Keep Singin’ in the Down-Market Rain: Invest in CX

Many of us have heard the adage, “Make hay while the sun shines.” In other words, take advantage of the good conditions by working extra hard. That’s exactly what the mortgage industry has been doing for the past two years. But what happens when it starts to really rain — when volume drops significantly and capacity strain is traded for barren pipelines?

Wise lenders will have built up a “war chest” during the boom of 2020-21 to invest in generating new business, but even those funds are finite, and investment decisions need to be weighed and measured carefully. For many, these decisions could determine their very survival. Our question this month: Where should lenders invest resources during a down market to maximize sales and ensure their originators are, “Singin’ in the rain?”

Where should lenders invest limited resources to maximize sales in a down market?

We all knew a rough patch was coming and we’re now finally in the thick of it. Mortgage rates recently reached multi-year highs, putting a major damper on applications activity. The 30-year fixed rate, specifically, reached its highest level since 2019 over 4 percent, pushing more potential refinance borrowers out of the market, as refinance share of applications dipped below 50 percent. Mortgage rates have increased substantially in 2022 (and risen faster than expected) and rate volatility will persist for economic and geo-political reasons. The latest MBA forecast expects mortgage rates to settle around 4.3 percent by the end of this year and be at 4.5 percent in 2023. Meanwhile, purchase activity has remained a challenge due to tight inventories.

As lenders look for ways to maintain or even grow production levels in this down market, two main strategies have emerged:

1. Invest in sales/marketing engine — buy more leads to fill the top of the funnel; spend more on brand awareness both at corporate and originator levels.
2. Hire/acquire more sales staff — top producers with shrinking pipelines are ripe for the picking from competitors; we’ve also seen a major uptick in merger and acquisition (M&A) activity to acquire this talent.

A third option — and one lenders would be wise to consider — is to increase output from the staff you have. In other words, figure out how to replicate your top performers.

Acquiring more leads and acquiring more people both come at a substantial financial cost, not to mention the fact that they are not exactly sustainable solutions — leads require constant reinvestment and new hires often don’t work out. With limited investment resources, lenders will have to get a bit more creative if they want to maintain or grow their revenue this year. They will need to do more with their existing resources.

It’s probably fair to say that every manager wishes they could replicate their top performers, but the reality is that few have figured out how to do it. Those who have successfully cracked the code tend to follow these three principles:

1. Define the Gold Standard. Many top-performing originators would like to think they have their own “secret sauce” or “X-factor” that makes their brand uniquely desirable to their clients. The truth is that the fabric of their success more than likely has certain common threads that are shared by all top performers. Some examples:
   • They practice clear and consistent communication
   • They embrace customer feedback, and think of how their actions impact the customer
   • They have a clear process mapped out
   • They make personalized follow-up standard practice
   • They are always relationship building with referral partners
   • They are skilled at setting expectations
   • They are constantly adapting to changes (and keeping borrowers “in the know”) They actively manage their reputation on social media
2. Measure Against It. These things that top performers do right are both measurable and controllable, and it’s very costly when you get those things wrong. For instance, failure to communicate with your borrower about final closing figures before closing will cost 95 points on your Net Promoter Score (NPS), quickly turning a would-be “raving fan” into someone who will deter future business. Some of the items listed above are habits and quality control issues — things that managers can “coach up.” Others need borrower feedback to identify and correct. Surveying your customers for deep insights about the people and processes involved in the loan process is a must. Whether you send mid-process or post-close surveys or both, they should go deep enough not only to distinguish dissatisfaction from satisfaction, but also the nuance between satisfaction and delight. Delight is where repeat and referral business are generated. Anything short of delight will not help your top of funnel.
3. Motivate. The hardest aspect of replicating top performer behavior is motivation. Loan officers are often most highly motivated by money, but as I noted in last month’s CX Tip, recognition and rewards are a powerful second and third, and accountability is always there if you need it. The best way to tap into originators’ motivational drivers is with monthly and/or quarterly scorecards that create a sense of competition (through rankings) and recognition (through awards badges).

What’s a Lender to Do?

Here are three tangible ways you can make sure your originators are “Singin’ in the rain” through the down market:

1. Interview Your Top Performers. Get into the details. The list I provided above was high-level, but you should be asking star performers to describe ad nauseum what they’re doing that their customers love. Ask them to help define the ideal customer journey and map it out as template for all. Ask for samples of communication, updates and even phone scripts. Ask how they make document requests and set expectations. If you need help, STRATMOR includes this work as part of its introductory CX Audit Package.
2. Assess Your Survey Questions. Take a hard look at the questions you’re asking to determine if behaviors can easily be identified and corrected based on the data points you’re collecting. Can you rank and reward your employees or are you just getting 10,000-foot flyover feedback with anecdotes? Make sure you have levers you can pull and data points you can monitor. Without these, goalsetting and accountability are next to impossible. STRATMOR can help here as well, whether from an advisory standpoint only or in a more hands-on survey administration role.
3. Revamp Your Reporting. Visibility is a powerful thing when paired with recognition and rankings! Loan officers will self-correct and pursue excellence on their own merit if they are given the right tools to monitor and track progress. Make sure your reports touch on all motivational drivers: compensation, recognition, rewards, and accountability. If you need help developing reporting, call me to discuss. STRATMOR’s reporting in this area is second to none!

How can you learn more about creating a better customer experience and about how the customer experience impacts your company?

Find out more about STRATMOR Group’s CX services and how transparency into the loan process can help your company. Contact Mike Seminari at mike.seminari@stratmorgroup.com.

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