This is not a particularly new development as lenders have always been worried about the strategy of heavily discounting products at the front end only to see customers leaving them when their product is about to go into profit.But HBOS’ retention policy has focussed all our minds. We are regularly bombarded with questions such as “will an intermediary still broke a case or will they just leave it with an HBOS lender, saving them work while they still pick up a proc fee”? If lenders are waking up to the fact that it makes little business or marketing sense to put their efforts into getting business in and simply hoping that consumer apathy leaves them with a profitable business at the end of a discount period, what are intermediaries doing about the problem? Sadly, judging from my discussions with brokers, it seems the answer is not much. The issues that still dominate intermediaries’ minds are compliance and getting in business. It is a fact of working life that business managers are often so involved in the day-to-day detail that they have no time to contemplate the future. But in respect of customer retention strategies, contemplating the future is something intermediaries must find time to do. The bottom line is that an intermediary cannot rely on a consumer automatically returning to them when it comes to their next financial need. Unfortunately, customers may not be aware of all the services offered by an intermediary and so go to another one for their next financial purchase. I recently read an article that claimed Brits have spent 22 million hours in the past two summers in search of properties abroad and that 2.2 million UK nationals already own a property abroad. I would guess that intermediaries in this country assisted few of those 2.2 million foreign home owners. And worse, from a customer retention point of view, I guess that few intermediaries know if their customers are among that army of foreign property window shoppers. I have a saying – if you don’t satisfy a customer’s need, someone else will. If intermediaries want to call their customers ‘clients’ they have to earn the right to do so by treating them as clients. That means everything the business does should be geared around long-term relationships. The starting point of this exercise should be a good and comprehensive client ag-reement whereby the customer knows what they can ex-pect from the intermediary firm. Such a way of working has a double benefit for brokers. First, a shift in the business balance from chasing new customers to writing new business for existing customers will help boost profits. Second, developing relationships with consumers is a fundamental premise of Treating Cus- tomers Fairly. Isn’t it strange how regulation forces businesses to work smarter.
The big debate in the lending world at the moment is about retention strategies.