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Most mortgage brokers don’t charge for their service. This is often viewed by the client as a benefit i.e. they essentially get something for nothing. Whilst I think it’s a benefit too (from a mortgage brokers standpoint), the risk is that we teach our clients to value our service at the price they pay – nothing.  So it is critical that you do something to avoid this. Let me share an experience with you that I had this week that reminded me about this point.

About 18 months ago I made an incredibly stupid decision (in hindsight) to offer 3 clients free financial planning advice as a reward for their custom and loyalty. Clients had to apply for the free advice and indicate why they wanted help. I then selected 3 clients who I thought were loyal and deserved the investment of time. I will never do this again. There were a few things that didn’t work but mostly the problem was that because the advice was “free”, they didn’t value it. The lesson I learnt is to never offer something for free or discount prices when it comes to selling advice. The right clients will always pay a fair fee. The wrong clients will be attracted to “free” or ask for discounts.

But what does this experience have to do with broking? Well, the risk is that because you don’t charge, the client won’t value your time, advice and service. Given this, we need to be vigilant in communicating our value to clients as often as possible (within reason) and never stop. A good recent example in my business is we did a valuation with lender A and the valuation came in $200k less than the customer’s estimate. We went to Lender B and the valuation came in bang on the customer’s estimate. This is a benefit that is exclusive to dealing with a broker, as opposed to going to the lender directly. We need to communicate this benefit: “I’m so happy we were able to help you overcome the stupid valuation Lender A did. This is the benefit of dealing with us. We’ll always be ready to find you the best lender that suits you at any particular time. We always look after your best interest”. There are many advantages we offer compared to dealing directly with lenders and some benefits compared to other broker. Always communicate them.

And if you can get the client to actually say out loud to you “I’m very happy with your service”, it will make a big psychological difference to their feeling about your business (based on research).

If you always assume your clients don’t value your time/service until you talk to them about it, you won’t be disappointed.

 

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Tell your story as often as you can

Posted by Oct02, 2014 Comments Comments Off
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I recently attended a one day workshop with the teacher I respect the most, Seth Godin (I have referred to his blogs in previous posts). Whilst I learnt many things throughout the day, perhaps the most powerful was to tell my story. Doing so will attract only “perfect” clients.

The first lesson is “as soon as you say you want everyone, you want no one”. Which means if you don’t have a clear idea of who your target client is and instead you try and appeal to everyone, it’s likely that you just won’t stand out of the crowd and getting new clients will be difficult. So find and develop your own niche.

Once you have a niche, tell your story. Seth suggests your story should be in the theme of “people like us do things like this”. So your story should resonate with your target market. For example, a fly fishing retailer will tell a story about how a serious fly-fisherman never compromises on the quality of their equipment – they spend $1,000’s. An Apple customer believes that beautiful and simple design reflects their personality. A broker’s story might be about helping his client’s access equity to build an investment property portfolio as soon as possible e.g. the story could be people like us want to take control of our finances. People like us realise that borrowing to invest plus strong capital growth is the easiest way to build wealth. People like us are focused on building wealth, not inconsequential things such as small differences in interest rates or fee waivers. You get my drift?

Prospects come to you already telling themselves a story about money. It’s hard to change that story as it’s probably the result of a lot of things including what their parents taught them about money, their experiences over many years, their mistakes, what their friends tell them and so on. Therefore, instead of trying to change that story, just tell yours. If your stories are aligned (or not too far away from each-other) the prospect will be attracted to doing business with you. If your stories are wildly different, it’s likely the prospect will run in the opposite direction. The aim is to do more business with the people that “get it” and don’t worry about the ones that don’t. They’re just not for you.

So, what’s your story? If you don’t yet have one, get one and tell it as often as you can.

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Using NCCP Compliance As A Marketing Tool

Posted by Aug26, 2014 Comments Comments Off
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Many mortgage brokers love to complain about the NCCP Act. They protest that the regulations are too restricting, too time consuming. While it is true that NCCP Compliance takes time and effort, if you are looking at compliance as an imposition then you are missing out on some of the great benefits that compliance can offer.

In truth, full NCCP Compliance is a good business practice all across the board. The policies and procedures that you are required to have to cover your obligations under the Act are full of good business strategies and advice. When you are fully compliant, you will see remarkable benefits for your business. But it doesn’t stop there. You can also use your compliance to attract new clients.

Ironically enough, the processes that people complain about the most are the ones that create perfect marketing material. In order to be fully compliant, you have to have testing procedures in place that prove your compliance. And if you are frequently testing and showing results, there is no reason that you shouldn’t share that with consumers as part of your marketing efforts.

“Your status as a licensee should be used as a selling point to consumers, to highlight the fact that you have an absolute duty to ensure their best interests,” said Greg Ashe, Director of NCCP Compliance monitoring company QED Risk Services, “NCCP compliance is a must to maintain your ACL. However, if you’re doing it you may as well brag about it.”

The benefit is that there is really no additional work needed to leverage your compliance as a marketing tool. Once the procedures and reporting methods are in place, the marketing potential is limitless. Following are a few tips from Ashe on how you can use NCCP Compliance as a marketing tool:

  • Include it in credit disclosure documents.
  • Use compliance and ACL statements as advertising on your website.
  • Use your compliance in your sales pitch, which may even put doubt in the consumers’ minds about your competitors.
  • Publish case studies and test findings.

Your compliance will also help put your potential clients at ease. One of the keys to complying with the responsible lending obligations in the NCCP Act is doing a detailed and personalised assessment of the consumer’s budgetary circumstances. This type of assessment assures both you and the consumer that the contract is a good one.

The whole assessment process should be directed to providing comfort to consumers looking to place their financial future in the hands of a mortgage broker. By publicly acknowledging your compliance, consumers can be sure that they are working with a broker who is not only licensed, but also has the their best interests at heart when making deals.

Remember that the NCCP Act is there to provide protection and security to both clients and mortgage brokers. Your compliance should be at the heart of your business, and talked about often in your sales meetings and marketing materials. When leveraged this way, your compliance will not just help you run a better business, it will also help you attract new clients, and keep them.

 

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My advice to new brokers…

Posted by Aug14, 2014 Comments Comments Off
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A common question I receive from new brokers is “what tips can you give me to be successful and what mistakes did you make?” I’m going to write a few blogs on this because I have made a lot of mistakes and knowing what I know now, I’m certain I could build a broking business very quickly. One of the biggest problems facing new brokers is leads. This will be the first topic I’ll write about.

Most established brokers get most of their business (typically 80% or more) from repeat clients plus referrals from existing clients. The challenge facing new brokers is that they don’t have any clients! Therefore, new brokers need to do two things:

  1. Start building a list of prospects that you can communicate to and build trust with. This will typically be an email list. Make sure you collect everyone’s email address you come in contact with. Make sure you have some good content on your website (to attract traffic) and include something of value that people can download in exchange for them entering their email address (like a free report). Gather as many email addresses as possible.
  2. Get access to someone else’s list. If you don’t have your own list then borrow someone else’s. This means approaching someone that has an existing list and ask if you can send their clients some valuable information (e.g. write a blog for their website, ask them to email a free report to their clients, contribute to their newsletter) or co-host a webinar with them. The best way to make this successful is to focus on getting more business for the list owner first. Don’t worry about yourself at first. Initially, you want to earn the right to speak to their list. Focus your content on getting them more business. For example, maybe you can interview a few clients about the benefits of using a buyers’ agent. Then approach a local buyers’ agent to publish the article in his newsletter. Eventually you can start including some content that is more relevant to mortgages.

Mortgage broking is a contact sport. The more contact you have with potential prospects, the more successful you will be. So the aim is to build a large database of potential clients and communicate to that database often but only with high quality, valuable information – not sales pitches.

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We really need to share more… and now!

Posted by Jul17, 2014 Comments Comments Off
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Imagine if we could upload the knowledge and experience of every mortgage broker in Australia to one central place and then download that entire database of knowledge into each and every mortgage broker. How awesome would our industry become? What would our market share be? How much more money would we all make? What would happen to commission rates?

Many people including the MFAA are focused on trying to attract new talent into the industry. I think this is important but an easier way to double or triple the size and strength of the industry is to share our knowledge. If we focus on sharing knowledge (like I do via this blog), and making the industry stronger, will be a lot more successful as an industry.

Many brokers are reluctant to share knowledge because they are worried that it will cost them business (i.e. if my competitors know my tricks and strategies then they will become stronger and I will, as a result, become weaker by comparison). That is so wrong. Think about it. Aussie Home Loans (the largest mortgage broker “brand”) has only 5% of the mortgage market. There is so much business out there that I think it’s near impossible to suffer a reduction in business as a result of sharing knowledge. In fact, what would happen if close to 100% of people came to brokers for new lending? Imagine your business size then! This is our opportunity and I believe we need to seize it.

Maybe you are reluctant to share because you don’t think you are creditable enough? Forget about that. I don’t “know it all” – far from it. We all (regardless of results) have strengths and weaknesses, successes and failures. We don’t need to consider ourselves as “experts” to share. At least one person will get value from your advice and that alone makes it worthwhile. You change an industry one person at a time.

So how can we share our knowledge? Here’s a few tips:

  • Ask/demand your aggregator to get the most successful broker to speak at your next PD day – this could be the most successful broker in terms of settlements, our most successful with social media, or referrals and so forth – doesn’t just have to be volume
  • Organise a broker forum of 4 to 8 like-minded brokers in your area that meets monthly to talk about their business challenges and experiences
  • Publish your experiences, tips and advice in a blog/article. I’d very much welcome contribution to my site (blog) but equally I know the broker industry magazines would love to receive some content too
  • Approach colleagues’ you respect and beg them to share their knowledge (e.g. article or presentation).

The irony is that we, as an industry, have all the knowledge and experience we need to double in size very quickly and it is completely in our hands… do we want to be massively successful or not? So let’s all learn from each-other’s mistakes and experiences, as a result improve our service and advice given to our clients and therefore become stronger businesses.

 

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