customers

Marketing is not about being unique

Being successful isn’t about being unique

Not far from where I live is a restaurant with an interesting cuisine.  The sign says that it is a Indian-Hungarian restaurant.  When I first saw this, I thought it was a new twist on fusion cuisine.  And this must be one of the few restaurants where you can order Stroganoff and Vindaloo together.

Needless to say I am not sure how successful this restaurant is. 

It is unique and different.  And certainly, made me take notice – but does it work?  Does this mean that this restaurant has the most delicious Indian and Hungarian food?  Or is the combination only a marketing ploy? 

Would a similar strategy by a mortgage broker work – by being so different that it would make people take notice?  And drive lots of business to that broker?  Would customers accept the this?

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Setting up a customer-focused business for success

Ask any successful mortgage broker on the MPA Top 100 list, and most of them will say that the majority of their business is generated from referrals. 

Referrals and word-of-mouth marketing form the backbone of most mortgage broking businesses. 

Which makes a mockery of why regulators and Royal Commissions cannot get their heads around commissions and the conflict of interest issue.  Why is it that the mortgage broker share keeps increasing?  At the most recent MFAA report, the market share for mortgage broker sourced mortgages has increased to 59.7%. 

The reality is that mortgage brokers only become successful if they focus on the customer.  There may be inherent conflicts of interest or commissions from some lenders that are higher than others, but if the broker wants to become successful, they must put their customers first.  And when that happens, those mortgage brokers will generate more referrals and repeat business.

The corollary is that those same referrals ensures that the customer’s best interests are looked after first.  Because if those same customers are not looked after, they will not be giving referrals to you.

And on the evidence of things, more customers are seeking mortgages from mortgage brokers.

As a mortgage broker, how do you set up your business for referrals and repeat business?  Here are my top 3 tips.

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Why you need to focus on your existing customers

You should have a Customer For Life approach in your business

Photo by Matheus Ferrero on Unsplash

The mortgage industry traditionally is focused on acquiring new customers.

All you need to do is take a look at the way banks and lenders advertise their latest home loan rates, and how they treat their customers.

Here is one I found amongst a prominent bank’s fine print about the interest rates advertised:

Interest rate discounts for LVR 90% or less are available only for new owner occupier borrowings and new to bank security property.

The corollary being that if you are an existing customer, these new rates being advertised are not for you.

The message being that: to get a better deal, you should refinance or complain.

Not very customer-centric is it? Despite what the bank is no doubt try to promote.

And as a mortgage broker, finding new customers is a great rush. It reminds us of the days when we were hunter-gatherers, the thrill of the chase, the high-fives and fist-bumps, plus the winning feeling when your customer says yes to going ahead.

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What is the value of your advice?

 

Last week we caught up with a very good friend, Sarah, who is also a mortgage broker.  I have known Sarah for more than ten years ago and the catch-up was long overdue.  And over a very nice lunch we discussed about why customers used mortgage brokers.

In the June 2018 quarter, the MFAA data showed that 54 percent of consumers used mortgage brokers instead of going directly to a lender for their home loans.

Consumers are obviously voting with their feet.  And one of the reasons, we think, is because mortgage brokers do more than just find a client the cheapest home loan.

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What makes a mortgage broker successful?

What makes a mortgage broker successful?

 

Mario and I were at the Australian Broking Awards in June, where we were a finalist in the Training and Education Program category.   And some of the best mortgage brokers were there.

When I looked around the room full of successful mortgage brokers, what struck me was that mortgage brokers are a motley bunch!  They were young, some older than me, introverts, extroverts, and even women!  And the successful ones come in all different shapes and sizes.

The beauty about the mortgage broking industry and this business is that there is no corporate ladder.  It is definitely BYO ladder.  This is one of the few businesses where you start at the top.  You are the CEO, CFO, COO, the sales manager, and also the admin processor – in fact you have to do everything.

And with low business entry costs compared to other businesses, this has led to many people deciding to enter the mortgage industry to chase their entrepreneurial dreams.

Which got me to thinking about what are the traits that each of our successful fellow brokers had in that event that made them successful?

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How to build your one-page A4 business plan

Succeed with a business plan

 

One of the things we do at Masters Broker Group is helping our brokers build successful and sustainable mortgage broking businesses.

A key element to creating a successful business is to have a plan and a strategy.  According to a Harvard Business Review article a startup business with a documented plan is more likely to succeed and, more critically, become cash-flow positive.

Usually whenever someone mentions a business plan, the convention is for a 100-page tome. Unconventionally, we suggest that you put your plan onto one A4 page.

Here are some reasons why your business plan should not need more than one page:

  • The mortgage business is a simple business. You have no inventory, no stock, no samples and none of the requirements for handling inventory.
  • Most mortgage brokers start out with only one employee – you.
  • Lenders always pay their commissions on time.  You don’t need an accounts receivable division to follow up invoices.
  • The lending and real estate environment changes so quickly it makes no sense planning for more than 12 months ahead.  In my opinion it makes no sense trying to forecast more than 1 year ahead.

When you have to condense your business plan down to one A4 sheet, it makes you think more critically about your business goals. There is no space for BS. You are forced to only write down what you are going to achieve, creating that roadmap to reach your business goals in a brief, succinct, clear, to-the-point document.

You can download a copy of our A4 business plan from our website here.

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Do You Have a Marketing Strategy?

Do you have a marketing strategy?

 

We all go through peaks and troughs in business. Two weeks ago, Adrian and I caught up to discuss this. Like every mortgage broker we cannot predict when we will get calls from our customers.

Sometimes we will get 4-6 calls in one day as our clients contact us because they have purchased a house, want to release equity to renovate or simply to ask a question about finance.

At other times the phone doesn’t ring.

Nothing causes more anxiety to a mortgage broker like a silent phone.

If you have a marketing startegy, you can take advantage of this “downtime” to implement activities to build your brand.

But first, do you have a marketing strategy?

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Get to know your clients

Know your customers well

 

In his article “How to write a great business plan”, Bill Sahlman poses a number of questions that we should focus on.  And the main focus of all our mortgage broking businesses should be about our customers.  Less so than our competition.

For instance, if we focus our mortgage broking business on what our competitors, (for instance, the banks) were doing, we might do things a bit better than them.  How are they doing it, what products and services are they providing, etc.

But most of that would be on the basic level.  And we could run into the trap of being a “me-too”.

What if we focus on what the issues our clients and customers are facing?  And what problems we can solve for them?  Perhaps we can provide better value to our customers.

And the by product is we will leap-frog our competitors.

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Client communication tip: Try to “reverse” a question

 

Have you ever had someone throw a difficult question at you?  Here is a tip: Respond to a question with a question.  Otherwise known as a “reverse”.
A reverse is when you return-serve by responding with a question yourself.

This can help you define the situation better, and help you get closere to understanding why they asked the question in the first place.

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How Mortgage Brokers Can Help Clients Buying Into Strata

 

Buying into Strata
Buying into Strata carries a different set of risks than buying a traditional stand-alone property. Whether your client is buying an off the plan development or buying into an established community, there are some key questions you should be asking your client. While you are not expected to be an expert in strata, getting your client to review these questions will help them make the right decision and help you cement a long-term relationship.

Buying off the plan?
Buying off the plan carries greater financial risk than buying into an established community. Leaving aside the well publicised issue of capital appreciation, often a first-time strata purchaser is surprised by what it costs to live in a community. When you then consider that the ongoing annual costs of a new community are often not settled for two or even three years it is easy to see why some clients look back and wish they had known what questions to ask before purchase. You can assist your client considering buying an off the plan apartment to buy into an affordable community by getting them to do some simple research.

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