Most of what I've been visiting with you about in this series has been about conversion, since I expect it to be the word of the year for 2014.
After all, creating and converting is a lot more important to mortgage bankers than "selfie" (the word of the year for 2013). I have suggested you pay attention to the numbers when it comes to how well you convert mortgage leads into apps, apps into closed loans and satisfied borrowers into new business.
But how do we measure that last relationship? The lenders that get this right could be the industry leaders by year's end and may have figured out how to get past the "selfie" behavior that still plagues our industry.
See, it's fairly easy to measure conversion when we’re talking about how many leads become applications. You just figure out how many leads you bought or how many referrals you received from Realtors this month and then count up your applications and divide the former by the latter.
Our clients are telling us that if they don’t convert at least 10% of their leads into apps, something's wrong. Either the lead source is very low quality, the LOs aren’t working the leads right, or both.
Likewise, it's pretty easy to measure how many apps get through to the closing table, although it can be a lot tougher to figure out why so many fall out during the process.
Every lender will deal with a certain percentage of applications that, for one reason or another, just don't make it all the way to close. The best lenders work on it until they figure out what’s causing the problem and change their process. That also drives conversion.
But for the vast majority of lenders, measuring customer satisfaction, which is the primary driver of repeat and referral business from past customers, is not so simple.
First, our industry has never had to do it before. It was nice to have satisfied customers, but when the phone is ringing every 10 minutes with another consumer eager to refinance into a lower interest rate, paying much attention to last month's customers isn't a big priority. Not that that’s happening so much these days.
In addition, many lenders felt—and continue to believe—that a checklist stuck in the closing package is a suitable way of gauging customer satisfaction. It's not.
Providing spaces for a list of friends and relatives to call upon is practically worthless unless the lead is ready to apply for a loan right then.
These simple forms send consumers the message that we don’t care much about them, but would love them to help us make more money.
Contrast this with the way the Consumer Financial Protection Bureau asks customers about their experience. This regulator has made it incredibly easy for consumers to complain publicly about their mortgage lender, without having to identify themselves.
I'm actually surprised that there were only about 60,000 mortgage-related complaints filed with the CFPB in 2013.
There are right ways to ask consumers about their experience and a right time to do it. More lenders are figuring this out. We wrote about this recently in a new white paper that you can get for free here. One of the things you’ll read about is how consumers who are satisfied with their lender will take actions that will benefit that lender’s business if they are asked to do so.
In addition, we talk about how reaching out to a dissatisfied borrower within a week of the loan closing can change that borrower’s opinion of the lender, level of satisfaction with the experience and even result in the same type of business building activity that a fully satisfied borrower exhibits.
This happens even if the borrower doesn't ultimately get everything they wanted in the beginning.
Every time you convert a dissatisfied borrower into a consumer who is willing to promote your business to their friends and family, your business grows, and it can be an exponential growth. Leading lenders will take this seriously in 2014.
In this way, they are constantly taking a picture of what the customer thinks about them, and that is not selfie behavior at all.
Garth Graham is a partner with Stratmor Group.