Good broking means good service

A broker knows that their existing database is a great way to generate business opportunities, especially in a flat market, and that current clients can provide both repeat business and warm referral leads.

Unfortunately, generating leads from an existing database is easier said than done.

While brokers need to provide their clients with exceptional service during the loan approval process, quality service alone will not drive business through the door.

Neil Massingham, director of Shire First Mortgages, says brokers need to be constantly ‘touching base’ with their customers and to have a sound client retention strategy in place.

“We work our database reasonably hard,” he says. “We touch base with our clients several times a year in different ways; we publish a magazine that we mail out to our client database; and we also contact them on their loan anniversary and conduct annual reviews.

“We try to contact each client at least six times a year.

“I also tell my clients to come to Shire First Mortgages for any queries they might have,” he adds. “If they have a problem with the service they are receiving from the bank, if they want a loan top-up or even if they have a question about their rate, I tell them to call us. While it does increase our workload slightly, the effort is worth the reward.

“If they go to their lender for general questions, then they will inevitably go straight to that lender the next time they want finance.”

Being proactive is the key to generating new leads from old clients, Mr Massingham says.

“You can’t wait for business opportunities to knock on your door,” he says, “because if you are waiting for your doorbell to ring, you’ll be waiting a long time.”

The Sutherland Shire, NSW-based broker has been in the business for more than a decade and together with his wife, co-director Susanne Massingham, has built up a database of 1,800 clients.

“This business is built on strong client relationships,” Susanne Massingham says. “If we didn’t have strong relationships with each and every one of our clients, we wouldn’t have a business.

“Less than 10 per cent of our business volumes come from our referral relationships with solicitors and real estate agents.

“The vast majority of our business comes from our existing clients,” Ms Massingham says, “but this doesn’t just happen; we have to nurture every relationship to ensure we receive their repeat and referral business.”

ESTABLISHING A REGIME

While contacting clients regularly is by far the best marketing technique the company employs, Ms Massingham adds, a magazine produced by the brokerage also generates interest.

Every quarter, Shire First Mortgages mails its database a magazine filled with property information of interest to home owners. It includes a competition, which acts as a general referral generator.

“We also give anybody that sees us for a loan interview an entry into the competition,” Ms Massingham says. “If they refer a friend or family member, then they receive another entry.”

Providing good service throughout the loan process will only get you so far, she adds: “You need to remind your clients all the time – let them know what services and advice you can offer them.”

A broker’s existing database is their bread and butter, says Strategic Financing’s Paul Miron.

“When the market is tough, brokers can look to their database for business opportunities. If you are not touching base on a regular basis, your clients will forget you.”

HOW MUCH AND HOW OFTEN?

Different clients require different levels of contact. Some will want their broker to get in touch every couple of months; others would prefer to hear from their broker once a year, says Mr Miron.

“Some clients need constant reassurance. They need to know they can call you at any time for any matter, while others would find that kind of a relationship suffocating and obtrusive,” he says.

“If you are going to call your client, make sure you have a good reason for doing so. Don’t just call to say ‘hi’. Call and tell them about the various fixed rate specials available, or summarise the state of the property market for them. Always have a purpose.”

Approximately 70 per cent of Mr Miron’s business comes from his existing database. “I’m not a marketer, I don’t advertise,” he says. “Instead, I focus on providing the best ongoing service to my clients.”

He also doesn’t have any paid referral partners. All of Mr Miron’s business is built on trusted relationships with clients and other industry professionals.

“My whole business is built on good relationships,” he says. “The better the relationships, the more likely I am to retain my client long term. It is for this reason that I really like the Homeside ramped trail structure.

“NAB Broker understands the broker proposition. They understand that good brokers have good relationships with their clients, and they reward these good relationships with a competitive trail based commission structure.”

STEP UP THE TRAIL

On 1 August 2008, NAB Broker changed the lender’s trail remuneration structure to reflect the life of the client with the bank, with payment increasing incrementally from the second year.

Under the new model, NAB Broker increases the trail it pays to brokers from zero to 0.15 per cent in the second year. From then on, brokers receive a 0.05 per cent rise to their trail commissions annually up to a cap of 0.35 per cent in year six.

Mr Miron describes the structure as “intelligent”.

NAB Broker’s decision to have the ramped trail structure apply to the customer’s life with the bank rather than to the life of the loan encourages brokers to foster their client relationships, he says.

“It is a very smart move by NAB Broker,” he says. “It encourages good business behaviour. The structure has been well thought out.”

Mr Miron adds that in the current competitive lenders’ environment he is more inclined to place his business with a bank that respects and rewards him for client retention.

“I like the fact that the client doesn’t need to stay in that loan for me to enjoy the stepped trail,” he says. “NAB Broker is effectively rewarding me for constantly following up with my client and asking whether they are happy with their current mortgage or are thinking of buying again.

“I am now earning 0.30 per cent trail on clients that I put with NAB Broker back in 2008, which is well above market average for trailing commission,” he says.

“The model supports good brokers and it supports good behaviour. They reward us for growing our business. It is a very fair model.”

PUTTING IT INTO PRACTICE

Shire First Mortgages’ Susanne Massingham agrees and says in theory that Homeside’s stepped trail structure is a sound move and shows the bank’s desire to provide its brokers with ongoing support.

“The stepped trail structure rewards client retention, which is what all good brokerages do,” she says.

“They reward us for looking after our clients, and I think it is really good to see a bank do that.

“No other lender provides this, which really highlights NAB’s ongoing commitment to the broker channel.

“Lender innovation is fantastic. The third party distribution channel plays a very important role in the ongoing profit of Australia’s banks, so it is good to see a bank recognise this.

“From next year we will start to see strong monetary gains, which will be great from a business perspective.

“It will also encourage us to keep in touch with our clients, make sure they are happy with their Homeside home loan and, in turn, receive increased trail payments.”