How do you ensure that the benchmarking data is accurate and can be used for meaningful comparisons between firms?
While benchmarking is never a perfect process, we believe our data is the most accurate, apples-apples data in the country.
We have developed a detailed set of definitions that clearly describe each data element. These definitions are fine-tuned and clarified as necessary each cycle. After over 20 years of refinement, we believe our definitions are well organized, clear and complete.
But having clear definitions is only half the battle. Over a period of six to eight weeks, MBA and STRATMOR personnel review and scrub each company data submission in detail. We look for errors, omissions and data inconsistencies and provide a list of follow up items for each participant. When all items are addressed, we prepare the preliminary data books to be used for our Peer Group roundtables.
We believe we are a high-performing mortgage banker. How would we benefit from the Peer Group program?
While some companies clearly perform better than others on an overall basis, we have yet to find a Peer Group company that is "best in class" in every key metric. Therefore, even for the best performing companies, there are always pockets of opportunity. By realizing improvements in weak areas, high performing companies can achieve substantial benefit from ongoing Peer Group participation.
Our business model is different from most other companies. Therefore, what good would it do to compare with "peers"?
While many companies believe their model is unique, they may be surprised to learn that there are other companies that operate in a similar fashion. However, even if a portion of their model is unique, other aspects of their operations may be very similar to peers. For example, if a retail lender sources loans in a unique way, they may have sales costs and sales productivity benchmarks that are not comparable with others in the Peer Group. However, all of the activities and costs after the point of sale may be comparable, including fulfillment (processing, underwriting and closing) and production support (e.g. post closing, secondary, shipping).
Furthermore, there is great value in understanding the competitive market landscape. If you better understand the issues driving your competitors, you can take a more learned approach to competing in the marketplace.
After attending our roundtable meeting, many of our participants are able to identify a subset of companies within the Peer Group that line up particularly well with their own company. They will then analyze their company results against this subset of companies. This allows for the best "apples-apples" comparisons.
How much time is required to compile the Peer Group data?
Compiling the Peer Group data is in fact a time-consuming task. The key drivers of compilation time are:
- Whether or not you are a first-time participant
- Whether or not you are reporting both production and servicing
- How many production channels you have (Retail, Broker/Wholesale, Correspondent, Direct)
- How well your financial statement line items "line up" with Peer Group formats
We estimate that a first time participant with multiple production channels and both production and servicing may require 40 to 60 hours of compilation time. If your firm is a veteran of the program and is perhaps a "production-only" firm the time requirement may be reduced by 50%.
While the data compilation process may take 40 to 60 hours at most, the work can be done over a six to eight week period of time. This allows most firms to successfully juggle the resources needed to complete the task.
How can I justify the cost of the PGR Program?
The cost of the program varies depending on whether you are a MBA member vs non-member; the frequency of your reporting; and/or your production and servicing volume. In the end, our participating companies have concluded that the benefits of Peer Group participation far exceed the hard costs and the time and effort required to compile the data.
In the go-forward market, companies who understand their costs, efficiency, productivity and revenue dynamics will gain market share. Participation in the PGR Program is critical to gaining an understanding of your performance and an assessment of strategies and operating tactics that can be undertaken to maintain competitiveness in the new market environment.
How will the peer groupings be determined?
Beginning with the Spring cycle, participating lenders will be ranked in order of estimated production volume for the previous calendar year. The PGR team will then form separate and distinct peer groups based on operating model (Bank vs. Independent vs. Hybrid) and with a targeted limit of 15-17 companies per group. While the exact threshold volume for being placed in the Large Bank or Large Independent Group is not known, we estimate that the cutoff will be somewhere in the $8 billion range for this cycle.