Dale Carnegie, the man who invented the self-help book genre, famously advised: "Be a good listener." Listening, in the broadest sense of the word, is something we do very actively at our company. Because, if you "listen" closely to what your portfolio is telling you and watch for certain "tells," you can often anticipate your customer's next move. Our method for retention relies on cutting edge data and analytics; leverages the strength of our retail branch network; and borrows common-sense advice from Carnegie.
At the last MBA Annual Convention, peers at other midsized firms talked about achieving a 20% customer retention rate. What surprised me was that it sounded as if this was a high bar. While that level might be reasonable for a mega-servicer that sources loans through multi-channels, it seems low for an industry standard. On the flip side, our firm has recently seen an average retention rate of greater than 30%, and we're not happy with it — which is why we've developed a proactive, integrated plan to maintain more of our servicing customers. The plan is intended to get us closer to a 50% retention rate.
The key is to listen to subtle messages that a customer might be sending, but that require us to lean in a little closer. For example, why are they changing the address on their monthly mortgage statement? Or, what is this customer telling you when they are checking their loan balance online? Chances are they're considering selling or refinancing.
This is valuable, actionable information that allows us to predict when our customers' home financing needs are about to shift and be ready to best serve them at any time.
We also work closely with leading data providers, and continually run segments of our portfolio against their databases. For example, we'll look for any hits on MLS listings. By taking the time to monitor our portfolio, we can see, for example, when a customer lists their home for sale, which enables us to proactively reach out to the customer to provide real-time service. In passing that information back to the originator, he/she can reach out and determine if there is an opportunity to extend further support in preparing for and securing the customer's next purchase.
In addition to listening to our customers, using the appropriate data to reach out to those whose situations are improving is another key factor to increasing retention. As we see certain geographic markets coming back in terms of home price appreciation and credit scores, we're also able to see which customers are now in a position to do more and offer them the opportunity to move, refinance or make some home improvements. While some might feel comfortable in passing off these types of leads to a call center thousands of miles away, we make it a point to offer consumers a more personal, boutique lending experience. (Admittedly, as a retail lender, we have some advantages over correspondent and wholesale competitors.) We send our leads back to the initial originator, who already has a developed, on-the-ground relationship with the customer and can hold their hand throughout the next phase of financial help the borrower needs.
This also creates a reciprocal relationship that loan officers appreciate and need. Normally, we're sending back leads to our originators on a weekly basis. Of course, if we get an MLS hit, the loan officer gets it the same day, because a stale lead is worthless.
Finally, the last lesson, which I'm sure Carnegie would concur with, is that you have to provide superior, personalized customer service every day. If you've done a poor job serving (note I didn't say "servicing") your customer — answering questions, anticipating issues or solving problems — none of the other strategies will work.
Creating a trustworthy partnership with borrowers is essential, and it is achievable. It simply requires focus, data and the ability to deliver personalized, proactive service — the same way to win friends, influence people and keep customers for life.
Scott Brown is vice president of servicing at W.J. Bradley Mortgage Capital.