We are putting the final touches on Cogent Road’s new Roohmz Mortgage Enterprise application. We’ve been working on the application for nearly two years, and we are now going live at our first client locations. The energy level is through the roof!

Cogent Road began selling the software in January – and I personally conducted every single demonstration. For me there is no way to learn how to sell enterprise software except by hearing feedback from real prospects as you sell it. Admittedly, this is not the best strategy in the world, but 15 years selling enterprise software has taught me it’s the fastest way to create powerful presentations that shortens sales cycles and generate installs.

If you are in the business of selling software I think it’s important to understand the difference between selling software and training software. Enterprise applications need to be sold using engaging word pictures that illustrate how your software solves stubborn business problems, saves prospects money, eliminates needless work and enforces consistency. Avoid the tendency to run down a list of how of your features work – doing so is like giving your prospect a giant dose of verbal Ambien.

But do demonstrate the software. Don’t make the mistake of staying so high level that you fire up a screen shot laden PowerPoint while never walking your prospect through your beautiful software. The best solution? Use PowerPoint only to illustrate high level business benefits with images and animation – then move smoothly into your software to demonstrate how easily the concept is delivered. Prospects get this – and you’ll sell more.

My first couple of Roohmz Mortgage demonstrations we’re pretty bad. While I had carefully crafted a complete presentation and flow beforehand, it was obvious I was off the mark in more places than I’d like to admit. After each demo I asked others from Cogent Road who attended to provide feedback in order to produce a presentation that sold harder. Areas that didn’t resonate with prospects were dropped – others expanded. In the end, we ended up with a polished, extremely compelling presentation created significant desire.

Here is a basic outline of how I produce and deliver enterprise software demonstrations:

1. Identify three to five unique things your software does. If you can create interest in these areas – you’ve made it that much more difficult for competitors.
2. Create high level business cases around each item above. How will each item help the prospect save money, improve performance and eliminate errors?
3. Use PowerPoint to help you communicate the problem and how you solve it. (Animation with icons and arrows is great – lot’s of bulleted text is not!)
4. After describing the item – toggle into the software to show (at a high level) how the software easily achieves the benefit.
5. Repeat steps 3 & 4 for each item in the application.
6. Quickly summarize the benefits of all the items you covered as you end the demonstration.
7. Finish with a description of how easy it would be to get started – and how you will help them through the process.
8. Improve your presentation based on your prospects responses (or long periods of silence).

After little more than a month, we have Roohmz Mortgage installations underway with 10 different mortgage lenders. I belive the short sales cycle is due in large part to taking the time to continually improve the Roohmz Mortgage demonstration.

Good selling!

The funny thing is though, the market (especially the banking industry), tends to favor the tried and true. Why? Inertia I suppose. Companies do what they do – and get a bit itchy if you even hint at changing things up. At Cogent Road good software means applications stuffed with innovative functionality (read “stuff that never existed before”) which helps businesses get more done with fewer resources. And quite frankly this scares the crap out of our potential clients.

Case in point: Our AVAIL software. Rewind to February 2008.

My partner and I work closely with mortgage loan originators. While our Funding Suite application was designed to help these originators legitimately improve the qualifying ability of each applicant – many applicants simply could not qualify. After receiving the bad news, the applicant had nothing left but to walk out the door – without an inkling of what to do next. So about two years ago we began wondering if we could we create an application to help originators hang on to declined applicants until they eventually qualified. It was magic canvas time.

If this application was going to work it needed to generate a clear roadmap leading declined applicants to mortgage qualifying status in the shortest time possible. If not, these applicants would continue to drift about, or waste money with nefarious credit repair firms or futilely apply to other mortgage companies. By showing them the best actions to take right now, we could focus their energy – and get them qualified fast.

After burning through boxes of “scented” (my favorite!) whiteboard markers – we fleshed out a software application ultimately called Avail. It would eventually become the industry’s only automated mortgage qualifying assistant. It worked with the applicant for an entire year – providing four status reviews and updated strategies along the way. Clients used the software (in cooperation with their mortgage originator) to discover learn new behaviors that would legitimately improve the credit scores. Avail examined their credit accounts and revealed the types of questions mortgage lenders would ask about specific accounts in their credit. The software told them how to answer and what documentation they needed ready. Avail even showed the applicant how to get out from under their current credit card debt in the shortest time with the least amount of cash. It was an amazing application.

We expected huge results when we launched Avail in July, 2008. Instead what happened was, well –nothing. Did originators get it? Nope. Did they show it to declined applicants? Nope. Avail elicited some interest during demonstrations, only to be ignored in unison by our clients.

Turns out, like most new software applications, Avail simply took a while to catch on.

Flash forward. Today as a group, our clients enroll thousands of happy applicants every month into Avail. Large percentages of these initially declined applicants qualify for their new mortgage within six to nine months. In fact, we recently received a call directly from an applicant who had tracked us down simply to say thank you for building the software. Are you kidding me?

I love the software business.

BTW: Click here if you want to see a video demo of the Avail product.

A company’s core competencies define what the business is and serve as its competitive weaponry. A business’ core competencies should remain within the business so they can be protected, managed, cultivated and enhanced. Cogent Road is a software manufacturing company – we design, build and distribute three enterprise software applications. Naturally I assumed that software coding was one of our core competencies – and thus off limits when it came to outsourcing.

Now this may be a blinding flash of the obvious to everyone else – but I only recently discovered that software coding was not among Cogent Road’s core competencies. It happened during a recent Focused 40 session in which my partner and I were unpacking Cogent Road’s competitive advantages. What was Cogent Road, what business were we in and what made us competitive?

We came up with the following list:

Our software engineering methodology. Cogent Road uses a software development model called Extreme Programming, developed by Kent Beck in 1997. Over the years we have customized the XP process for our type of work at Cogent Road. We all speak in shorthand which helps get large projects completed quickly and under budget – something not easily duplicated by competitors.

Our product ideation methodology. My partner and I have a natural ability to think abstractly – which is good and bad. While no one at the company is going to ask Alan or I to plan the company’s Christmas party (in our minds it would be great, but in reality we’d neglect to book the restaurant) – we easily come up with scores of software features that have never before existed. The result is that Cogent Road’s applications are full of beneficial tools our clients can’t get anywhere else. Again, a significant competitive advantage.

Our customer service commitment. A significant portion of our software is never even used by our clients. In order to better serve our clients, Cogent Road regularly devotes significant R&D resources to developing automation and back-end tools that route, manage and distribute customer service orders and requests. (You can see our latest example here). While it’s true spend time (never enough!) training our account managers – our service commitment transcends the individual to create an overall positive experience with our software, even if the client never contacts us. This too is difficult to duplicate.

On a side note, during this process we made the painful discovery that our sales process was not a core competency. It actually should be, but we have some work to do.

What else did we learn? Writing software code was not a core competency at Cogent Road. This meant that if we found qualified, highly competent outsourced partners – we could plug them in to specific areas of our engineering process. In the same way an architect can use any number of building contractors to assemble her blueprints, Cogent Road can use outsourced programmers.

Still, we are starting slowly with one specific highly compartmentalized project. However, so far I am very pleased with the speed and quality of the work. If the project is successful, and I have every reason to believe it will be, Cogent Road will likely incorporate more outsourced coders into the mix.

I’ll keep you posted.

Funding Suite used to receive these documents via fax and e-mail. As our business grew, we recognized this highly manual process created bottlenecks in an otherwise automated process. Our processors constantly sorted through a steady stream of incoming faxes attempting to match each with the correct service order. This was a difficult and time consuming process and one prone (unfortunately) to human error. We eventually solved the problem and made document delivery easier (and less wasteful) for our customers, while creating more efficient internal process. Here’s how we did it.

Automated Fax Server: The first step was to eliminate our bank of fax machines by building our own fax server. Once this was integrated into our secure network the server digitized every Funding Suite fax and converted it to a PDF.

Indexing System: Next we used barcoding and indexing to tell Funding Suite what kind of fax it had received. Additionally it recognized the specific mortgage lender and borrower file to which it belonged.

An E-Folder for Every Borrower: Once a fax is received it is stored in an e-folder attached to the corresponding applicant file. Our clients now receive a digital copy of every document for their reference, along with the specific time it was received.

Client Side Document Delivery: We recognized that if the client already had the document in a digital format, our e-folder could actually eliminate the need for faxing altogether! Our next step was to provide our clients with three different document delivery options accessible directly from their Funding Suite application.

• Barcoded Fax Cover Sheets: If the lender needs to send Funding Suite a document that exists in paper form, a couple mouse clicks creates a barcoded coversheet. When faxed to us, the fully indexed document appears in seconds within their applicant’s e-folder.
• Direct Upload: If the client receives a document via e-mail – why print it just to fax it over to us? Instead, to eliminate faxing altogether, the lender can upload the document directly into the applicant’s e-folder. Funding Suite recognizes the type of document received and responds accordingly.
• Virtual Printer: For any other document, the lender can select Funding Suite’s virtual printer to print it directly into the applicant’s e-folder. No paper is ever used.

Intelligent Routing: The final and most involved step was to write a series of algorithms to match incoming documents with the correct service order, department and processor. Consider the lender requesting two years of W2s. In this example the W2 order is placed electronically and queued up until Funding Suite receives the signed 4506 IRS form. Immediately upon placing the order a completed 4506 and barcoded coversheet is presented to the lender which can now be e-mailed to the applicant. The applicant signs the 4506 and faxes it back. Funding Suite servers read the document, match it to the pending W2 order and tee it up for the next available processor. A digital copy of the signed 4506 is also made available to the lender for their internal files. By eliminating the manual processes we significantly improved our completion speed – which in turn improves our customer service levels.

Although we won’t see a return on investment in terms of additional revenue since Funding Suite doesn’t charge for these enhancements – solving this problem provided an overall service improvement for our customers.

Cogent Road is growing rapidly and my partner and I are extremely busy. To ensure we spend time thinking, we engage each day in what we call our “Focused Forty”. This is committed block of 40 minutes during which we sit in front of a whiteboard and discuss the future of the business. For those 40 minutes we sit atop Cogent Road’s crows nest peering through binoculars to determine which way our ship should go. If we didn’t schedule this time, we may well drift any which way the industry winds blow.

It was during a recent Focused Forty that we began harping on our competitors. Over the years we have watched our competitors copy nearly everything we do. More than a few competitors have even cut and pasted entire pages of copy from our website  into their own. (I’m talking entire pages word for word!). And they’ve copied our software innovations too. Most recently ScoreAll, an innovative idea in which all available credit scores may be purchased for a low cost with a credit report – and the highest ones added to the file.

Yet, after a short time we laughed because we realized Cogent Road had thought leadership. Rather than  creating their own futures – they are simply looking at us. Where we go – so go the rest. For them, this is easier and safer. But in the long run this management style is self defeating.

Instead of worrying about your competitors copying your latest strategy – stay focused on the future. Spend time thinking and creating innovations that will lead your business into new markets – and hence new revenue streams. Competition exists when two or more companies battle it out using the exact same products, service and strategy. Consider the airlines or the American automobile industry. This is a bloody war that leaves no victor. Instead, look ahead…where there is only endless ocean and blue sky.

Thinking like this is difficult. Acting on your ideas is harder still. But as the leader of your business, there is no more important work.

Most mortgage clients understand that their credit report influences their loan and its terms. For many, then, credit review and improvement can mean the world — not to mention a favorable mortgage.

For brokers, credit proofreading — or credit review and rescoring — can be an effective referral-generating opportunity. This service helps you identify errors in your clients’ credit reports, as well as ways they can correct the errors.

In fact, many FICO scores could be wrong. A 2004 U.S. Public Interest Research Group report found that 25 percent of credit reports contain “errors serious enough to deny consumers access to credit.” This could mean that one of in four
applicants may be turned down because their credit score was wrongly and unnecessarily lowered in error.

Another type of error that can deflate FICO scores and that often is more damaging involves credit-use. These errors  often appear in different forms, which makes them hard to detect. Worse, consumers who seemingly make good short-term financial decisions inadvertently commit credit use errors without realizing it.

In fact, many consumers use credit in ways that needlessly lower their scores. Some have too many credit cards. Others don’t have enough. The same goes for credit balances. It all depends on how the credit fits into their profiles and how Fair Isaac and Co. interprets consumers’ new credit.

Mortgage brokers can help their clients identify these errors, however, and work toward reconciling them and increasing their credit scores. To offer a credit-review and rescoring service, you’ll likely want software that detects any hint of data or usage errors within a credit profile. The software scans an applicants’ entire credit profiles each time you order a credit report. Results are then neatly categorized by the type of error, with credit-use errors separated from
data errors.

Once detected, these tools tell you how to fix the errors and how many more points your clients will get by doing so. With the help of a credit-reporting agency, your clients often can see higher credit scores in just three days. When you position your credit review in a way that presents you as a qualifying expert, you’re moving down the referral runway. Taking the next step and demonstrating that you can improve your clients’ credit health can enhance your referrals.

People are concerned with every detail of their financial lives, and with credit proofreading, their credit profile becomes the one financial area in which you can help. And because healthier credit profiles often mean higher credit scores and better mortgage terms, many clients go out of their way to send you their friends and family members.

With the quickened pace of our California software company just hours away, and the quiet stillness of Tennessee only hours past, I’m stuck in a place that’s got me thinking just how important having a clear vision of who you are and what you want to be is to the success of your business.

You can learn a lot by watching chickens. Or fire ants. Or the way horses respond to a looming thunderstorm. Nature, for all practical purposes, is reactionary. The response may be simple, the way fire ants pour out of a hole made in their ant hill in such volumes it looks like blood streaming from some mortal wound. Or nature may respond complexly and more slowly, as in the way a tree will grow too tall for its own roots as it strains for light in a dense forest. Yet, no matter how beautiful, nature is a well orchestrated symphony of cause and effect.

Man, however is not a part of this symphony. We sit outside of nature’s rules in much the same way as the composer transcends the boundaries of the symphony being played. Man is gifted with the greatest of all gifts, an ability to envision, a capacity to create.

If you are a business owner, or an aspiring one, my weekend excursion into nature has compelled me to share one bit of advice: You will be successful if you continue to think and create. As you strive after your vision, you will grow. Become reactionary, (which this weekend has taught is the natural way of things) and you will stagnate. Keep creating. Keep growing.

My partner and I began Cogent Road with a simple vision – provide loan officers with innovative software that can help boost their business, and ultimately their incomes. This caused us to think about different ways in which our software could deliver this vision. Rather than trying to be a specific type of company, we focused solely on helping our clients. We began in 2001 with a credit platform we leased from a third party. As we thought about our vision, we created different ideas in which credit could be used to increase our client’s business. This led to ideas on how we could help our loan officer clients help their own client’s, the borrowers. It led to ideas in which credit could be used to increase our client’s word of mouth business from referring sources and previous borrowers. The led us to create Funding Suite, and in turn the concept of credit proofreading, which we believe to be the most powerful business building strategy a loan officer can use. And credit proofreading is leading us into new software offerings for loan officers that Cogent Road could never have anticipated just a few years ago.

Reflecting back on a weekend lived right out of the pages of Field and Stream, I realized how much we, as business people need vision. Perhaps for the first time I realized how contrary to nature a creative vision actually is. And likewise how difficult. Vision takes thought, and thinking may well be the hardest work a man can do. So it goes that I encourage you, wherever you find yourself right now, to begin creating. Begin the work of thinking about what you want to do and why you want to do it. Then by all means get to doing it. Break free of the reactionary nature of your industry, your competitors or even your own habitual way of looking at your business.

You possess what nature does not – the ability to create. Now get composing.

The problem I have with the article is that the casual reader is left feeling helpless, almost at the mercy of a random credit score attached to hit or miss credit card use. The fact is, many mortgage brokers use advanced credit proofreading software that can identify exactly where you may be going sideways with your credit use.

Don’t feel bad if you don’t know how your use (or non use) of credit cards is helping (or hurting) your credit score. How could you know? And for that matter, those that say they know are only guessing. Credit use is always considered in context of ones complete credit profile. This means that opening up a brand new credit card may help your score – or hurt it. It all depends on how many cards you currently have, how often you use them and to what extent.

The bottom line is that the impact of your present credit use on your credit scoring is complicated. But it doesn’t need to be confusing. I’m suggesting that the best time to select and visit with a mortgage professional is before you are ready to buy or refinance your home. Pick up the phone and talk with a few of them – find out what they know about credit scoring – and ask them about their technical ability to scan your credit files for errors. Can they detect the issues in the way you use credit that are hurting your scores? Can they offer suggestions to improve your credit use in order to strengthen your scores? And can they scan your credit file for data errors that may be unknowingly harming your credit score?

These mortgage professionals exist. I know, because more than 20,000 of them use our software nationwide to perform these services every day. A one hour visit with anyone of them may result not only I a stronger credit profile, but also in the best credit education you’ve ever had.

In a mortgage market that is arguably one of the most difficult we’ve seen in decades, you’d think today’s mortgage originators would use every available resource to increase their applicant’s qualifying ability. Too often however, they do nothing but order a credit file, glance at the scores and decline the applicant.

[Head throbbing]

For the past six months I’ve been talking with broker after broker in webinars, on the phone and via magazine articles about the simple and very real fact that FICO is punishing applicant credit scores because of errors and issues in their credit files. I could say the same thing this way: “Don’t trust the credit scores on your applicant’s credit report, their probably lower than they should be”.  Yet in all this, it seems I’m the only one that’s learned anything and that being how true the saying, “old habits die hard”, which is to say they don’t really die at all.

Ok, so I’ve given my self a headache by beating my head against wall after wall – but I’m amped up on Advil, so here I go again. Mortgage qualifying depends (to a great extent) on the credit score. While the paper credit report reveals your applicant’s current credit scores, it doesn’t reveal the data used to calculate those scores. The credit report is a composite (merged data from three different sources) which makes it near impossible to understand how the account tradelines relate to the credit scores. But what we do know is that over 70 percent of the time credit scores are wrongfully lowered because of bad file data or the applicant’s improper use of available credit.

So what to do? Since the odds are that the scores you see on a printed credit report are lower than they rightfully should be, it would be helpful to know A) what the scores actually should be and B) what issues need be corrected. You can pour over the paper credit report for hours on end and never answer any of these questions. But, run the file through some good credit proofreading software and you’ll get your answers instantly. You see, you need software to sift through the data solely from TransUnion in order to understand where errors are pulling down its score. Ditto for Equifax and Experian. You can’t use the merged tradeline data in a printed report since it may be a mash-up of data from all three sources. When it comes to qualifying, paper credit reports aren’t enough.

The ironic thing about this… and perhaps the root cause of my headaches is that credit proofreading software doesn’t cost anything since these tools come free when you purchase a paper credit report. All it requires is a change of habit. Most mortgage originators connect to their credit agencies through loan management software like Calyx Point or Encompass, which only pass through a paper (PDF) credit file. Left behind are all the credit proofreading tools that can help them increase file accuracy and raise credit scores. This is the habit that needs breaking. Instead, order the credit file directly through the credit agency’s software so that you can see the true qualifying potential. Then retrieve the existing file into the loan management software (rather than ordering it). There is no extra cost to do this – and it doesn’t add much time to the process. It will however, help you qualify significantly more applicants.

The idea that the large company’s suffer from their own inertia began to bubble up about three years ago as we worked in partnership with one of the industries largest organizations. (For confidentiality reasons I’ll call this company AIG). My partner and I developed a business process that could effectively replace the need for physical appraisals, yet guarantee that the value of the residential real estate collateralizing a mortgage loan equaled the sales price. Without getting technical, suffice it to say we used fancy mathematical formulas that could measure risk – and then price an insurance policy accordingly.

It’s a simple, strait forward concept. Why use an appraisal, which after all is simply a personal opinion of collateral value, when you could get an insurance policy guaranteeing the value in seconds. When you consider that it costs only 50% of typical appraisal prices, that there is no cost unless the loan actually closes, and there is no valuation risk it seems like a no brainier.

I then set out to find a large, well connected company to sell this product for us. After several phone calls and preliminary discussions a division of AIG known for selling mortgage related insurance products signed an agreement to become Cogent Road’s sales agent. As a small mortgage technology firm, I believed we needed AIG to get an audience with the large mortgage securitzers which would be most concerned that the collateral backing up their investments was properly valued. I believed large companies only buy from large companies.

We came to AIG with a turn key business process, and the complete software solution needed to execute. All AIG had to do was sell it. Instead, they began ooze bureaucracy into every nook and cranny of the project. Its not their fault really, its simply that they were doing what big companies do…which is cranking out an endless stream of meetings. And meeting meant more interal work (called “action items”) and pages of unnecessary documentation (called “business case studies”). Before they could sell they decided the software should be modified a zillion different ways – and everything integrated with their own client billing system. Ok, fine. We did all that.

Then we had to have more meetings with additional (more senior level, presumably) managers who had no idea what the product even was. However, they knew enough to demand more changes to the software that again we believed were baseless and entirely unnecessary. But fine, we agreed to that too.

And we spent almost a year ironing out a contract with nary a prospective client in sight. AIG demanded what large companies demand and we conceded what smaller companies concede. In the end we had a one year sales agreement and an equitable financial distribution. AIG would get the product introduced to the many different lenders they assured us were practically tripping over themselves to get started. Cogent Road would provide all hardware, software, billing and collections. It was time to sell.

But the selling never happened. In fact, nothing ever happened. During our initial couple of conference calls we realized the big company didn’t really understand what the small company was offering. Slowly, it dawned on us that if they didn’t understand it they couldn’t sell it. And they didn’t. The year came and went and we never heard a word from them. In the end, they never even called us.

Perhaps its my fault because I picked the wrong partner, who knows. But, as I write this I am sitting on a plane en route to a sales meeting with one of the nation’s largest mortgage securitzers. My advice to the smaller company with a good idea; think twice about enlisting a partner to sell it for you. If its your idea, you can communicate its benefits better than anyone. Be confident and start selling.