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How much is enough? When should you stop working for free?

Posted by Aug03, 2012 Comments Comments Off on How much is enough? When should you stop working for free?
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Do you get frustrated when you spend lots of time working with a prospect, sharing your knowledge and advice but they don’t end up doing business with you? It’s irritating isn’t it… almost enough for you to never share so freely again?

The Law of Reciprocity suggests that if you go out of your way to help someone without any expectation of compensation or benefit, the person you helped will feel obligated to help you in return. If the person doesn’t feel in that way, the universe will reward you for the behaviour – often called Karma.

That’s all well said and done but let’s be realistic – we have bills to pay and family to support.

My approach is to share feely. When I meet a new prospect, I focus all my attention on helping them solve their problems/challenges – be it mortgages or whatever. I put my own self-interest squarely aside and focus 100% of my attention on them. I will continue to do that until a time when I feel that they are 1. not valuing the advice I am giving or 2. purposefully draining as much advice out of me as possible for their own benefit without an intension of ever doing business. If this happens, I “sack” them and move on. I’m really happy that this approach has generally worked well for me and is authentic to my own personal values.

What I would warn of however is to stop sharing with prospects just in case they waste your time. That could lose you a lot of business I think. The person that shares first is in a strong position and it is the first step towards building trust.

What is your approach?

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What a great lead generation tool

Posted by Jul27, 2012 Comments (5)
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We all know repeat and referred business is awesome. It’s profitable and enjoyable working with people we already know and like. Want more? Of course you do!

One of the key disciplines of getting more repeat and referred business is maintain contact with your client base. But it’s more than that. I believe you must always aim to “add value” with each contact – not try and sell something – but demonstrate why they should continue to listen to you, open your emails, open your mail and take your phone calls. We are only as good as our last contact.

So how do you maintain contact with your clients? Email, post, SMS, phone? I believe you need to do all 3 in almost equal parts. The reason being is that email will work really well for some – but some clients won’t even bother to read it (email is becoming less effective due to the sheer volume people receive so certainly don’t be too email focused). The same goes with the other methods. Using all 4 methods will greatly increase the impact you make.

For example, at the moment fixed rates are very low by historic standards – St George’s 3 year rate is 5.59% as I write this blog. This week we sent an SMS to all clients about this rate and suggested that they should consider fixing. If they wanted a review, contact us. It’s created new business and added value – because clients know that we’re on the lookout for them. We also put together a report (to give to interested clients) that assessed at historic rates, rate forecasts and so on to demonstrate why we think 5.59% is a good rate. SMS is a great tool for quick, factual based communication and compliments everything else we do (email, post and phone). I’d recommend using SMS.

So my question for you is; are you using email, post, SMS and phone in equal parts – they are all reasonably cost effective.

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A broker charging a fee-for-service/advice is a hot topic of conversation at the moment so I thought I’d share my insight. [note: I am talking about charging a fee for advice in addition to receiving a commission – not in replacement of commission]

I think that until a client has to reach into their pocket and pay you some money you really don’t know if they value your advice and time. At the moment a mortgage broker doesn’t have to charge a client a fee and I think that’s a double-edged sword. Obviously, the benefit is the service is free which makes it easy to sell. On the other hand the downside is that the client doesn’t necessarily have to consider the value you provide. Research (as discussed in a great book, Predicably Irrational – highly recommend) suggests that two price points; free and 1 cent – are perceived as completely different by most humans – even though the difference in dollar terms is only 1 cent.

Also, I believe that charging a client for advice increases a brokers’ self confidence in the value they deliver as a broker. Good brokers deliver heaps of value and I think many brokers underestimate the value they provide.

For this reason, I believe charging a fee for certain services is a good thing – not because of the incremental revenue but because of the stronger relationship it creates with clients. It forces the client to recognise the value you provide. And it forces the broker (you) to clearly communicate their value proposition. This result is a stronger (stickier) client relationship. The downside of doing so in this environment is the extra compliance with NCCP – providing a credit quote, etc.

If we start charging fees we’ll look more like professional advisors and less like sales people. What’s your experience?

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Do our clients really know?

Posted by Jul17, 2012 Comments Comments Off on Do our clients really know?
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One of our biggest challenges as mortgage brokers to the balance the competing priorities of:
• Taking accountability for getting the job done (loan settled); and
• Educating the client about what we can and can’t control.
I was reminded of this tug-of-war today while reading Seth Godin’s blog (anyone that knows me knows that I think Seth Godin is a genius).

Lender delays and mistakes can cost us a lot in terms of goodwill. As brokers, we know that there’s a lot that we can’t control in the loan process. Sometimes we need to work really hard just to achieve an average result (approval time). The problem is that clients don’t see all the hard work behind the scenes. Worse still, they might think we’ve done nothing.

Clients expect a broker to work hard and solve problems – that why they come to us in the first place. So we should never communicate about the work we do as if it’s something special or unexpected. However, that definitely doesn’t mean we should not communicate at all.

I believe that brokers must let clients know what we do and how long it takes. Educate your clients about exactly what you do and why. Doing so will reaffirm the value you bring to the table and why they should always come back to you for future lending. Also, the law of reciprocity suggests that since they have received value at no cost to them, that they’ll be obliged to give you something in return – referrals.

What do you think? Do you tell clients how much work you do? How?

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It’s the leads you say ‘no’ to that matter

Posted by Jul15, 2012 Comments Comments Off on It’s the leads you say ‘no’ to that matter
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For a long time I have said that the amount of profit that a broker makes is mostly determined by the leads (prospects) he’s decided not to peruse, not the ones he does. Our industry is characterised by the “win some, lose some” methodology. That is, some deals are very profitable because they don’t take a lot of time to write. On the other hand, you lose money on other deals that are either complex, the client is difficult or the bank plays games. At the end of the day, you hope you make money – i.e. that there’s more profitable deals than non-profitable ones.

In my experience, many brokers seem to chase each and every lead without having regard to its potential profitability. For example, a broker that has little experience and knowledge of the commercial market might spend hours researching and chasing a commercial lead. In my opinion, that’s doomed for failure. Sure, you might actually win the deal but how much profit will you make if you add up the hours you spend on it? You have to have the discipline to say no to these types of leads.

I’m not suggesting that you should make money on each and every deal – I think that would be difficult (impossible). However, be mindful that is only takes one or two poor quality (unsuitable) prospects to wipe out one month’s profit.

So what do you need to do? In short, you must protect and value your own time. You have a lot of value to offer the right prospects. Wasting your time with the wrong prospects helps no one – least of all, you. You don’t have to say “no” to prospects that aren’t suited to you – just say “not me” and find them an expert that can help them (and take a commission split if you want to – which will be all profit mind you). More on this topic in my next post…

I invite you to share your expereinces or thoughts.

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