Mortgage broking is a weak-link business so act accordingly

Posted by Jan15, 2018 Comments Comments Off on Mortgage broking is a weak-link business so act accordingly
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In December, I attended a Malcolm Gladwell conference (bestselling author of many books such as The Tipping Point and Outliers). I would like to share an important story with you that is very relevant to mortgage broking so bear with me.

He cited some research completed by two economists, Chris Anderson and‎ David Sally (The Numbers Game) where they analysed years of data from the Premier League (soccer) and worked out that if all of those clubs worked on upgrading their weakest players, rather than their strongest players, they would score more goals and win more games. A lot more – something like twice as many goals – but I didn’t write down the exact number.

This is because soccer is a weak-link game. That is, the ball is passed between players many times before any attempt to score is made. If one player makes a mistake and turns the ball over, the opposition then has a chance of scoring. In short, soccer is a “game of errors” i.e. the team that makes the least errors, wins.

In contrast, basketball is a strong-link game because one player can take the ball from the oppositions goal and score without needing much assistance from any of her teammates. Therefore, upgrading your strongest player in basketball has the greatest impact.

Interestingly, as a side note, most Premier League club owners have ignored this research. It has been suggested that this is because they are driven by the cachet that signing a high-profile player creates for them and their team.

I believe that mortgage broking is a weak-link game because you can do everything right except for one tiny error – such as an interest rate discount not being loaded correctly – and it ruins the client’s impression of your service. Consequently, the likelihood of enjoying repeat business and referrals from that client are greatly reduced. The lifetime value of a client that has a perfect experience and one that has a less-than-perfect experience is massively different – well over $20,000 in my experience.

Therefore, a mistake such as a lender not loading the correct discount – a mistake that’s arguably not even your fault – could cost you $20,000! Of course, we could bitch and moan that we shouldn’t be punished for a mistake that’s not our fault – but that will get us nowhere. Sometimes life’s not fair. From a client’s perspective, they want a perfect, error-free, hassle-free experience – so that’s what we need to deliver, or we risk losing them. Clients don’t care who’s responsible for the mistake – just whether they happen or not.

If you agree with me that we are in a weak-link business, then you must ensure you don’t have any weak team members. Your team members include:

  1. You;
  2. Any loan writers you employ;
  3. All admin staff, receptionist, anybody that answers the phone and anyone who has any contact with clients;
  4. The banks you recommend including the BDM’s; and
  5. Any conveyancers you recommend. In fact, any business you recommend.

Take a few minutes now and have a think about who is the weakest member on your team.

Replacing the weakest team member rather than hiring a super-star loan writer will probably have the greatest impact on your revenue in the long run.

 

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