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When I was a kid back in the 80s, I remember praying every night that I would win the $1,000 Toys ‘R’ Us sweepstakes on the back of the Life cereal box. That seemed like an infinite amount of money, not because we were poor or because I had no toys, but because my allowance at the time was $3 per week. And that didn’t buy you much, even back then! It was a very natural human response for me to want to look for (and wish for) shortcuts to prosperity.
For many lenders and loan officers (LOs) in today’s mortgage environment, the same temptation exists to look for ways to fast-track success. There is no shortage of new tech tools offering to “mine” your customer database, new lead sources promising to drive business to you, or new social media influencers pitching get-rich quick schemes, passive income streams and side hustles, 99 percent of which are smoke and mirrors. Some of the savviest lenders and LOs, however, are seeing through the smoke and finding Customer Experience (CX) focus to be a very real — and largely untapped — revenue source. Our question this month: Is Customer Experience the biggest untapped revenue opportunity in today’s market?
There is broad acceptance by lenders that Customer Experience focus is important to financial success. And there’s plenty of data to justify that belief. Past studies have shown that companies with customer focus are 60 percent more profitable than those without it. And more than 80 percent of companies that work to improve their customer experience report increased revenue because of it.
Yet, when it comes time to allocate budget, it’s often the shiny new tech toys that claim the highest priority, primarily because they have easy-to-understand cost/benefit ratios. It’s much harder, on the other hand, to tie individual customer experience initiatives directly to financial outcomes. That’s because customer experience initiatives need to work in concert as part of a greater CX strategy to produce cultural effects that in turn drive revenue. It’s a few too many turns in the road for many execs to get their heads around, especially when viewed side by side with simpler, cause-and-effect initiatives like marketing.
Note, I said it’s harder to measure the cost/benefit ratio of Customer Experience, but not impossible. You just need to widen the lens a bit from singular initiatives to an overall, comprehensive CX strategy. I recently revisited a 2019 CX study by Watermark Consulting, citing data from 2007-2017, that observed the cumulative stock returns of the Top 10 (“Leaders”) and Bottom 10 (“Laggards”) companies with publicly available third-party customer experience rankings.
The results are eye-popping, showing the Leaders tripling the Laggards in cumulative total return over the time period. That’s some serious opportunity!
STRATMOR’s own — and more recent — mortgage industry research underlines the vast size of the market opportunity as related to customer experience.
When more than 1 million borrowers were asked why they chose their specific lender, 9 in 10 said it was because of:
Stated another way, 90 percent of your new revenue is dependent on creating positive experiences for your borrower. Let that sink in for a minute.
We are not in the mortgage loan business. We are in the mortgage experience business.
Despite the size of the market opportunity, most lenders (and LOs) will end up missing out on it. Why? Because they’ve convinced themselves that they’re already doing a great job. It’s our nature as leaders to want to believe we provide great service. Yet, according to data from STRATMOR’s MortgageCX program, a whopping 55 percent of borrowers cite one or more problems on their loan that destroy referrals, repeat business and retention, otherwise known as the “3 Rs.”
Whether it’s a poorly set expectation around timeframes, a repeat request for the same document, a forgotten callback or a slow response time one thing is certain: these process miscues are costing lenders and their LOs referrals, repeat business and retention.
If a company’s leadership supports customer focus, they’re listening to their customers through surveys, and they’re monitoring some basic performance metrics, they might think they’re doing everything they can to create a great customer experience.
The truth is these elements on their own have very limited impact on the borrower’s experience in that they have no mechanism for igniting meaningful change in people, processes and technology. Put simply, they’re missing strategy and direction. They fail to engage and compel employees to higher levels of service. They’re part of the picture, but not the whole picture.
This is why it is crucial to be intentional and proactive with your CX strategy. Without a well-honed game plan, you’ll continue to run into the “Big Three” lender frustrations around CX:
With a comprehensive strategy that includes things like secret shopping, journey mapping, employee and customer surveys, benchmarking, process design, tech innovation, personalized reporting, recognition programs, and voice-of-customer amplification, you’ll start to bring everything into focus – like a ray of light through a magnifying glass – and ignite revenue growth.
The fact that you’re still in the game as we approach Q4 2023 means you have a healthy serving of grit and staying power. But there’s a big difference between the “Survive ‘til ‘25” mentality I’ve heard so many lenders mention and the idea of proactively building and investing in a comprehensive CX strategy that will return 184 percent market growth over the next ten years. Which one will you embrace?
Here are three steps you can take to start tapping into this significant revenue opportunity in today’s market:
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