Commercial

Broker benefits

24 February 2007

My enthusiasm for brokers to improve and increase their marketing activity to potential commercial mortgage customers is well documented. The mechanical aspects of marketing to generate sales leads – for example, website, mail shots, advertising, exhibitions, etc – are generally well understood. There is room, however, to think more creatively about the messages that our marketing techniques are conveying to our target audience, ie, small to medium enterprises (SME) in need of a commercial mortgage.

Realising the alternative

In the residential sector, the proportion of the market introduced by brokers is rising and is now estimated to be approaching 60 per cent. In the commercial mortgage sector on the other hand, the majority of borrowers are still seeking finance from their main business bank, without realising the variety of commercial products that are now on offer or how much added value a commercial broker can give them. Brokers need to start articulating to potential commercial customers why using a broker works.

Time is a precious commodity for SMEs. In July 2006, research revealed that SME owners spend on average 61 hours a week working – significantly ahead of the UK average working week of 37.4 hours. Not all of this long working week earns money for them and so they need to outsource wherever possible to concentrate on their core earning activity – as long as this outsourcing delivers savings. Outsourcing IT, compliance, PR and marketing can all free up time to generate more core income. Therefore, a key message to generate more commercial enquires should be that using a broker can save you time and deliver the right outcome quickly.

Brokers that deliver this message successfully should find no problems with new customers understanding that a fee will be charged. SMEs that already buy-in services are used to paying for them and understand the benefits they are paying for. For borrowers whose time is at a premium, it’s all about getting best value.

Better value

Why can brokers give better value? They have access to specialist commercial lenders that individuals do not, and they are aware of a range of options that individual borrowers often do not realise exist. Brokers are also often in a better position to negotiate a better deal, where possible.

In just going to a bank for a commercial mortgage, borrowers are restricting themselves. The person they speak to may not have the appropriate knowledge, and may not have the appetite to do the deal. On the other hand, brokers always have the appetite. They can look at the whole of the market and get the cheapest deal. While instant access, web-based comparison sites for consumer financial products are available, nothing like this exists in the world of commercial financial services, so only a broker with access to the many potential lenders has all-round knowledge.

A commercial borrower seeking their own deal is alone in an unfamiliar zone, whereas brokers have established relationships with lenders. They can get information, push through cases, and negotiate. They also know what information to ask for and how best to present it to lenders. Furthermore, specialist commercial lenders, offering self-cert, adverse, and development capital options, only distribute through brokers. In addition, by taking the commercial mortgage under their own control, businesses can stay more independent from their main banking facility.

With these powerful messages, brokers should not only be able to grow their own commercial volumes, they could contribute to the growth of the overall sector. Not a bad outcome for adding bit of lateral thinking to your marketing strategy.