[New] EVERYTHING IS WITHIN REACH with the right relationship

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shares your enthusiasm.

As a public company, your goals and dreams are no longer private. Shareholders with a vested interest in the company need to be convinced they’ll come to fruition, and how profitable they’ll be.

When Argus Analyst Kevin Heal came out with a report in November that downgraded RKT’s stock from “hold” to “sell,” he cited a number of difficulties the company is facing, though they are not much different from what other companies across the industry are facing. Although Rocket has a long list of ancillary services, like Rocket Solar, Rocket Auto, Rocket Money, etc., Heal’s report states, “We believe that these acquisitions and expansion into other financing and partnerships will not generate enough revenue to substantially move the needle.”

Rocket Money, formerly known as Truebill, was acquired last year for a hair under $1.3 billion, and has generated a little over $84 million this year. Heal calls these earnings “inconsequential” compared to the amount of revenue from mortgage business.

Rocket Money is an important acquisition if the company wants to succeed in becoming a one-stop-shop for consumers to manage their finances. It’s essentially the mouthpiece to their funnel, working as a lead generator bringing in consumers who will eventually need auto loans, mortgage loans, and maybe even solar panels for their house.

“Subscription revenues from Rocket Money were $32.6 million (for the third quarter),” Heal said. “That represents 2.5% of Rocket’s total revenue. To me that is inconsequential when you are deriving well over 90% of revenues from the mortgage business.”

Sure, at this point Rocket Money’s revenue is no match to their mortgage business, but the app was just acquired last year and seems to be performing well.

When Rocket first acquired Truebill in December 2021 it expected the service to generate $100 million in annual recurring revenue, so generating $84 million in premium subscription revenue by the third quarter puts them well on track to reach their goal. TechCrunch also speculates that since Truebill was acquired in all cash, Rocket may have gotten a discount of sorts, making this a very cheap deal.

Other analysts, Barker and WedBush Analyst Jay McCanless, believe that Rocket’s acquisition of Truebill was a wise move.

“Gen Z’s almost as large as the millennials, almost as large as the baby boomers,” McCanless said. “And so having an asset like Rocket Money that people are gravitating to is very beneficial. It seems like the subscriber growth is headed the right way as long as those young people still have jobs and the job picture doesn’t fall apart for them.”

McCanless said when the market is healthy and business is looking good, that’s the time to make long-term strategic investments and acquisitions that will carry the company through future market downturns. Rocket Money is one of these acquisitions.

“Rates will go up and rates will go down, and that will impact the short-run growth of your business,” Farner said. “But if you’re focused on the long run engagement and acquiring of a client, then you’ll stay on the right path to grow your organization regardless of what interest rates are.” customers happy. It allows services and creates stickiness to the customer base,” Barker said. “What it also creates is a significant amount of leads for customers. I believe (Rocket Money) has over two and a half million customers at this point, growing at about a hundred percent rate. So if you run that out a couple years, you’re gonna have over five to seven million customers within Rocket Money.”

Moreover, Rocket Money is a viable alternative to generating leads at a lesser cost, Barker says.

‘VERY CHEAP LEADS’

Fmargin that they generate — that will generate a couple billion worth of earnings.

For now, the service exists to please customers and make the company “stickier” as analysts like to say, but ultimately what it generates are very cheap leads.

It’s expensive to generate a mortgage customer. If you go to a broker, you have to pay 1.5% on that mortgage, or one and a half points for generating that mortgage. For a $300,000 house you’re paying a broker $4,500 for that customer. But if you get a Rocket Money customer that you’re already servicing, there’s no real incremental cost or it’s very minimal.

Sure, it takes money to operate Rocket Money and there is some technology associated with it. It will take some investments to develop it and update it over time, but these costs are inconsequential compared to what it costs to bring in

In the third quarter earnings call, Rocket Chief Accounting Officer Brian Browns said, “One of the biggest challenges in the mortgage industry is the cost to acquire a client, which typically runs in thousands of dollars. In contrast, Rocket money can acquire a new client for less than $100, which is a significant difference.”

The beauty of this funnel system Rocket is building where they initially acquire the client through Rocket Money then lead them to use the rest of their services to fulfill financial needs is that it’s a huge money saver.

“Acquiring a client one time for one product or service will cost you a certain amount of marketing dollars,” Farner said. “But if you can engage that client daily, weekly, monthly, and bring them back for another service, let’s say it’s Rocket Solar… you’re able to help the client reduce cost and generate revenue without paying to acquire

The whole reason for creating that onestop-shop is to generate lower cost customer acquisition goals, Barker said. “And no one’s ever done that in mortgage, like from a mortgage lead. It’s all been very episodic. And so when you think about what Rocket wants to do… I think it’s great that they’re doing it,” Barker added.

CAN YOU SEE IT NOW?

magine one platform where you can manage all your payments and acquire the loans you need throughout your lifetime. You could cancel your Netflix subscription, refinance your auto loan, and apply for a mortgage all in the same day by pressing a few buttons. An app like this could be an absolute game-changer, and especially attractive to the younger and more digitally advanced generations.

“When you think about the engagement that we have with that client on a monthly base basis as they make payments, there’s an opportunity much like Amazon to offer other related services, and that’s exactly what we’re doing as we talk about Rocket Money and Rocket Rewards and Rocket Loans and Rocket Homes,” Farner said.

Once a person graduates college and lands their first job, they’ll have to step into the real world of managing monthly bills, subscriptions, insurance, credit card debt, and begin to take ownership of their finances. They’ll need new businesses, is leverage this great core of mortgage, but wrap it with these financial services and this engagement platform that we’re building,” Farner said. “To allow our clients to constantly keep up to date on their finances, but also allow the company to have the experience and the relationship with the client on an ongoing basis so we can leverage the marketing costs time and time again… So I think Amazon is a great blueprint for where you’re seeing Rocket going.”

New Competitors

But Rocket is not the only company with this vision. There are strong competitors out there looking to do the same thing.

“SoFi is a good one,” Barker said. “I mean, they’re doing it in different ways. They’re growing a lot faster and they’re a bank. They do student loan refinances. They outsource mortgages. They do personal loans, and they have a fintech franchise that does payments processing for neo ads.” NEO is a cryptocurrency often described as a rival or alternative to Ethereum.

In February 2022, Insider Intelligence came out with an article stating that SoFi could be the next Amazon of the banking world, providing a one-stop-shop for all banking services.

—JAY FARNER

to gain some financial literacy in order to understand how to apply for their first loan or credit card.

“Every experience is separate and so it’s hard for clients to connect all of those experiences to manage their finances,” Farner said. “And so there’s a huge opportunity to place all of this on one platform.”

By centralizing these transactions into one platform, it eliminates confusion, delays, and costs for the consumer.

“When I think about where Rocket’s headed, Amazon is a great example,” Farner said. “I may later today recognize that I’ve gotta buy a light to install in my garage. I may do it on Amazon. Later today, I may have to buy some Halloween costumes for my kids. I’ll do it on Amazon. It offers many different types of products, but it’s one company that knows me, that can execute on a delivery that I have confidence in.”

Rocket’s goal is to have the same kind of centralized platform that will serve consumers’ financial needs.

“That’s exactly what you’re seeing us do as we grow out these businesses or acquire

SoFi said that its Technisys deal will help it with its ambition to become “a one-stop shop financial services platform.”

Barker emphasizes that SoFi may be in a better position to become a one-stop-shop for consumer finance because they are a bank. Opening a bank account is the first step to becoming financially independent and many consumers begin opening their own account in high school or college, before they even have to manage subscriptions, bills, or debt. The main advantage banks have is being able to see customers deposits and paychecks – that creates stickiness.

“If you have a sticky customer base that wants to utilize your products over and over again, that creates lower customer acquisition cost and the ability to sell more products,” Barker said.

Then again, Amazon had to deal with competitors too. Having an original idea is not what led the company to win.

“Back in the internet heyday, there were plenty of internet shopping malls where they were aggregators,” Heal said. “So, you know, basically Amazon is kind of a big shopping mall. They’re the one that survived. But there were countless others that had the same business model that went by the wayside.

By AMERICAN MARKETING ASSOCIATION, SPECIAL TO MORTGAGE BANKER MAGAZINE

Researchers from University of Miami and New York University published a new Journal of Marketing article that examines how voice technology can affect what consumers reveal about themselves.

The study is titled “Information Disclosure in the Era of Voice Technology” and is authored by Johann Melzner, Andrea Bonezzi, and Tom Meyvis.

We live in an era where consumers constantly interact with technological devices connected to the internet. Whenever consumers search for information online, make purchases, or consume videos, music, and other content, they disclose information about themselves. This disclosure has allowed technology companies to collect consumer information at an unprecedented scale – which they in turn have monetized directly, mined to identify unmet needs, or used to optimize marketing activities such as segmentation, targeting, and pricing.

disclose information about themselves both verbally, that is, by voluntarily providing information through language, as well as nonverbally, that is, by involuntarily revealing information through vocal paralanguage and ambient sound.”

Verbal Disclosure

The researchers also identify mechanisms that arise from fundamental differences between oral and manual communication. They integrate these mechanisms into a verbal disclosure decision-making framework illustrating the complex ways in which communication modality can affect consumers’ likelihood to disclose information. This modality-dependent framework not only provides impetus for future research, but can be used as a tool by marketers to gauge when and how oral versus manual communication may increase or decrease consumers’ likelihood to disclose information verbally.

from such auditory nonverbal disclosures. Additionally, it provides an overview of industry patents attesting both to the wide range of information about consumers that can be extracted from audio data and to industry interest in leveraging such data.

Practical Implications

Of interest to marketers: Practically relevant suggestions for marketers to aid them in counteracting processes that reduce consumers’ likelihood to disclose information verbally when speaking with connected devices.

How vocal paralanguage and ambient sound as new sources of information in oral interactions with connected devices can be used to improve targeting effectiveness, specificity, and context-awareness.

Of interest to policy makers: Suggestions for consumer protection measures against mechanisms that may misleadingly increase consumers’ verbal disclosure likelihood when speaking to connected devices.

Privacy challenges of collecting and using information inferred from vocal paralanguage and ambient sound inherently captured in oral interactions with technology in light of both U.S. and European privacy legislation.

Until recently, consumers interacted with technology largely through manual communication, which entails typing or selecting options by clicks or touches. Voice technology (brought about by artificial intelligence) has enabled interactions to also occur through oral communication and consumers increasingly engage with their phones, tables and other devices using their voices.

Melzner explains that “The rapid propagation of voice technology raises a vital question: Do consumers disclose more or less information about themselves when they interact with technology orally rather than manually? To answer this question, one needs to consider that consumers can

Nonverbal Disclosure

Oral communication with connected technologies allows one to capture information beyond language in the form of nonverbal disclosures, which are largely absent in manual communication. When consumers speak to connected devices, vocal paralanguage (e.g., the sound of their voice or how something is said) and ambient sounds (e.g., sounds in the current environment and from activities) are inherently captured and reveal information about consumers. The article provides an overview of marketing relevant information around consumer states (e.g., emotions, health conditions, current activities) and traits (habits, ethnicity, personality, identity) that can be inferred

“Our analysis suggests that voice technology can increase, but also decrease, disclosure. From our research, policy makers can gain a better understanding of how to regulate the collection and use of information disclosed to voice-technology in the interest of consumer welfare. In particular, our analysis calls for higher privacy protections for information disclosed in oral interactions with technology,” says Bonezzi.

You can read the complete article at ScienceDaily.com https://www.sciencedaily. com/releases/2022/11/221130114606.htm

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Gather with your peers for a packed program of networking, product showcases, educational sessions, motivational speakers, and so much more!

Learn in-depth about the impact of blockchain on the mortgage industry. Find out why you should be using LinkedIn to build your business.

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