensive data and testing shows you need an average QS of 7+ for the entire campaign, a click through rate of 15% and a conversion rate of 20%+ to give a decent ROI for mortgage/finance PPC lead generation.

 

[UKmortgageguy]

I do not really want to explain how I generate leads, nothing personal and nothing special or unique in all honesty. I just do not want the extra competition.

More than happy to help in any way, but thats something which could have a negative effect on me being able to pay my bills.

Is it £70 per converted lead or £70 per lead? I only ask as there is a big difference. I know when I bought leads, the conversion rate was well below 10%, so you could be looking at £700 per conversion.

That is fair enough.
Well, that is what I have heard some people say. And I have heard up to £70 per lead! I have heard a range from £20 - £70 per lead, which makes it difficult to run high level numbers. Of course, the devil is in the detail, but just trying to get rough idea.

Thanks for your input.

 

[UKmortgageguy]

Mortgage lead generation is ultra competitive, the best method is a combination of existing customers and targeted leads; e.g. remortgages, organic SEO leads and carefully selected PPC. There are bought leads too, but most of these are poor quality and can be a race to the bottom.

As you are starting out and can't bring business across, PPC may be the only option. However, there is no such thing as rough cost per lead, as the industry average numbers will mean PPC leads are likely to be very expensive, as the average CTR (click through rate) and conversion rate will be very low (3-5% click & 4-5% conversion). However, those doing it well will have really high CTR and a conversion rate 3 to 4 times higher.

You need to do some research and target very tightly, all your examples are way to broad and will not lead to good results. The CPC (cost per click) varies heavily by keyword, time of day etc. A do it yourself campaign is likely to waste a lot of money for limited or no return.

Also think about the conversion rate after they've contacted you; e.g. first time buyers tend to be a long lead time and many haven't found a property or fail affordability in the current market.

You will need a really strong proposition, marketing message, and access to a good range of lenders. Otherwise you'll struggle to get a good Google Ads conversion rate and to turn contacts/conversions into real leads and mortgages.

Before you commit to going it alone, you need to research it and create a marketing plan with a reasonable budget, or get someone to help you and understand the costs and options.

Thanks for your input Paul.
These are all very useful points.
And yes, my next steps is really to speak with a local marketing consultant as I would not dream of managing a marketing campaign myself.
I am guessing many companies use PPC in conjuction with SEO to bring down lead spend.
I have a good marketing budget in mind considering I will be a one man band to start off(around £3k per month), as I know once I get reasonable leads on my desk, I convert them well. It's just establishing whether there is enough margin there.

Thanks again.

 

[UKmortgageguy]

As @tony84 says this is the key, we generate leads via SEO and PPC for a variety of mortgage, finance and other high ticket businesses. The cost per lead most people quote is the cost per conversion from the PPC; e.g. the cost of the number of clicks they had versus the number of form fills or calls (or the cost per bought lead).

This isn't the real cost per lead, these are relatively cold leads and some of them you will never speak with. A lead is someone you speak with who is interested in your services, a warm lead. These are the real cost per lead.

The actual cost per sale is what Tony refers to and this is the key metric for your profitability. If you only speak to 33% of your leads and they've cost £70 per conversion, the real cost per lead is £210. You then have to convert those into mortgages, again if you convert 33% of these, the actual cost per sale is £630.

This is why being ultra targeted about your mortgage services, keywords/search terms you go after, and then testing and honing the actual marketing process is key. You need to specialise in areas that can be used to generate leads at a sensible cost and good return; e.g. contractor, self employed etc.

In Google Ads, a QS (Quality Score - the metric Google use to assess the quality of your keywords/ads for each search) of 10, costs around half that per click of a QS of 5.

Our extensive data and testing shows you need an average QS of 7+ for the entire campaign, a click through rate of 15% and a conversion rate of 20%+ to give a decent ROI for mortgage/finance PPC lead generation.

Thanks for this follow up infomation Paul.
I am hoping that the cost per conversion is a lot less than £70 to be honest as I would struggle to make it viable with those costs.
Interesting to know about the 15% click through rate.
A 20% conversion rate seems high, but I do currently work on more complex cases with high broker fees so as I lower the fee when I start my own brokerage, I would hope that the conversion rate would increase.

Thanks again,

 

[Paul Carmen]

Thanks for this follow up infomation Paul.
I am hoping that the cost per conversion is a lot less than £70 to be honest as I would struggle to make it viable with those costs.
Interesting to know about the 15% click through rate.
A 20% conversion rate seems high, but I do currently work on more complex cases with high broker fees so as I lower the fee when I start my own brokerage, I would hope that the conversion rate would increase.

Thanks again,

We've got several mortgage clients PPC converting at 25-40%. We've built their websites, lead setup and entire marketing processes.

It's all about being ultra targeted and having specialised landing pages, adverts and mortgage funnels. They don't start at that level, but with optimisation and A/B testing we get them there within a month or two.

We model it all upfront, so can give pretty accurate QS, CTR and cost per conversion data. I'm happy to discuss this with you if it's something you're interested, but a but like Tony, we won't share the details on a public forum. Feel free to drop me PM on here or contact me on the details below.

 

[UKmortgageguy]

The starting point - as with all marketing - is to get known for something & build your reputation as an expert in the field.

Random examples:

Self employed
HNW
Poor credit.
Self-build

The list goes on.

Each will require a slightly different approach.

If you go out as a generalist, I can guarantee that you will be flooded with cr@p.

Thanks for your input Mark.
Each business model is slightly different.
But as long as the individual broker is competence and checks the case off with lenders thoroughly, I don't beleive there is any need to specialise, as the process is the same: Fact finding, reaseach(thoroughly), quote, DIP, submit.
The exeception to this is second charge loans, bridging, development and commercial as this is a completely different process that involves a different skill set.
I currently work on more complex cases attracting a higher fee and we do a mixture of business.
The company that provides me leads actively markets for poor credit and self-builds leads, and the conversion is very, very low.
For poor credit - most clients either do not have a sufficient deposit(usually a minumum of 15% for clients with recent adverse) or affordabililty does not fit.
For self-build - very low conversion, probably in part due customers calling in to get an idea, and then realizing it is not viable due to deposit/funds to carry out works initially, before stage release.
This could be down to the marketing of course, as I am sure there are brokers out there that make it would. Most of the adverse credit brokers that I know, work off referrals from other brokers with a commission split, due to the extremely low conversions.

Self employed and HNW I find are good.

I am happy being a generalist mortgage broker that takes the time to competently carry out research.
Anything bridging, second charges etc - I refer to someone else.

Thanks again for your input.

 

[Paul Carmen]

I am happy being a generalist mortgage broker that takes the time to competently carry out research.

The cost per conversion and conversion rate for PPC will vary a lot depending on what type of mortgage you are targeting; remortgage is much more expensive than mortgage, bad credit is more expensive than non adverse. However, within these areas there are massive fluctuations; e.g. "IVA mortgage" & "DMP" type terms have way lower CPCs than "bad credit". This is because they convert well and have lots of searches, but are incredibly hard to place mortgages for.

This is what Mark is referring to when he says specialise, he's talking about the marketing and customer perspective; e.g. being known for and having reviews for a service/product that customers look for.

You are correct in saying the overall process to place the mortgage is similar, assuming you have whole of market, or a panel of lenders that can deal with adverse and CIS/contractor etc. The customer doesn't know this, and some brokers don't have experience in these areas and aren't good at it. The customers experience is their bank or high street mortgage broker turned them down, so they look for a specialist online.

You will need to be very targeted and specialised with your PPC marketing, even marketing to your local areas. The CPCs are high and the mortgage search terms so broad (9.5 million UK searches a month containing "mortgage") that even with a big budget you will not get enough data to understand what's working, you also don't want leads you can't place or waste your time.

If you speak to local marketers, then ensure they have lots of experience of mortgage and finance marketing, and that they can demonstrate high levels of lead generation before working with them. We see lots of finance clients who have historically spent a lot of money and barely generated any leads.

 

[Mark T Jones]

Thanks for your input Mark.
Each business model is slightly different.
But as long as the individual broker is competence and checks the case off with lenders thoroughly, I don't beleive there is any need to specialise, as the process is the same: Fact finding, reaseach(thoroughly), quote, DIP, submit.
The exeception to this is second charge loans, bridging, development and commercial as this is a completely different process that involves a different skill set.
I currently work on more complex cases attracting a higher fee and we do a mixture of business.
The company that provides me leads actively markets for poor credit and self-builds leads, and the conversion is very, very low.
For poor credit - most clients either do not have a sufficient deposit(usually a minumum of 15% for clients with recent adverse) or affordabililty does not fit.
For self-build - very low conversion, probably in part due customers calling in to get an idea, and then realizing it is not viable due to deposit/funds to carry out works initially, before stage release.
This could be down to the marketing of course, as I am sure there are brokers out there that make it would. Most of the adverse credit brokers that I know, work off referrals from other brokers with a commission split, due to the extremely low conversions.

Self employed and HNW I find are good.

I am happy being a generalist mortgage broker that takes the time to competently carry out research.
Anything bridging, second charges etc - I refer to someone else.

Thanks again for your input.

I'm refering to your outbound marketing, not your capabilities.

In any business, attempting to market everything to everyone will quickly become a bottomless pit of expenditure.

In a money business (in which I have served 40 years) it has the additional downside off attracting all the dross that has been punted around the market for months.

You could of course be a broad specialist in a specific geographic area, where you actually know the right people and who to avoid.

 

[Paul Kelly ICHYB]

@UKmortgageguy The only real way to know is to test, test, test.

Using the previous comments, if you do not want to specialise, create a few different landing pages aimed at the different type of customer and make sure it is set up for SEO as much as possible. You can then set budgets for each page, start advertising and start measuring.

Regularly review your pages, even create multiple versions for A/B testing and you will soon understand what works best and how to minimise costs.