for these free STRATMOR
online publications
I was talking with a lender recently who proudly shared their Net Promoter Score. It was excellent, well above industry average. Naturally, they felt good about the customer experience they were delivering. Then we started looking at a different set of numbers.
Only about one in four inquiries actually turned into an application. Roughly one-third of applications weren’t making it to the closing table. Suddenly, the conversation changed. If borrowers loved the experience so much, why was so much business slipping away?
It raised an interesting question: Have we been too limited in our thinking about how customer experience drives revenue growth?
For nearly 25 years, Net Promoter Score has been the mortgage industry’s go-to measure of customer experience. That’s understandable. It’s simple and widely recognized. And NPS measures one thing well: advocacy — whether a borrower would recommend your company to others.
Somewhere along the way, many of us began treating NPS as the ultimate measure of customer experience success. If borrowers were giving us 9s and 10s on the ‘Would you recommend?’ question, we assumed the experience must be excellent. After all, what better validation could there be? But in this market climate, are there other critical questions that we need to ask to ensure a more direct correlation with the bottom line? The challenge is that borrowers are remarkably forgiving. They remember getting the keys to their new home. They remember finally making it to the closing table. Most of all, they remember the relationship they built with their loan officer. Those positive emotions have a powerful influence on the score they give at the end of the process. And it may even result in future referrals.
Meanwhile, a very different story may be unfolding beneath the surface. A lender can have an excellent NPS while converting just 25% of inquiries into applications. Another third of applicants may never make it to the closing table. Along the way, borrowers experience process friction, unnecessary document requests, confusing communication, poor handoffs, and operational breakdowns that erode revenue before an NPS survey ever goes out. In the annual MBA and STRATMOR Peer Group Roundtable (PGR) meetings this Spring, lenders reported low total pull through, and it’s a real challenge for profitability.
I was recently talking to a lender who does 10,000 loans annually and showed them how improving inquiry-to-application conversion from 25% to 40% could improve their annual gross margin by roughly $18 million (assuming an industry median $3,000 gross margin-per-loan figure). Improving application-to-close conversion from 66% to 75% would add another $4 million.
That’s more than $22 million in annual gross margin that a great NPS score (on closed loans) may never reveal. We’ve been looking at customer experience through the lens of advocacy, while the biggest revenue opportunities have been hiding within the loan process itself — in the moments that determine whether borrowers apply, close, return, and refer.
Most lenders don’t wake up in the morning simply hoping to improve their Net Promoter Score. They want more funded loans. More referrals. Better pull-through. Stronger retention. Higher profitability. The question is whether the metrics we’re watching actually help us accomplish those goals.
If your primary measure of customer experience tells you borrowers are happy while millions of dollars are leaking out of your acquisition funnel and loan process, then you’re solving the wrong problem.
Satisfaction is a feeling. Revenue is a fact. CX has to answer for both. That means paying attention not only to how borrowers feel at the end of the journey, but also to what happens throughout it. Every inquiry that never becomes an application, every applicant who drops out of the process unnoticed, and every operational breakdown that creates unnecessary friction represents a customer experience failure, and a lost revenue opportunity.
I think we’ve confused an outcome metric with an improvement metric.
NPS tells you the ending. And if you’re only surveying closed loans, of course the ending looks good; the borrowers who didn’t make it that far were never asked.
What NPS doesn’t tell you is why one loan officer converts twice as many inquiries as another, or why one branch consistently outperforms in pull-through. Those answers are found throughout the loan process — in how quickly inquiries receive meaningful follow-up, how clearly expectations are set, how effectively handoffs are managed, how often borrowers are asked for the same document twice, and how consistently teams execute the hundreds of small interactions that make up the borrower experience.
None of this diminishes the value of NPS. It’s an excellent relationship signal. High scores generally indicate borrowers were pleased with their experience and that referral relationships are healthy. The mistake is expecting that single metric to explain the operational decisions that drive growth.
For years, we’ve optimized for advocacy while paying far less attention to acquisition and operational excellence. I believe that has cost us millions of dollars. The greatest revenue opportunities in customer experience aren’t hiding in the borrowers who already closed. They’re hiding in the borrowers who never did.
So, where should lenders focus instead?
Final Thought: For the past 25 years, we’ve measured whether borrowers liked the experience. That’s still worth doing. The real question now is where that experience is creating — or destroying — revenue. Mike Seminari
Start receiving monthly Customer Experience Tips
Feel free to reach out with any questions or needs we might be able to help with.
