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   ARTICLE   |   From Scotsman Guide Residential Edition   |   March 2006

Past Customers: Seeds or Weeds?

It’s essential to tend to previous clients to see your referral business flourish

r_2006-03satterlee_spotEvery time you close a loan, you plant a seed. If you ignore it, it will have little chance to take root. You will continually search for new sources of seeds to plant in its place.

Customer-relationship management (CRM) is all about tending this garden. With a little thought and some care, your closed loans can flourish into a continuing source of new business that can sustain you for years.

The bad news is that competition for your borrowers is fiercer than ever, especially considering the options they can find online. The good news is that borrowers also are re-entering the marketplace more frequently. The days of most 30-year mortgages actually lasting 30 years are largely a thing of the past. Customers who secured ARMs soon tire of escalating rate adjustments. Increasing property values entice homeowners to tap into their home equity for a limitless number of uses. The real estate market can provide a steady supply of buyers, many of whom are buying again in record time.

Not only is there a tremendous amount of repeat business to be had, but there are also referrals to be earned. No man (or woman) is an island. Most borrowers have friends or family members who could also benefit from what your services.

Why bother with CRM?

Without an intelligent CRM plan, you’ll have to work much harder just to maintain the status quo or to take your business to the next level. Whether it’s by pounding the pavement, advertising in the newspaper or purchasing leads of questionable quality, ignoring the new-business potential that’s no further than your own filing cabinet is short-sighted, detrimental to growth and just plain bad business.

Studies have shown that most mortgage borrowers are satisfied with the service they receive from their originators and lenders. They’d not only consider returning to them the next time they are in the market, but they also would be willing to refer family and friends. Good, right?

It’s been found, however, that most borrowers forget their originator’s name within a few years. Not so good.

Originators who do nothing to maintain their relationships with borrowers can lose two-thirds of their clients’ next deals.

Call your borrowers from three to five years ago and see how many of them have since refinanced or done business with another originator. If at least one has, and is still in the same geographical area, then you’ve been fired without knowing it. If you didn’t do anything to stay in front of these clients, you never really gave yourself a chance.

Your borrowers don’t stop doing business; it’s just that many of them stop doing business with you — that is, unless you have a plan to keep them.

Tend to your garden

If customers are seeds, then customer service is the soil in which they live or die. Even the best CRM program will have an uphill battle if you haven’t delivered superb, memorable service first.

You don’t get extra points for doing what customers expect. There’s nothing memorable about simply meeting someone’s expectations. Exceeding expectations is what gets remembered and talked about.

To see your referral garden flourish, consider the following suggestions:

  • Include everyone: Aside from memorable service, the most important aspect of any CRM program is universality. Include all your customers in your program. Too often, people will try to nickel-and-dime their way out of including everyone in their program. But doing so is penny-wise and pound-foolish. The few dollars you’ll save by not including someone is insignificant compared to the profit potential of future business and referrals.
  • Spice up your mailings: Sending the same tired envelope, postcard or newsletter every time runs the risk of finding the round file before the letter carrier gets to the next house. Letters, greeting cards, newsletters, postcards — mix it up.
  • Measure the results: If you can’t determine with a reasonable degree of accuracy how well your program is working, you’ll have a difficult time measuring your return on investment. If the only answer you can give someone who asks about the effectiveness of your CRM program is, “Pretty good, I guess,” then you’re not in a position to evaluate it adequately.
  • Make it easy: Your borrowers should reach you more easily than they can reach anyone else. Consider including a postage-paid reply piece with everything you send. Be sure to add every way your borrowers can contact you (e.g., your e-mail address, Web site, cell-phone number, fax number and mailing address).
  • Strive for top quality: Your marketing pieces should appear professional and not be of poor quality. Rely on common sense, and don’t dwell on how pretty they are. Remember, quality, not aesthetics, is what counts. If what you’re about to drop in the mail doesn’t convey a sense of quality, drop it in the trash instead. Your professional image is at stake. Protect it.
  • Consider personal versus salesy: Stay away from signature stamps or digitized faxes. Opt instead for hand-signing, even if someone else does it for you. As for address labels, nothing screams, “I sent this exact same piece to 400 other people, too!” more. Opt for personal over slick, salesy and glitzy. Also, resist the urge to slap logos or pictures of yourself on everything. You’re already past the name-recognition and brand-identity hump. Save the photos and logos for your marketing efforts to potential new clients who don’t already know who you are.
  • Say thank you: Borrowers love cookies, brownies, flowers, fruit baskets, etc., but these gifts probably won’t make your phone ring four-and-a-half years after settlement. By all means, use these thank-you gifts to your advantage; just don’t rely on them exclusively to earn your borrowers’ loyalty.
  • Stay in-house or outsource? In-house marketing and outsourcing your marketing each have pros and cons. Doing it in-house affords an unparalleled degree of control and flexibility, but program implementation and maintenance can be expensive and time-consuming. Outsourcing, on the other hand, frees you to focus on your primary function: originating loans and showering customers with incredible service. Some CRM-providers can even manage the responses and sales leads that their programs generate for you. This can come at the expense of complete control and can limit flexibility, however.
  • Invest wisely: Remember, CRM is about increasing profits, not expenses. If your plan is too expensive, you’ll be tempted to end it when business slows down (which is precisely when it can help you the most). Earmark a small portion of each deal or commission for CRM. The best plans are those that are simple and affordable so as to provide a solid return on investment.
  • Remember why the hare lost the race: CRM is a long-term endeavor, not a quick fix. Chances are that your phone won’t start ringing off the hook with repeat and referral business six weeks after you implement your program. Even a seemingly modest reply rate of 5 percent can translate into a successful program when you consider the high quality of referrals and leads from past customers. 
  • Ask and you shall receive: Don’t be shy about asking for referrals. Remind borrowers that you would value the opportunity to serve their friends and family just as you served them. If you’ve established any sort of rapport with them, they will understand that this is your livelihood, and they won’t mind being asked.
  • Satisfaction surveys: At settlement, let your clients know that they’ll soon be receiving a satisfaction survey. Mention that you take the surveys seriously and that you’d consider it a personal favor if they could take a few minutes to complete it honestly and return it. While you may end up with fewer returned surveys than if you’d done them at settlement, those you do get back will usually be more comprehensive, complete and honest. For a real eye-opener, include the following question on your survey: “What was the most memorable aspect of your experience with us?”
  • The right frequency: The key is to reach out often enough to increase your odds of being in the right place at the right time — but not so much that your contact becomes routine. Usually, a mailing every few months and the occasional phone call will do nicely.

In the end, remember: If you’re not tending your garden, you can rest assured that someone else is.


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