Taking Control of Your Marketing By Rene F. Rodriguez
OCTOBER 2010
TENNESSEE MORTGAGE PROFESSIONAL MAGAZINE
NationalMortgageProfessional.com
26
Marketing during a downturn isn’t Two runners approach a hill. One runner walks up the hill and the other, the only challenge we face. Today, a runs up the hill. Which is a better strat- great deal of people are focused on the back end of the mortgage transaction. egy for a long distance race? Well, I’m not a runner, so I really don’t With defaults at historic levels, mortknow which is a better strategy, however, gage fraud out of control and constant when we look at this from a marketing government pressure to help homeperspective, the answer becomes a lot owners in distress, mortgage loan servicers have their work cut out for them. more clear. Let’s look at it again. Two businesses hit a downturn in the But soon, very soon if the federal govmarket. One business seizes all market- ernment’s academic advisors are coring activities. The other, decides to rect and we have exited the recession, invest more into marketing. Which is a the focus will return to the point of better strategy for long-term business sale. It will be here where the future of the mortgage industry is being written, success? for only by closing new The answer to that loans will companies question comes down to remain in business and understanding the value succeed as we move into of the incremental gain the recovery. earned while running We are already seeing versus walking up a hill. some excellent signs. In running, you expend Some pockets of secondenergy to gain distance. ary market investment In marketing, you spend are starting to get active money to gain customers. and we’ve already seen at The big difference is that least one mini-refi boom the energy spent running this year. Those who harder does not translate believe that this new busiinto more energy for the “Today, it takes a ness is only the result of race. In fact, you’ll have combination of less energy to finish the touches from different government bailout funds are missing the point. The race hard. In business, channels (or media) government can spark however, the money to keep prospective interest on the part of spent on marketing transborrowers engaged.” prospective borrowers, lates into more cusbut only lenders can close tomers now, which means more cash to invest in more the deals. And only lenders who have a marketing to get even more customers. good understanding of what it means to An unfortunate common practice for market to the new generation of mortcompanies at the onset of a poor econ- gage borrowers will be around. Most discussions of marketing are omy is to begin cutting operating costs. Even more unfortunate is the fact that complicated by confusion about how it marketing budgets are often the prime relates to sales. While sales are the results targets of those cuts. It has been proven of good marketing, they are not at all time and time again that it’s not a good similar disciplines. While sales is what idea to reduce marketing efforts during ultimately makes the company money a recession. This short-term approach and keeps the machine working, marketsaves money, but leaves your brand in ing tells us who to sell to, why they want a less competitive position whenever our product and what salespeople must the economy recovers. And over the say to get them to close. The companyyears, research has confirmed that the centric (or supply side) “Four P’s of best strategy in terms of long-term Marketing:” (Product, Place, Price and return on investment (ROI) is to Promotion) now need to be accompaincrease marketing efforts during an nied, if not replaced with, the customerfocused “Four C’s of Marketing:” economic slowdown.
Customer value (product), Cost to the customer (price), Convenience for the buyer (Place) and Communication (Promotion). Beyond that, marketing is the machine that keeps future borrowers on the line until they are in the “buy zone” and ready to sign an application. While loan officers know they must maintain these databases and stay connected to these prospects, it can be very difficult to do so on a regular basis. Without that kind of marketing support, sales become much more difficult, referrals are harder to get and customer loyalty goes out the window.
So what do we do? Gary Kellar, Dave Jenks and Jay Papasan wrote a game-changing book entitled The Millionaire Real Estate Agent. Their research into what they call “mindshare” illustrated that the 92 percent of sellers will list their home with either the first or second agent they meet with and 82 percent of buyers will sign a contract with either the first or second agent they meet with. That means that you’d better be number one or number two or you’re not even in the game! We see the same lack of loyalty from customers in the mortgage industry today. While the industry has worked hard to increase customer satisfaction, and the numbers are promising, it is not translating into customer loyalty. We’re still seeing almost every borrower go to a different lender for their next loan. I believe this is because no one in our industry is taking control of the marketing process.
Who owns the marketing process? I strongly believe that marketing should be owned and managed by the company so that originators can focus their time, energy and money on selling and building relationships. Sounds great, but there is one big problem. For a mortgage company to “own” marketing, they have to pay for it and where will they find that money? For too many years, mortgage companies competed for the industry’s top talent through the promise of high commission splits. Over time, as those splits continued to rise, there was less and less money available to spend on supporting, training and developing the originator. In the end, the originator was left with not only the task of selling, but
they also now had to spend their own money to implement marketing systems. We all know that dollars spent on an individual basis go a lot less further than collective dollars. One-hundred originators individually spending $250 per month on marketing with no cohesive message generates a pretty weak impression on the market. Now, if you pool the $250, you can now spend $25,000 per month into a cohesive message and effort. Much more powerful! In the past, mortgage lenders went down one of two paths when it came to marketing. Either they had a process that they subjected every loan officer to as a matter of course, or they left all of that to the front line originators, letting the best rise like cream to the top. As you might imagine, those loan officers that did the best job of marketing to their prospects on a regular basis, closed the most loans and earned the most commissions. The top producing loan originators do a few important things consistently. After years of training and consulting with some of the nation’ top originators, I can tell you that when it comes to database building, mining and maintaining, these guys are experts and they spend a lot of money to do it. They have teams of people whose sole job is to execute marketing best practices similar to Kellar Williams’ 8 x 8 (eight touches in eight weeks) and 33 Touch (33 touches per year) programs. The ROI on campaigns of that nature have been proven and easily justify the expense of a full-time person. Sadly, the amount of work and expense to properly execute those campaigns on a regular basis prohibits the majority of originators from being able to enjoy the benefits of such activities.
e-mail marketing to the rescue … NOT! I’m not saying that I don’t like e-mail marketing because I do. What I am saying is that the days of uploading your email marketing list to an online service that kicks out an e-mail a few times a month are over. In the beginning, it was a very powerful too, but the influx of automated spam messages and the continued abuse of people’s personal information has forced e-mail spam filters to tighten up. I personally know of several owners of e-mail marketing sys-