The most important thing mortgage originators need to consider for customer retention is to make sure their clients know in any interest rate environment that they are looking out for their needs and goals, said an executive with a lead generation company.
It is an area that the industry is becoming more focused on as time goes on, said Jim Blatt, chief executive at Mortgage Returns. It is inevitable that interest rates will at some point start to rise again and “being prepared for that is increasingly important.”
His company is now putting a lot of emphasis on giving its clients tools for customer retention strategies. Refinancing your customers is just one element of this strategy, he noted.
“If you’re refinancing your own customers, you are showing them that you’re engaged, that you’re managing their loan and you are helping them improve their financial position. That is what loan officers do,” Blatt declared.
Now the company is working on helping loan officers get that message out to their clients when rates finally do start rising on a consistent basis. “I’m still managing your loan. I’m still engaged. I’m still trying to help you improve your financial position.
“It may just be I can’t do anything for you right now, but I want you to know I am still doing those things,” he continued.
Getting this message out is important because when these clients do move into a new home they come back to that loan officer. Or if they know someone who is buying a home, they refer that person to the loan officer.
When the Realtor asks the client if they are working with a mortgage originator, “you want that answer to be yes,” Blatt said.
Mortgage Returns measured its own database in the first quarter of 2011 and found that clients using its system had twice as many purchase loans from past customers.
Its key differentiation is that it makes the marketing piece relevant to the homeowner through the use of database management and managing the details of the customer’s current loan.
It measures customer retention metrics for its clients and benchmarks them against other originators who have implemented various marketing plans, he said. “So you can see how your marketing is working and is it delivering the type of customer retention that it should.”
The company recently released statistics from its Guaranteed Marketing program launched in May 2012. It said 35 lenders in the program had a return on investment of over 400%.
The company analyzed its customers’ databases to identify homeowners with high interest rates. It created customized marketing messages for each homeowner’s financial situation and sent each homeowner two direct mail marketing pieces and five personalized emails through an automated marketing system.
The company added if a participating lender did not generate enough loans to cover the cost of the program, Mortgage Returns offered to refund the difference.
Those who executed the company’s three-pronged approach got new loans from 10% of their customers, versus those who just simply mass-mailed got loans from 3%, he claimed.
As for those numbers, Blatt further explained that people do a mortgage transaction on average once every five years. That translates into 20% of your clients doing a new loan each year. If a lender gets 10% of its clients to return in a particular year, that is half of those getting a new loan.
The analytics analysis lets Mortgage Returns show originators how their marketing is doing and scrutinize their current program.
It could be their retention percentage is fine, but they’re spending too much money on getting those clients. Or that they need to invest more on retention programs.
And it is not very often that mortgage marketers are measuring the return on investment for their programs. They understand the need for it, but don’t have the proper systems in place to perform such an analysis effectively, he said.
Some rely on their loan origination systems to do this function, but that technology was created to close loans, not measuring marketing success.
“If you can’t measure it, you can’t manage it,” Blatt declared. They spend a lot of time is making sure the measurements work, because that can be hard to do. There are all sorts of matching criteria, logic and business rules and Mortgage Returns is still working on improving those metrics.
Clients look to the company to help them understand those metrics and results better. Hire his company not because of the pieces it mails out, hire them because of its success in getting customers to come back, he said.