What will happen to your business when Coles starts selling home loans to its millions of customers?

Posted by Dec04, 2013 Comments Comments Off
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Coles is aggressively expanding into financial services. It began with Coles insurance and now with Coles credit card. It has a huge marketing budget and an even bigger customer database (via the data it gets from their rewards program). I’m positive its next move will be into home loans… are you worried???

(This blog is a little longer than usual but please take 3 minutes to read it. It’s important)

I reckon the supermarkets have picked up their game massively in their core business over the last 5 years. They are very smart at business. They have improved the quality of produce, they are getting us to do all the work at the checkout (self-checkout), they have improved margins via selling more home branded product and are collecting lots a data about us from their reward programs (which they’ll use against us). Coles expansion into insurance is really smart too. They have targeted a more profitable segment of the market – I.e. they don’t want to win every Australian as a customer – just the profitable ones. When will Coles start selling home loans? I don’t know but I’d guess that its next move after the recent Coles credit card push is done.

Coles sells commodities and they are experts at doing so (selling commodities). It’s Coles’ biggest strength but may also be its biggest weakness when it comes to competing with you in the home loans market. Do you sell a commodity? I hope your answer is no. However, if your client value position centred around saving time, finding the lowest rate, doing all the paperwork, visiting clients at home (to save them travelling), taking the hassle out of the process and so on… If that sounds like your marketing spiel, then start looking for a new job/business because you’re selling a commodity and Coles is going to kick your arse! But on a more positive note, I believe brokers have an opportunity to position themselves as trusted advisors that add value well beyond the lender selection/application process. And if you do it well, Coles will never be able to compete with you.

Can you list 5 things you can do for your clients that Coles won’t (likely) be able to do (or do well consistently)?

  • Number one in my opinion is they can’t develop a personal relationship between client and the owner of the business. People trust people well before people trust brands. So if you have a trusted relationship with your clients, it’s likely 99% of your clients won’t defect to Coles – even if it offers a very cheap rate
  • Other things might be your post settlement care system
  • your position as a source of quality and valuable information (via blogs, newsletters, webinars, etc.)
  • other services you provide (such as risk insurance)
  • your ability to work with your clients by understanding their longer term goals beyond the transaction and genuinely CARING ABOUT THEM
  • the fact that your clients can call on you anytime (not via an overseas call centre) they need help and be relatively sure that you’ll still be there in 5 years’ time (because it’s your business).
  • I’m sure you catch my drift.

You’d better have a clear client value proposition that cannot be commoditised. If not, your business has a finite life and you should be worried. Document your client value proposition and communicate it to every client as often as possible (i.e. turn it into a story and tell your story to everyone you meet – just how Apple tells its story about why the iPad is different to the 100’s of other tables on the market. its story is more about design than it is about features – but that’s another blog for another day).

I promise you something. If all the brokers that read this blog sit down, document and communicate their client value proposition (read story) to every client and potential client they meet, we’ll become a mighty strong industry that even the supermarkets and banks can’t complete with. Do this and everybody wins – well, everybody that matters – our clients and us! We only need the top 10% of brokers in Australia to do this and our industry changes for good.

Please do me a favour. Please forward this blog to other great brokers you know to help fuel The Broker Revolution. Thanks.

 

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