For many, being told their clients are their greatest asset is stating the obvious. However, experts repeatedly argue that many of today’s mortgage brokers are not utilising their existing database effectively. So what can brokers do better to increase their client revenues?
Macquarie Practice Consulting senior consultant Fiona Mackenzie says the key theme of the bank’s recently released benchmarking survey on mortgage brokers was that more successful brokers focus more on their clients and client data, rather than just the next deal.
“It was really around what they are doing with their client base,” she said. “Nurturing their existing clients - staying in touch with them, communicating with them – is a key way that we have seen that brokers can increase their revenue per client.”
So what are some ways to gain more value from your most valuable asset – the client?
One of Macquarie’s key recommendations was to focus on referral relationships.
“People think about referrals pretty much in terms of client acquisition – a good way to get leads,” Mackenzie explains. “But by building really good, strong referral relationships, it will impact on the efficiency of the whole business.”
One example of this is the type of client being serviced. By locking in referral relationships, brokers can gain a steady flow of pre-qualified, pre-sold leads, who are likely a good match for their business. This enables them to focus on the type of client they want to target.
Macquarie has also recommended that brokers formalise their referral relationships.
“We see that smaller businesses are saying that on the whole their referral relationship are a little less formal than larger firms. What we are saying is that there is an opportunity for them to look at that, and say that if they formalise it perhaps it will generate more leads.”
Mackenzie said this involves close communication with referral partners, to clarify expectations and how the relationship will be managed over time. “Some of the best practice around managing relationships over time is having very regular meetings,” she said.
When it comes to diversification, brokers don’t usually ask themselves what they are good at. But identifying their strengths and weaknesses is exactly what they should be doing.
“It’s kind of matching those two,” Macquarie’s Mackenzie explains. “The firms that I have seen do diversification well – rather than just adding another service in a ‘plug and play’ way – is really about thinking very clearly about who their clients are, as well as what they themselves are really good at, and not so great at,” she says.
In this way, brokers are able to match their clients and target market with their own passions and skills.
For example, Mackenzie said if a broker is part of the ‘wealth accumulator’ market, then they can build a business that brings together the many pieces those clients need, such as mortgages, insurance, and maybe even superannuation, tax and legal services.
“On the other hand, if they know their real strength is in a specialist area - around mortgages for example - sometimes it can be better to stick to their knitting and do that really well and then network with other professionals who help meet the broader needs of the client.’
This approach will ensure client needs are being met – and they don’t go somewhere else.
According to Mackenzie, there are a few main planks that businesses can put in place to increase their revenue per client.
• Retention: “You don’t want a client to do a loan with you and then three years later roll over with somebody else,” Mackenzie says. To ensure client retention, brokers should stay in touch with their database, to ensure they know if a client is thinking of doing something different, and being seen as a “first port of call” for any queries.
• Loan size: Boosting revenue per client can be achieved by seeking out clients with more complex needs. When it comes to pure finance, increasing average loan size by developing your business within a particular target market or demographic may achieve this aim. However, Mackenzie said it’s important to be “true to who you are”.
• Revenue streams: Building new revenue streams into your business can assist in boosting revenue per client. Experts argue the easiest bolt-on services for mortgage brokers include motor vehicle finance, equipment and leasing, as well as insurance.
Mackenzie said that the adoption of various revenue raising techniques depends on “who you are talking to” – particularly the size of the business in question. “At the smaller end it is more about the retention piece and positioning themselves well. At the larger end it is more about looking at different and more opportunities for revenue,” she said.