A low pre-approval conversion rate doesn't automatically mean a loan officer or team is bad at converting. Before you coach to the number, check the mix of borrowers underneath it. A team working with a different credit profile can post a lower overall rate while converting comparable borrowers at nearly the same level as everyone else.
What happened when one office's conversion rate looked low?
One of our offices was converting about 23% of its pre-approvals into closed loans. Company-wide, that rate was in the low-to-mid 30s. That's a meaningful gap, and my first reaction was the obvious one: this team has a conversion problem, and we need to help them convert more of the business they're already bringing in.
Instead of starting there, I dug into the numbers to see what story they were actually telling.
How did borrower mix change the picture?
Across the company, about half of our borrowers had credit scores of 740 or higher. At this office, it was about a quarter of their pre-approvals. They were working with a fundamentally different mix of borrowers.
So we compared apples to apples. Looking only at borrowers with scores of 740 or higher, that office was converting at about 41%. Company-wide, the rate for that same group was only a little higher. Most of the gap came from who was in the pipeline, not from how the team worked it.
What should leaders coach on instead?
That finding changed the conversation completely. Instead of asking how to get the team to convert more borrowers, we started looking at where their opportunities were coming from in the first place, and how to improve the quality of the borrowers they start working with.
Had I walked into that office with a conversion-coaching plan, I would have been trying to solve the wrong problem. Worse, I'd have been telling a team they were underperforming at something they were actually doing reasonably well.
How do you compare conversion rates fairly?
Start by splitting the numbers by a factor that strongly affects whether a loan closes. In this case, credit score band was the one that explained the gap. Compare like-for-like segments across people or offices. Only then decide whether you're looking at an execution problem or an inputs problem. They call for very different coaching.
What's the takeaway for loan officers?
If your overall conversion rate trails your peers, don't assume you're the problem, and don't assume you're not. Look at the mix first. Numbers tell you where to look. They don't always tell you what you're looking at, and as leaders, we need to understand the difference.