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Making the time for old clients

I was talking to a mortgage broker in the North East. It was a large office with a good frontage onto the street, although admittedly not in a prime location. And he was on his own – doing everything from advising prospects off the street to handling referrals from local estate agents, to chasing mortgage offers to phoning solicitors, to making the tea. He seemed to be doing a fair bit of business – hardly surprising given the strength of the market over the last couple of years, even in this North East town. But he was complaining like mad about the time and costs involved in doing all these new mortgage applications.

It was at this point that I asked the question: “What do you do about your existing customers? You know – the borrowers you have helped over the last few years.” And I ducked, sub-consciously, because I had a good idea what the response would be.

“Existing customers? Oh, I haven&#39t got time for them. They&#39re all in there.” And he pointed at a long bank of filing cabinets.

The worrying thing is that as I continue to meet mortgage intermediaries from different parts of the country, this reaction is not unusual. And not surprising. After all, there seems to be so much new business around that some elements of good customer management seem to have gone out of the window.

But if you are handling a high proportion of remortgages then you must be dealing with some other broker&#39s existing customers. And you can bet your bottom dollar that your own existing customers are going elsewhere for their next mortgage.

So why all this customer churn? Well there&#39s an easy answer to that one – everybody&#39s chasing their tails so much with their new customers that they seem to get onto a treadmill and forget to maintain contact with their existing customers.

And if contact isn&#39t maintained then relationships aren&#39t being built that will help develop future business with those existing customers.

I can hear the reaction: “It&#39s all very well for Sutherland-Kay to sit in his attic and write this stuff but it&#39s not that simple.”

But I can tell you it is that simple. What&#39s more, it delivers higher value for little cost and it doesn&#39t need loads of fancy software to make it happen – customer relationship management is a discipline, not a technology.

And you can prove it to yourself fairly easily but you need to ask yourself some basic questions.

Firstly: How many new customers do you deal with?

I should point out that I mean the total new customers, of course – you must include lost prospects as well as prospects that you have converted to sales. (It&#39s also worth mentioning at this point that existing customers are already converted prospects so the prospect-to-sale ratio is usually much higher – a key element behind my earlier comment that existing customers deliver higher value for lower costs.)

Secondly: How much income do those total new customers deliver? If you&#39re getting it right, you&#39ll be earning a procuration fee for the mortgage plus commission on the protection products (life, critical illness, buildings and contents, accident, sickness and unemployment) and maybe a fee from the customer too.

Thirdly: What are your total costs? And how much actual profit do you make per customer? You still need to include the lost prospects here – after all, they&#39re soaking up costs while delivering no income.

At this point, you should have got to a cost/income picture for your average customer. And like all averages, it will hide a fairly wide range of actuals, from the all-cost-and-no-income – the no-hopers and lost prospects – to those who delivered high income at an average cost and those who delivered an average income at a low cost. But I&#39m getting away from my aim to keep it simple so I&#39ll stick with averages for now and talk about deeper customer analysis another day.

When you complete the sales on your new customers, there&#39s a simple track of contact you should set up. It&#39s not enough just to pencil in a follow-up call at the end of the mortgage fixed rate or discounted rate period. In any case, the end of the period is too late – you need to contact your customer a good three months before this date to allow for a new mortgage to kick in immediately at the end of the rate period, to avoid your customer having any payments at the full variable rate. But if you had made no contact up to then and you only appear out of the woodwork when there&#39s an opportunity for you to make some more money, how do you think the customer feels?

Better to set up a series of simple contacts so that the customer knows you are there and looking after their best interests. So, start with a thank-you note when the new mortgage starts – if it&#39s a house-purchase mortgage, send them a good luck card. Then three months down the line, give them a call to check that everything&#39s OK – and please don&#39t try to sell them anything, it&#39s just a relationship-building call.

At about the nine-month mark, the customer should be well established with the new mortgage and, having had two contacts from you that were not sales calls, should be more receptive to a discussion about their needs – time to check that their protection products are still the right ones for their circumstances. And then a further contact every six months or so to keep the relationship building. After all, this relationship is built on your actions as a trustworthy and concerned professional.

So when it&#39s time to rearrange the mortgage, the customer is still your customer and will want to remain so, rather than go somewhere else. And when you redo your cost/income analysis, you&#39ll find that the cost of building the relationship is worth every penny.


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