Though less than 5 percent of loan inquiries at LendingTree Inc. currently come in by telephone, the company views the recently launched channel as an investment in the future.
“We're around seven-tenths of 1 percent of the entire U.S. consumer lending market” in terms of dollar value of loans closed, said Keith Hall, LendingTree's senior vice president and chief financial officer. “What we realized is that most of that traffic, if not all, came over the Internet — and even though it represents nice growth, it still is under 1 percent of the whole marketplace.”
LendingTree, which connects consumers with potential lenders, began testing the toll-free line in July and launched it nationwide in December to reach potential customers who lack Internet access or are uneasy about entering personal financial information online. The company also sees expanding its customer base as a cushion against any slowdown in mortgage refinancing.
Revenue from the channel is expected to pick up in the coming months as many of the loan requests made so far begin to close.
“LendingTree has two revenue streams,” Hall said. “One is a small amount it gets for transmitting loan requests to lenders, but we get a much larger closing fee when the loan subsequently closes. We're just starting to get into the second phase.”
Consumers who call in can request offers for mortgage and home equity loans as well as real estate referrals in which LendingTree tries to match home buyers and sellers with Realtors. Online, consumers have more options, including credit cards and student and auto loans. Right now, the margin on these loans doesn't warrant the incremental call center cost, Hall said, though that could change if conversion rates increase.
Opening the phone operation required little investment since Charlotte, NC-based LendingTree already had a call center to answer calls and e-mails from online applicants.
“All we then add are hourly workers to handle the additional call volume,” he said.
The temporary work force has doubled since the second quarter of last year, and Hall attributed half of that increase to the opening of the phone channel. The call center, also based in Charlotte, is open 24 hours a day, but agents generally shift to answering e-mail inquiries during the evening when call volume drops.
Income level, age and other demographics are similar for consumers using the phone and Web site. Consumers using both channels tend to have a much higher credit score than the national average and higher average mortgage size — about $200,000 compared with the national average of $140,000 to $150,000, Hall said.
Most of the advertising for the phone channel has come through television and radio, though there has been some direct mail. Two basic TV spots in 15- and 30-second lengths are currently in use. One is a traditional LendingTree ad in which the trailer was changed to promote the phone line. The second focuses on the phone service. Both ads run on cable and network channels.
The company expects to begin a 60-second infomercial that includes both the Internet and phone channels. Hall said the company may consider an additional ad focusing on teleservices “to keep the message fresh.”