One of the defining questions of any business is how to achieve growth. Mortgage brokers are no exception. Lending data suggests remortgaging rates are at their highest in a decade, meaning competition is high, and the need for a strong growth strategy is more important than ever.
It’s retention which has been pegged as a strategic favourite for the mortgage market going forward, with Esther Dijkstra, director of strategic partnerships at Lloyds Banking Group, saying: "Retention, retention, retention – for lenders, brokers and customers. The retention market has overtaken the acquisition market."
For anyone still wondering why retention should be a core part of a broker’s arsenal, here is some food for thought.
Retention reduces costs
On average, loyal customers are worth 10 times as much as their first purchase, since they’re more likely to spend more when they return. Equally interesting, a 2% increase in customer retention has the same effect as decreasing costs by 10%.
Customers who return are much more likely to recommend you to their friends and family, thus further reducing marketing costs. A study by Nielson found that a whopping 84% of consumers either completely or somewhat trust recommendations from family, colleagues and friends about products and services – making these recommendations the highest ranked source for trustworthiness.
Retention enhances the customer experience
Studies show that even a 5 per cent increase in retention rates can equate to more than a 25 per cent increase in profits. The key is communication, which invariably increases your customer’s experience of your brand.
Going above and beyond to strategically align your customers with other great businesses and an advice centre that can help them achieve their goals, places you in a power position of resourcefulness. You could, for instance, send a bi-monthly newsletter offering tips on managing personal finance, and recommend helpful apps and services that you’ve found particularly useful.
The goal is to enhance trust by over-delivering, which significantly increases the chances of retention.
Retention increases business
Brokers who employ a customer retention strategy will not simply see the same customers return purely for the same product. Through the building of trust, it’s been shown that customers are more likely to return to the same broker to secure loans for commercial purposes or for businesses.
Equally important is the ability to turn customers into brand ambassadors. This can be prompted by offering a referral bonus to reward clients who generate new leads for you; ideally you’ll then end up with two happy customers.
Turning customers into brand ambassadors has been an idea knocking around marketing teams for a good few years, and with the remortgaging market heating up in the years ahead, this level of customer engagement could help set your business well ahead of the curve.
A good first step in enhancing engagement with customers is to ask for feedback, you could use our template here. Getting their honest opinions will help you identify areas to improve, and re-engage with useful content on the topics they raised in the feedback. The result is a customer getting the impression you care, and are prepared to work with them to ensure you provide the best possible service, tailored to their needs.
If you’d like to find out more, check out our comprehensive guide: How brokers can increase customer retention.