A cultural shift
Jeremy Duncombe is director of intermediary distribution at Accord Mortgages
There’s something really exhilarating about winning a new client, a sense of achievement that you have brought in fresh income to grow your bottom line.
Many firms heavily invest in new business, spending time and money securing additional customers.
But what about existing customers? The ones we’ve already fought hard to win? Whilst there is a lot of talk about client retention, how many of us can honestly say we dedicate enough time to it?
These are customers who already have a connection with their broker. They have seen first-hand your customer service and experienced the value you can add.
As interested parties, they require less investment to win, but can bring far greater returns. Research1 from management consultancy Bain & Company highlights that the average repeat customer spends 67% more in the 31st-36th months of their relationship with a business, than in months 0-6.
But what makes a successful customer retention strategy? There are practical things you can employ, such as Customer Relationship Management (CRM) systems which can easily enable you to send birthday cards, celebrate house-moving anniversaries and contact clients when their mortgage is approaching maturity, but to truly engage with existing customers, you need to develop a customer retention culture which is at the core of your business, not just when you have time.
In such a competitive market, with tighter margins and less differentiation on price, this is tougher than ever.
At Accord, our communications are designed to lead the customer back to the broker, but still lenders see around 50% of retention customers still come back direct rather than via their broker.
Likewise, with so much information now available at our finger tips through mobile devices and the ability to self-serve in almost all aspects of our lives, some customers won’t automatically see the value of getting advice on their product transfer.
The challenge for brokers is to develop a relationship with a client that inspires loyalty, so that they automatically come to you for advice when any financial decision needs to be made.
At a recent event, we met with a number of brokers who said that client retention was a key focus for them, with a schedule of touchpoints throughout the year to enable them to be front of mind, especially important for clients taking longer-term fixed rate mortgages.
Not only did this sustained contact allow for upselling additional services like insurance and protection, they found that having a more engaged approach had resulted in more referrals.
Know the value of advice
The value of advice continues to incite debate. In the most recent Mortgages Market Study published in March this year, the Financial Conduct Authority suggested that ‘almost all’ new customers were guided to an advised route, which meant some were likely being “unnecessarily channelled” into advice.
This statement has confused many in the industry, myself included. I find it hard to argue that any advice on your biggest asset could be deemed “unnecessary”.
However, once a client has been through the process once, some will be wondering if they need the services of a broker a second time.
Whilst having different administration systems around their CRM, all the brokers we spoke to agreed that when maturities came up, it was imperative for borrowers to seek advice and discuss their current situation and future plans to ensure the best product was selected.
Many had stories of clients choosing the execution-only route, and then wanting to move house six months later and being locked into a deal.
Had they shared any plans (even the slightest suggestion of a change), an adviser would have been able to ensure they had a range of suitable options available to them.
The key issue for brokers is therefore proving the value of advice in that first encounter, then providing a faultless, and ongoing, customer experience to ensure they choose to use you again and more importantly, recommend you to family and friends.
Establishing a successful client retention strategy can take time, but has been proven to deliver impressive results to your bottom line.
There are a number of guides with practical hints and tips available on the Accord Growth Series Hub to help you get started and decide which tactic will work best for you.
Once in place, it not only secures additional income from existing clients, but by implementing thoughtful touches and showing your customers you value them they are more inclined to speak positively about you to others, bringing in new clients at a fraction of the cost.
Top 5 tips for employing a successful customer retention strategy
1. Invest in a CRM system to help you manage key dates and communications
2. Show your value. Demonstrating the advice you can give through industry insight newsletters, short emails on regulation changes etc all clearly indicate you have the expertise to guide your client
3. Don’t spam! Engaging clients longer term requires creative thinking as too much contact can be seen as irritating and too little contact means you won’t be front of mind when it comes to their next financial decision
4. Get feedback and act on it. Not only will you identify areas to improve, you can re-engage with useful content on the topics they raised. Consider asking clients to post their comments on a review site, so potential customers can see the value of your service, but be prepared to respond to comments good or bad
5. Ask for referrals. A good excuse to reconnect is to contact a client and ask how they are and if they know of anybody who might need some expert advice – you could even offer an incentive gift or discount