4 Core KPIs for Mortgage Brokers
Sam Panetta covers the four core KPIs in a mortgage business, two reasons you need to track them, and one example of how it works.
You can’t get what you want at the bottom of the funnel without filling the top. Doubling from $2M to $4M a month means doubling every KPI, starting with leads.
1) KPI 1: Leads
Leads are the amount of opportunity coming in the door.
- Opportunity coming in.
2) KPI 2: Strategy presentations
Strategies, presentations, options, whatever you call them: it’s when you give the client a solution. “Mr and Mrs Client, I think you should use ABC Bank for XYZ reasons.”
- A clear recommendation to the client.
3) KPI 3: Lodgements
Lodgements, submissions or applications: when a deal is packaged and submitted to the bank.
- Packaged and submitted.
4) KPI 4: Settlements
Everyone’s favourite, and the one everyone tracks, because it feels good to see deals settle.
- The number everyone watches.
- But it’s only the bottom of the funnel.
5) Reason 1: Strategy
It’s very hard to make strategic decisions in your mortgage business when you don’t know your numbers.
- No numbers, no strategy.
6) Reason 2: Cash flow forecasting
If you only track settlements, it’s very difficult to forecast how much cash is coming in over the next four months.
- Lead indicators make forecasting possible.
7) Example: a $2M month
Say you generate 10 leads a month. You present strategies to eight (two you couldn’t help), lodge five and settle four. At a $500k average, that’s $2M a month.
- 10 leads.
- 8 strategies.
- 5 lodgements.
- 4 settlements: $2M.
8) Doubling to $4M
To settle $4M a month, everything has to double. You can’t settle eight deals from the same 10 leads. You need 20 leads, 16 strategies and 10 lodgements to settle eight, assuming the same $500k average.
- An extra 10 leads.
- An extra 8 strategies.
- An extra 5 lodgements.
- Gets you 4 more settlements.
9) When each KPI turns into cash
Brokers have one of the longest cash conversion cycles of any business model. A lead today means cash in around four months, a strategy in three, a lodgement in two, and a settlement in one.
- Leads: about 4 months to cash.
- Strategies: about 3 months.
- Lodgements: about 2 months.
- Settlements: about 1 month.
10) The next step: your activity
Tracking the four KPIs diagnoses where you are today and where you want to go. The next step is breaking down what you do with your time, so today’s activity produces the results you want in four, three, two and one months’ time.
- Diagnose first.
- Then change the activity.
The simplest version of the playbook
Track leads, strategies, lodgements and settlements, fill the top of the funnel to grow the bottom, and use the KPIs to forecast cash four months out.
