I believe in the deepest part of my soul that this episode of Todd Duncan TV could change your life.
Are you measuring your sales conversions? Are you being intentional with it? Do you know where you can impact your bottom line the most? I’ll give you a hint: It’s not by increasing your leads, it’s by increasing your conversions.
In this video and blog post, I give you a step by step strategy to convert leads to sales and create clients for life. Let’s dig in.
Take the Moneyball approach to your loan business
One of the movies that I loved watching was the movie Moneyball, and so that is the title of this episode, a Moneyball. And if you think back to Billy Bean’s character played by Brad Pitt, and you think back to that movie, one of the big takeaways for me in the movie was that before Billy Bean existed, before his methodology came into play, most of baseball was focused on the big things, the big numbers, the big hits, and all of those kind of analytics. What Billy Bean did is he figured out that it wasn’t so much the big numbers that mattered most, but it was the small numbers and that the aggregate of the small members made for the big numbers, which is why it then became a money ball.
Follow the story, check out the movie. But how does that apply to you in the loan business? How does that apply to you each and every day? If you’re slugging it out, pun intended, and you are trying to absolutely kill it and make some money, right? So I put up here that you’ve gotta know your numbers and I wanna walk you through just the kind of the analytics of how I think about your business and how I think about what you wanna accomplish. Most of you want to hit a home run. Most of you want to get on base with a borrower. You wanna be able to land an a real estate agent. You wanna be able to crush it in the marketplace and have people love you and line up for you and say yes to you all the time, right?
How to calculate your conversion rate
So the analytics really matter, and I found that most loan originators, when they really deep dive into the analytics, can make some pretty big things happen. So we’re gonna start over here under part A and part A involves three specific elements. So one of those elements is the number of conversations you have today. So let’s say you have a business plan and it calls for having four conversations a day. So that in and of itself is a goal. It could be your daily goal of conversations that you need, that at the end of that conversation is going to yield a borrower who is willing, able, and desires to do financing with you, right? Let’s say that in the normal world that 25% of those will actually convert to a deal, okay? And so the obvious math and the analytics here are that when one out of four convert to a deal, that deal is then in the system and you have a loan, right?
And there’s a lot of obviously trade things that you go through to make sure that the loan is registered the right way. And we’re just gonna, for simplification purposes, assume that that loan, because you’ve done a great job pre-qualifying that borrower, that that loan is going to get submitted to processing and that 90% of those loans that you put into processing actually close, right? So we’re gonna look at this. Number one. Now, when we start to look at analytics, what we’re starting to look at is that, first of all, do you have these three numbers? And the big question for most of us is if we don’t have those three, how are we succeeding? I mean, literally, we’re succeeding by accident, we’re succeeding by being in the right place at the right time. There’s no design, there’s no strategy, there’s no real tactic behind that.
And I think most originators probably end up, at the end of the month, not absolutely sure that they followed a business plan. If my thinking as an instructor in this business is true, I would say it’s probably north than 90% of originators don’t follow a daily plan. And that’s why this lesson Moneyball is so important and why knowing your numbers is critical. So watch what happens. Let’s assume that we have an aggregate tool in place. We’re able to have four conversations a day, which is 20 conversations a week, which is 80 conversations a month. Okay? If we look at the daily number and we realize that the four conversations produces one loan per day, right? Then we are going to have in that calendar month 20 originations.
Increase your conversion rate, not your leads
Now, here’s where it gets really exciting. I want you to not spend your time trying to increase your leads. I mean, there is a point in time where you obviously have to have enough people to talk to, right? Enough borrowers, enough people to have that conversation with. But most mistake growing the business with increasing leads, where I think about it, it’s not so much increasing your leads, it’s about increasing the conversion of those leads to actual deals. So let’s say that you’re able to improve your conversion rate, okay? And let’s say that you improve that conversion rate and now it’s able to yield one and a quarter loans. Okay? So we’re just gonna take the one loan a day, we’re gonna improve it just a little percent to one in a quarter loans per day. So what that materializes out to for you is 25 loans for the month. Using the same math, we decide to get a little bit better.
How to improve your conversion rate
Maybe we decide to have our partners refer borrowers to us better. Maybe we decide how to meet rate and pricing objections head on. Maybe we have deeper integrated dialogues about home loan strategy and what a mortgage plan and managing a mortgage actually looks like. So we start to develop some skill. We start to have some emotional bonding that takes place. We start to engage at a deeper level. We ask questions we haven’t asked before. We kind of deepen the dive and really find out what some of the fears are and what some of the joys are in both financing real estate and buying real estate. And obviously both ends of the emotional spectrum come into play. But here’s what I’ve learned, the deeper the conversation goes, the more likely that person is to, to use you. And uh, and that’s obviously what, what money ball’s about.
It’s about improving that conversion. So if we’re able to have the four conversations a day, so notice we haven’t changed the conversations at all. We’re simply changing the percentage of yield that those conversations give you. So let’s say this now with that kind of improvement takes you to 1.5 loans a day, which then translates into 30 loans a month. So here’s the first takeaway. You’ve gotta know the conversations you need to have, you need to have a baseline conversion percentage. And it doesn’t matter to me what it is, it matters to me that you know it, and you start with that as your baseline and then you improve from there. And the bottom line is we’re looking for output. We’re looking for loans per day that those conversations generate. Now if 90% of those close, okay, and so it’s submitted to processing and that application is going to close, let’s use some percentages.
How increasing conversions will increase you monthly revenue
Let’s use 90% of the time those loans will close. So what does that number look like? Well, it’s going to either be 18, it’s going to be 22 or 23. Let’s call it 22.5, or it’s gonna be 27. Okay? So just changing this small analytic gets us to a point where we see the number of loan applications increasing the pull through rate. And that’s a beautiful number to really look at. What is my pull through? What is the percentage of loans that actually close based on what I bring into the system, right? And let’s just assume for sake of this conversation that each of those loans that closes produces a $3,000 commission to you, right? It might be higher, it might be lower, but let’s use $3,000. So 18 at $3,000 is $54,000, 22.5 at $3,000 is $67,500, and 27 at $3000 is $81,000.
How looking at the analytics and developing a business plan will put you ahead of the competition
So this is a beautiful monthly number and I don’t know if you’ve ever given real thought to how all of this kind of migrates to you making money, but the bottom line is you can see by increasing your effectiveness, you’re increasing your pull through and you’re obviously increasing your monthly income. Now, right then and there, if we were just to stop on this, you’d be ahead of almost every person you compete against. Not only would you be ahead in terms of having business structure and strategy and having a plan, you would be ahead because you are building monetary gain by looking at the analytics. And any person that owns a business understands that you have to look at the optics, you have to look at what you’re doing each and every day. And you have to start to measure, excuse me, measure those optics.
If you don’t measure, you can’t improve
If you measure those optics, you can improve. If you don’t measure, you can improve. As Peter Drucker said, “What gets measured can be improved.” So the reason why I like going through these numbers with you is because you can start to see that throughout your career. You don’t ever really need to change the number of conversations you have. In fact, you could simply say that all I’m gonna do for the rest of my career is enhance my conversion. If I enhance my conversion and it produces this kind of lift, then that’s where I’m gonna make the money. Now, here’s where it gets really exciting. I wrote down here WIIFY. What in it for you? What’s in it for you? Right? So if we were able to take this conversion methodology and we were able to improve our conversion by, uh, basically 5%, okay?
So we would take it from whatever number you start at in this math and improve it by 5%, what I know is that’ll produce about $9,000 more in commissions per month just by improving conversion by 5%. All right? I know that if you improve conversion by 10%, it’s gonna produce not shockingly about $18,000 more a month in revenue. Here’s what’s exciting. If I’m able to produce this kind of increase and I’m able to take this monthly increase and I’m able to invest this at roughly 6% compounded annually, this $9,000 at 6% compounded annually over five years is in the millions of dollars. Obviously the 10 year compounded over every single year at 6% at $18,000 a month is also then in the millions and millions of dollars. And you can do the math on this, but what I, what I’m trying to emphasize here is besides the obvious kind of, this is why this is important, the most important thing is you realize what’s at stake.
And these numbers, again, if you’re able to produce this kind of business lift by improving conversion by 5% or 10% or even 15%, what you’re actually doing is you’re accelerating the amount of wealth that you’re able to create, not by seeing more people, but by doing a better job with the people that you have conversations with. And not by spending all the money that you make, but by taking that extra money that you’re able to make through increasing your efficiency and investing it at a relatively moderate level, 6%, you’re able to then have millions of dollars saved over the course of 5, 10, 15 years. So for you who are just starting off, part of the recipe to be financially free and to have security and to have some margin is to make sure you’re focusing on the Moneyball stuff, the analytics for you who have a little bit more experience.
Scale your skill to scale your business
I want you to question whether or not you’re actually running the business this way. Are you actually looking at the metrics? Are you measuring what’s happening every day? Do you know what that is enabling you to do in terms of monthly volume? And are you focused then on just scaling your skills? And that’s a big, big question. If you scale your skills, make them better, you will improve. Part of the way to handle any market, part of the way to make any goal come true is to get better, to get better, to get great, and to get great at what you do accelerates the effectiveness, the efficiency, and the efficacy with which you do it. Let me say it a different way. If you never decide to get great at a conversation, you will have to talk to a lot of people to kind of luckily get whatever volume you might need to get to pay your bills.
But if you’re intentional about scaling your skill and getting really clear on that conversation and by slowing down the conversation and deepen it, you speed up trust and you speed up that belief and that commitment, then you’re able to get more people to say yes. And at the end of the day, let me tell you what this business is about. It’s about solutioning borrowers with the right mortgage strategy so that they are better off because of their encounter with you. And as a result of that, then you are going to be helping that person manage that loan forever. Whatever that loan materializes into, whether they sell, whether they move up, whether they build whatever it is, you’re gonna be in that mortgage kind of management position forever.
So as an obvious, why do you have to have really good conversations? Cuz if you have a really great conversation that client’s gonna wanna stay with you for a very long time. If you don’t believe me, there are plenty of options. So back to baseball, this is Moneyball. Keep your eye on the numbers, know the small analytics, improve, improve, improve. And you can see what is at stake for you. What’s in it for you is everything. So play ball.
How can you improve your conversations to improve your conversions?
It all comes down to trust and High Trust Selling.
If you haven’t already, download my free High Trust Interview Guide. Following this guide when having conversations helps you have better conversations that build trust, which leads to higher conversions.