Clients for Life Await

Story as published in Scotsman Guide, the leading resource for mortgage originators.

By Kirk King, President of Halo Programs, Inc.

Every client has the potential of becoming a million-dollar sale. Once you realize the value of each borrower, you can begin to implement a system so you don’t lose them to the competition without even knowing.

Think of your business as a collection of interactions that take place before, during and after the closing of a mortgage. By looking at it this way, you can build a foundation for future sales that can revolutionize your business.

Customer relationship management (CRM) software is more important than ever when considering a growth plan for your mortgage business. With CRM software, you can improve productivity, manage leads, improve the customer experience and secure the continued business of your existing clients.

Engage clients
The first CRM software was developed in 1995. In the 24 years since, the mortgage industry has changed its approach to technology, regulation and more.

Twenty years ago, brokerages could charge far more for each deal, make fewer monthly transactions, and still have a profitable business structure. That is no longer the case. With competition higher than ever, originators need to expand the ways they approach clients and their needs.

To do this, originators need a consistent form of communication that can drive customer engagement. This is where the value of CRM comes in. Thanks to the rise of the digital age, companies can now streamline their connections to customers in cost-effective ways.

Thanks to CRM, it has become painless for lenders in the deposit business — such as banks and credit unions — to cross-sell and upsell their products and services. While cross-selling was simpler in the past (when people visited branches), CRM software has opened up a whole new world of opportunities.

With CRM, a company can focus on the client experience and their business’ profitability. To truly understand how CRM technology has helped the mortgage industry, however, you need to understand the ultimate goal of the software: the client experience.

“ If you want to support clients for life, you need to stay in touch with them. ”

Keep in touch
Although technology in the mortgage industry has changed, it’s interesting to look back and recognize a fundamental principle that remains true. If you want to support clients for life, you need to stay in touch with them.

Look at the results of a study by Halo Programs completed 20 years ago, which measured the rate at which customers chose a different originator when they returned to the mortgage market. As part of this study, 5,000 surveys from randomly selected borrowers were used to gauge how mortgage originators managed to retain, or not retain, their clients.

Six months after closing, 14 percent of the new mortgage customers could not remember their loan originator’s name. After 12 months, 28 percent could not remember the name of their originator. After 24 months, 67 percent of borrowers had forgot-ten their originator’s name.

Now consider this: Three years after closing, the majority of the 5,000 people surveyed had either refinanced (2,117) or made another real estate purchase (714). That’s 2,831 new transactions. Yet only 947 of those borrowers used the original originator. That means 1,884, or about 38 percent of the clients surveyed, found a different lender for their next transaction.

This is a huge area where mortgage CRM technology can help. Since people tend to remember companies that they’re actively receiving value from, it’s important to make sure contact with a customer never goes stale.

A CRM can segment your list of contacts by type (such as prospects, past customers, referral partners). This will allow you to streamline customer communications, send the right message at the right time and encourage future transactions.

Seamless experience
A mortgage company’s reputation is one of its greatest assets in attracting and securing clients. It’s also one of the most important things potential borrowers consider when deciding with whom to do business. If a client comes to you for their financial needs, that means they have trust in your business.

The goal of CRM software is to create a seamless client experience. With the right CRM, you can create an experience that will make sure your clients don’t forget about you.

In fact, research shows that the average lender receives a 97 percent customer-satisfaction rating. Prompting clients to write a review for your company online, or even refer a friend, can build social proof and help you earn new and valuable leads.

This means that your mortgage CRM can drive your online reputation if it includes a way to generate customer reviews and post them online. With technology, you can maintain better communication and generate leads via online contact forms that feed back into your CRM.

Social media networks also have helped companies secure clients, as it allows originators and lenders to open up another line of communication. This is especially useful to community banks, as they continue to face competition from national lenders.

With the functionalities of a mortgage CRM, residential originators also can better respond to their clients’ needs. This will help them secure their trust and make a living throughout the ups and downs of the housing market.

“ If you look at the numbers, you can create a story that will help to outline a borrower’s overall lifetime value. ”

Lifetime value
Many originators struggle with the concept of the lifetime value of a client. If you look at the numbers, you can create a story that will help to outline a borrower’s overall lifetime value.

Let’s conservatively assume that you make $2,500 on an average closing. Borrowers will need another mortgage about every seven years. If you start working with them at age 25, they will need six mortgages in their lifetime.

Let’s also assume they also will buy one investment property and one second home. They will refer one deal each time they do business with you.

Using these numbers, you end up with a lifetime value of $40,000. This could be much larger if you’re in a high-end market, however. When you have this kind of information, you will be better prepared to serve and invest in every prospective customer you interact with.

Lasting relationships
The best referral sources include past clients and real estate agents. If you want to secure lasting clients, then utilizing the right technologies and the right CRM is vital.

When you use a mortgage CRM — especially one that can solve borrower issues in a scalable, cost-effective way — you can streamline the various day-to-day processes of client management. This will then allow you and your mortgage originators to focus on your company’s core objectives.

Your borrowers are always going to be your most important asset. Generating leads and maintaining healthy client relationships is the key to success.

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It not only helps you reach new markets, but it also will equip your company to provide for your borrowers in the best ways. With the right CRM, you’ll be provided a better, clearer way to understand your clients and deliver on their every need and expectation.

About the author
Kirk King is president of Halo Programs Inc. and past president of the Michigan Mortgage Lenders Association, Southeast Chapter. Halo Programs helps residential lenders grow with easy-to-use customer relationship management (CRM) software. Originators gain efficiency and generate leads with automated marketing based on Continuity’s 45-plus years of experience.