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Use Customer Satisfaction Data to Measure Technology Strategy Success

By Mike Seminari May 2019

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The mortgage industry has been consistent the last several years — consistently experiencing higher loan costs, and lower productivity. This is not exactly the trend that industry participants are hoping for. In fact, according to PGR: MBA and STRATMOR Peer Group Roundtable data, loan costs are now almost $9,000 per loan, and productivity has declined 20 percent since 2015, eight percent in just the last year. So, how do we turn the tide on rising costs?

Many tech vendors are talking about how their FinTech solutions can remedy this problem, however simply throwing money at technology may not move the productivity needle or reduce costs. Success comes down to the crafting and execution of a great strategy.  And once that strategy is deployed, it’s worth finding out how effective that strategy is. Our question this month: How does customer satisfaction help you measure the success of your technology strategy?

A Technology Strategy

In this month’s In Focus article, STRATMOR principal Andrew Weiss discusses three steps along the path to a successful technology strategy:

  1. Differentiate. Articulate the critical elements of success and the business activities that will differentiate you.
  2. Diversity. Recognize the portfolio nature of the problem — that you will likely need to leverage a collection of technology applications.
  3. Define Your DNA. Decide whether you are a lender who leverages technology or a technology company that makes mortgage loans. There will be point on that spectrum that best matches your company’s culture and leadership.

As Weiss points out, a successful outcome has more to do with how a lender executes their chosen technology strategy than the technology selected. You may choose the best rated commercial off-the-shelf LOS available, but if the borrowers aren’t getting their docs in a timely manner, or your employees don’t receive adequate training, then your technology spend will become just another cost – not an investment in your business.

Most lenders understand that the topmost aim is to use technology to provide a truly delightful borrower experience. This means not only providing technology that you think will improve the borrower’s experience, but also taking steps to measure the effectiveness of the technology in helping create a better borrower experience.  Therefore, you must measure the customers’ perception of your technological improvements to get to the ultimate truth of the success or failure of your strategy.

With costs soaring and productivity dropping, lenders are reluctant to spend more on technology, which can be seen as an overhead cost as opposed to a production or revenue driver. According to data from MortgageSAT, technological improvements can have a major impact on Net Promoter Scores, which measure customers’ likelihood to recommend and therefore are a reliable representation of potential future revenue.

Our STRATMOR consulting team recently helped a large independent lender implement a new Point of Sale (POS) system and the before-and-after NPS results were impressive.

For reference, a 30-point change in NPS for a company doing 5,000 loans annually with a Net Production Margin of $1574 per loan, is worth approximately $2.3 million to the bottom line. For more calculations like this, visit the MortgageSAT webpage online.

Furthermore, according to STRATMOR data, technology costs currently represent just 4 percent of overall loan costs – a very small piece of the pie compared to loan officer compensation (29 percent) and fulfillment costs (28 percent). In other words, lenders should be investing more on technology to drive customer delight, and in turn create more repeat and referral business.

What’s a Lender to Do?

Here are three takeaways for improving borrower satisfaction with technology:

  1. Define Your Technology Strategy. Use differentiation to stand apart from the pack, which may mean re-evaluating your current tools and investing in some best-in-breed components. Use a tool like MortgageSAT to determine which areas of your process have are most ripe for change, which will help mold your technology strategy.
  2. Measure Its Effectiveness. Once you’ve begun to implement, use MortgageSAT’s trend analysis to determine whether your technology changes are having the desired impact. Watch how scores change in key areas like document collection and communication with borrowers.
  3. Create Team Accountability. You may want to consider tying a piece of the originators’ compensation to customer satisfaction. Ideally, this tie-in would be based on satisfaction with the entire end-to-end process and not just the individual originator. The more you can create team accountability, the quicker culture changes to prizing delighted customers above all.

Find out more about STRATMOR’s MortgageSAT Borrower Satisfaction Program, and how rich, drill-down data can help your company. Contact MortgageSAT Director Mike Seminari at mike.seminari@stratmorgroup.com.

To see how improving your NPS score translates into real revenue dollars, try our new MortgageSAT calculator.

To find more MSAT Monthly Tips, click here.

How Can We Help?

STRATMOR works with bank, independent and credit union lenders on strategies to solve complex challenges, streamline operations, improve profitability and accelerate growth. To discuss your mortgage business needs, please Contact Us.

The most successful lenders live by their numbers; they embrace change and create a culture of accountability and transparency.


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