How have you communicated the RBA’s rate reduction to your clients?

A conceptual look at variable interest rates. Where next?

I don’t know about you but whenever the RBA changes rates either up or down a little bit of me sighs as I know there will be further work for me to complete over the coming weeks.

I understand that sounds a little lazy but deep down I know the truth is most brokers would love not to service existing clients so that they can only focus on new business.

However, the days of being a transaction broker are well and truly behind us. With the explosion of the internet, interest rates and the market’s ability to easily search a variety of offers means that your clients not only know exactly what their current rate is but will no doubt have knowledge of other offers out there that are more competitive than theirs.

And your clients aren’t even necessarily looking for better rates, they can’t help being confronted with offers all day long. Whether it’s via their Facebook feed, pop up ads on their personal email or radio advertising, brokers these days need to accept that a home loan is no longer a ‘set it and forget it’ situation.

To survive as a mortgage broker in this day and age, not only do you need to have strategies in place in order to generate new business, you also need to develop an ongoing value proposition for your existing clients in order to protect your trail book.

Here are three things I would suggest you work on having in place when thinking about how to serve your existing clients.

1. Let them know about changes in the market

Most aggregators have a service available that will send out an email or text message do your database whenever the RBA decides what to do with interest rates.

Whilst that is certainly a good start, what will also happen is that your clients will want to know if their bank has passed on the full rate reduction or increase.

Aggregation software has come a long way over the last decade and you will find that your software retains data as to what lender a client ends up with at settlement. As such, it’s not that difficult to send out a courtesy email to for example, all your St George customers letting them know that they passed on the full rate reduction.

You shouldn’t necessarily look to do a whole bunch or refinances when rates change. I know it’s a good way to increase revenue in the short term, however as the years go on your clients will catch onto the fact that every 2 years you are churning them and will lose respect for you eventually.

When sending out this communication you’re mealy just letting them know of the change as opposed to offering a cheaper rate elsewhere. If they do end up wanting to know what else is out there, at least they’re now coming to you as opposed to going to another broker or lender.

2. Start writing a blog or newsletter

I’ve talked before about email marketing and it’s no secret that blogging or writing a newsletter is a great way to continue to develop a relationship with your existing clients.

However, when thinking about a newsletter I have to warn you that they have come a long way over the last 10 years. When newsletters first came out they were very corporate and stiff with businesses trying to look as professional as possible.

Over the years that type of newsletter has become so saturated across all industries that they are no longer effective.

These days your clients want to hear from you personally and their filter for whether or not you’ve outsourced this function to a third party is highly advanced.

Whilst it can take up a bit of your time to write your own articles and you won’t see any immediate results, trust me when I say that over time the benefits are there to be had.

This is exactly the same strategy of what I am doing with you. Whilst you may or may not have purchased my products or services, slowly over time I am building up rapport and respect with you.

You don’t have to write a newsletter every week but I would suggest that you try and am for at least once a month.

3. You must complete annual reviews

This is no longer a premium function of a mortgage broker, it is something that your clients are expecting. A good basic structure for an annual review I would suggest is:

  1. Cover letter with a brief market update
  2. A CMA report on their property produced by RP Data.
  3. An update of their existing loan structure with a comparison of other offers who are competitive.

Bind all this together and mail it out to them in the post. From there follow up with a phone call and ask to book in a time to either meet them face-to-face or have a chat over the phone to get an update of what their current situation is.

Now some brokers will advise against this, suggesting you shouldn’t offer other lenders when completing an annual review.

Personally, I have found that the first question a client will ask is, “how is my home loan comparing with the rest of the market?” Again, personally I like to be seen as transparent and open with my clients as to what else is out there. For me, doing this means that my clients don’t ever feel I’m aligned to any one provider.

What I also do is actually go back to their existing lender and try and negotiate their rate down for them. If the lender refuses to budge then this is where we can discuss the possibility of refinancing.

Once again, attempting to negotiate with their current provider will raise your perceived level of value in their mind. After all, you were the one that sold them on their current lender in the first place!

If you can’t get a rate reduction then this is where you have the ability to pick up a refinance as opposed to losing them to another broker or lender.

Committed to your success,

Tim Russell