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Industry in depth
The rise of the super salesperson
24 February 2007
Pete Thomson looks at the continued importance of experienced business development managers and the development of the BDM role
One of the great untold success stories of the mortgage market has been the role played by the humble business development manager (BDM).
Over the past couple of years the big stories to hit the mortgage press headlines have been regulation, technology and the increase in market competition. However, it could be argued that none of these factors have had quite the same effect on lenders’ bottom lines as BDM’s, who have transformed themselves from basic salespeople and brochure delivery people into true business consultants who are valued by intermediaries, distributors and, most highly, by their own employers.
Transformation
Interestingly the onset of regulation has almost certainly acted as a catalyst to this transformation process, as BDMs cannot any longer focus their efforts simply trying to incentivise brokers to place more business with their employer. To do so may transgress some important Financial Services Authority (FSA) regulations. Today BDMs have to go beyond a simple sales role and move more into the world of business consultancy, where their true role is to help brokers add value to their businesses.
The image of a BDM just a few years ago was of a salesperson having endless cups of tea and discussions about football with any brokers who were willing to give up half an hour of their time for a chat. A successful call was measured not in terms of increased business opportunities, but in terms of ‘relationship building’ – however that was measured. BDMs would dispense leaflets detailing the latest product offers, take details about the most recent problem applications and make hollow promises to try and get something done, but most importantly talk about where to go for holiday or which football team was about to be promoted to the Premiership. To show their employers that the visits were worthwhile, they periodically asked brokers how much mortgage business they were generating because market intelligence is always a sure-fire winner.
This may sound harsh, but I’m sure lots of intermediaries reading this article will relate to it. Today, however, I’m pleased to say that the image of BDMs has changed dramatically. The best are self-motivated, energetic go-getters who are hungry to make a success of their careers. The number of female BDM’s has also increased significantly and there is greater demand now for good BDM’s than ever before.
So what does the job entail, what qualities are required to become a BDM and what are lenders doing to attract and retain the best?
Not simply salespeople
BDMs are not simply salespeople in the traditional sense of the word. Mortgage products cannot be ‘sold’ to intermediaries as it’s not them who ultimately ‘buy’ the products. If you think about it, brokers can find out as much as they want to about any lenders products from sourcing systems and don’t need BDMs to act as glorified sales brochures. No, simply imparting information is no longer the name of the game.
The first, and perhaps most important role, of a BDM is to ensure brokers understand what type of applications are acceptable to their employer and to explain the differences between their lending criteria and those of their competitors. To say good product knowledge is essential is an understatement; BDM’s have to know not just about products but also about criteria and underwriting rules.
Different lenders go about this task in different ways but at Mortgages plc our view is that our BDM’s must be at least as knowledgeable as our underwriters, or they have no right to be talking to brokers. All of our BDMs are therefore required to sit and pass what we describe as our bronze underwriting module, which is the basic standard all underwriters with a mandate must achieve, and re-sit the exam every 12 months.
BDM’s are also put through a rigorous training programme as soon as they join us. We use a combination of external specialist sales trainers and knowledge and experience shared by our best performing BDM’s. External training companies are excellent at imparting sales theory, but can struggle when it comes to translating that theory into best practice in our specific market. That’s where there’s no substitute for experienced BDMs sharing their knowledge.
When BDM’s are ready to take control of a region we use an online sales management system called ‘Sales Track’ to monitor their performance and activities. This is not a ‘big brother’ scenario which gives us the equivalent of an electronic tag on a criminal. To be honest, if our main concern was ensuring our BDMs were not spending all their time in the pub, we would have bigger problems to address with our recruitment process. ‘Sales Track’ does, however, provide us with the management information to identify where our sales resources are being used most effectively. This type of analysis is indicative of the way in which the art of sales is now turning into a science.
Recruitment
Recruitment is clearly a key issue. There are certain key attributes that are essential in a good BDM. They must be self-motivated and eager to do well. If they are not driven individuals, they are going to struggle in a sales role. They must also be good communicators and outgoing, personable individuals. They also need to be intelligent. BDM’s have an immense amount of information to digest. As well as knowing products and underwriting criteria inside out, they also need to know how their employer’s proposition stacks-up against competitors’ and where strengths and weaknesses lie.
BDM’s also need to have an excellent working knowledge of online application systems, and should be able to show brokers how to use all the other sourcing systems e.g. Mortgage Brain and Trigold. BDMs must also be good problem solvers. Brokers don’t want help with clean cases, they want help with problem cases and that is where BDMs can really come into their own.
Recruiting multi-talented individuals presents an ongoing problem. Ideally lenders want people with a background in the industry, but staff recruited from competitors can often bring with them too much baggage – preconceived ideas about how things should be done. It may be better to get those with the right outlook and immerse them in your business – the good ones will pick it up quickly.
The problem, of course, is that high-flying BDMs are in big demand and employers will do everything possible to keep hold of them. It is not uncommon for employers to try to lock-in good performing salespeople with attractive incentive schemes. BDMs do move between lenders of course, and there are a number who seem to jump on and off the BDM merry-go-round with amazing regularity. The ‘Catch 22’ with BDMs is that the best are often impossible to recruit; those who can be easily recruited are often the sort you don’t want. Recruitment agencies can help, as the good ones understand who is available and willing to move.
During the past 12 months, Mortgages plc has introduced a trainee scheme to nurture the BDMs of the future. Candidates may have no previous sales experience, but as long as they have the right attributes they can be fast-tracked through a training programme to give them the knowledge and skills necessary to do the job. It’s still early days, but the scheme looks very promising.
Future
The role of BDMs is inevitably going to continue to evolve into far more of a business advisory role. BDM’s need to be able to help brokers add value to their businesses by increasing sales, opening-up new markets, increasing efficiencies and improving processes. If the results of a BDM’s activities make a contribution to a broker’s bottom line, they will be viewed as an essential business partner.
The market is becoming ever more competitive and, as a result, the role of good salespeople is more important now than it has ever been. Although technology will continue to dominate the trade press headlines, it will be still be salespeople who separate excellent service from the mediocre.
EFFECTIVE WAYS OF MAKING A MORTGAGE SALE
By Jon O'Brien, operations director at the Professional Mortgage Packagers Alliance (PMPA)
If we start by assuming that mortgage advisers are qualified, competent and possess the correct knowledge and skills, what more do they need to create a successful career in mortgage sales? Undoubtedly they need a supply of customers, so the firm needs to have good lead generation techniques in place, either by using their own marketing resources or by buying in leads.
The adviser’s selling skills are needed from the point where they are face to face with the customer, who has already made a decision to purchase. This is already one step ahead of many other sales personnel whose sales processes begin with the job of persuading the customer that they need and want what is on offer. So, dealing with an eager mortgage customer is more about sourcing the right product and submitting a successful application than it is about selling an idea. The real skill in increasing sales effectively is to understand that each individual borrower’s needs are different and then to make an accurate analysis of the applicant’s information and set it out correctly so that the lender can issue an offer.
Customer information for the lender to base its decision on can only be collected accurately if the adviser asks the right questions and the borrower gives the right answers. It’s easy for well trained advisers to ask the right questions, but a borrower who feels ill at ease may become evasive and give inaccurate details about their financial circumstances, especially if they have some adverse credit history. Interviewing clients in a private, comfortable setting, and putting them completely at ease about their financial circumstances is very helpful in getting the full picture the first time round. From a compliance point of view too, gathering the right information is seen as a vital first step in delivering good quality of advice, which makes getting this first step in the sales process right very important.
The second key element in successful mortgage selling is being able to offer the best product that fits the customer’s needs (again, also a regulatory requirement). This brings us to the matter of mortgage product distribution and access to lenders. While many lenders are strengthening their direct-to-broker proposition, it’s true to say that distribution through packagers remains dominant, especially in the niche and non conforming sectors. In addition, larger packager/distributor firms and packager associations such as PMPA are substantial distribution channels for lenders and, as such, often offer exclusive products that are market leaders. Products that are designed for the rarer niche customers are also largely only available via packagers, who also have expertise in finding product options for this sort of customer. So, using an experienced and effective packager can certainly oil the wheels of mortgage sales and help the adviser to close.
Finally, a word about technology. No mortgage broker can expect to be more successful at selling if they do not have the right technology to support them in gathering credit information, sourcing products, case tracking and conducting successful communications. Once again, packagers can often make this sort of technology available to smaller broker firms who do no have the resources to make the necessary investment.
The psychology of mortgage sales
By Will Fraser, national sales manager at Standard Life Bank
Standard Life Bank commissioned The University of Edinburgh Management School to carry out research on the reasons why home buyers can miss out on the long term value of mortgages and found that a number of psychological processes can underpin consumers’ decision making. The research is of particular interest in light of recent and potential future interest rate rises, which may mean that consumers need to reassess what constitutes value for money. Can flexibility ever compete with the attractiveness of a low initial rate? It seems unrealistic to expect mortgage hunters to rework their value system overnight, but by being aware of the following factors IFAs may be able to better understand consumer buyer behaviour.
Loss aversion
The research, entitled “Why Mortgage Customers Miss Out on the Long-Term Value of Mortgages” shows that many of the biases consumers are prone to derive from the psychological pain associated with the experience of loss and their efforts to avoid it. This can lead to decisions which are economically less rational. A particular aspect of loss aversion is an attempt to minimise regret, i.e. how one might feel about a mortgage decision which turns out to be wrong. Coupled with this home buyers may suffer from myopic loss aversion which is an inability to take a long term perspective. Therefore they may find a short-term bargain – waiving of the arrangement fees or two year discounted rates for example – far more appealing than a relatively low SVR which could lower the mortgage return figure over the full term of the loan.
Mental accounting
As financial decision makers, consumers are prone to mental accounting, and as a result they tend to evaluate the costs and benefits of their financial arrangements separately. This means that they may show resistance to products such as offset mortgages which can combine the idea of ‘savings’ with ‘expenditure’; not always a ‘natural’ combination for them. The unconscious decisions made to simplify choices can come at high financial cost.
Status quo bias
This is also likely to be a key characteristic of consumer mortgage decisions. Despite not having the best mortgage deal, consumers can find it difficult to switch to a less expensive product because the financial loss is emotionally less painful than the psychological costs of having to rethink the original decision. Many consumers may therefore do nothing when they come to the end of an initial discounted or fixed rate period, opting instead to automatically switch to the standard variable rate rather than look for a less expensive option.
Cognitive dissonance
Finally, the research suggests that buyers may tend to procrastinate, taking longer to analyse choices and suffer from cognitive dissonance. Cognitive dissonance relates to consumers’ inability to deal rationally with contradictory concepts, in particular when the actual task of choosing a product may be viewed as psychologically threatening. This can be the case with choosing a mortgage because it calls for analytical skills and a high level of financial understanding. Furthermore, a bad decision may be at the buyer’s financial expense which is why they often look for a third party to validate their decisions.