Limited Options Get More Conversions

About 15 years ago, when I was a branch loan officer at Downey Savings and Loan, I got calls everyday from bank customers asking about our rates. I finally figured out why I received so many "rate" calls; they didn’t know what else to ask.

The number of options you present to a prospect greatly influences your conversion rate. Simply said, the more options you present, the greater the chance the prospect will do nothing.

That’s right! It’s a proven fact. Too many options lead to inaction.

At Columbia University, Professors Sheena Iyengar and Wei Jiang did a study to understand the relationship between the amount of choices offered in 401K programs and participation in the plan. They looked at 657 companies that matched at least 50% of employee contributions.

When the 401K plan only had two options to choose from, 75% of employees signed up for the plan.

For every additional 10 options that were added to the plan, 2% fewer employees signed up. And the company that offered the most choices in their 401K plan had the lowest amount of participation.

Another study done in 2000, came up with similar results. In supermarkets that offered 24 different types of jams, only 3% of people bought jam. When there were only 6 types of jams offered, 30% of shoppers bought jam.

What the heck is going on?

The problem lies partly in Buyer’s Remorse. People don’t want to make a mistake and regret it later. When given too many choices, the decision becomes too hard.

We all offer hundreds of loan programs. And it is a good thing to state that in our advertising. But when it comes down to it, you need to take charge and ADVISE the prospect which loan is the best for him. You are the professional. You need to tell him which loan will be best for him based on the information you gather from him.

If you leave it up to the prospect, he will never be able to choose.

By using the proper questions in your interview you can find out what he wants and offer it to him.

In the end, I suggest you offer your prospects three different loan programs. Describe the pros and cons of each and let them choose from the three. This technique gives you the best of both worlds. You are seen as a trusted advisor offering multiple solutions to satisfy their needs and additionally offering crucial expertise and advice. On the other hand, you are not pushing any particular loan program upon them, so they cannot say that you did it just for the commission. This also reduces buyers remorse because they are informed of the pros and cons and will know that they made the best choice. They also cannot blame you later if their situation changes and desire a different loan.

Offering just one loan is not enough, and more than three leads to confusion and stalling. Stick with the Three Options Technique and you will convert more prospects.

I am Kelly Heyden. Know more about mortgage broker training visit loanbrokeracademy.us.