When lenders tighten their criteria – which is the prevailing situation at the moment – experienced and strategically committed broker firms have the best chances of ultimately prospering.
If banks are pulling back and being less aggressive about selling commercial mortgages, the potential for brokers to attract more customers increases in proportion.
If loan criteria are tighter and rates are higher, potential clients are also more likely to need the expertise of brokers to help them find a product to meet their needs.
Top quality service will be a key success factor, and those brokers that can act more effectively than their competitors should not only survive, but could also prosper.
The direct marketing route
Turning the current situation into a winning one will involve investing time, effort and money into marketing. Contrary to popular belief, direct marketing can often prove to be a very cost-effective way to create business leads if it is approached in a structured manner.
Direct marketing is characterised by sending messages directly to customers without the use of intervening media, designed to drive direct response via a specific and trackable call to action. So what is the best way to approach an area that is perceived as risky and expensive?
Critically, data should be the first consideration for brokers looking to drive a successful campaign. Without access to recent, quality data of meaningful numbers, brokers may run the risk of achieving little more than marginal brand exposure.
Typically response rates are likely to be around the 0.5-2 per cent mark, so obtaining volume data is one of the first requirements – with ‘recent’ being top of the list of important criteria.
Brokers should consider their own database as a starting point and branch out into data purchase only if existing data is low or missing key information. There are many firms that can provide good, recent data on both the ‘professional introducer’ side, as well as data across various borrower businesses.
Costs vary but are generally around £300-£500 per thousand records and will depend on how you purchase and how many fields are required. Bear in mind that just one commercial deal could pay for the entire campaign as commissions are higher, making direct marketing a potentially rewarding investment.
Anyone considering a direct marketing campaign needs to ask themselves a few questions. Who will be picking the communication up? Where is the message being sent out, and is it specific to a particular user group?
If resources are available, it is advisable to conduct some form of market research. This doesn’t have to be a huge project and can be as simple as making phone calls to test the effectiveness of your messages.
People will respond to messages that are relevant to them and content that is tailored to them as individuals. Splitting the data into segments such as business, previous history, and region, and rolling out individualised campaigns will increase response rates.
Anyone new to direct marketing can make a start by rolling out a test program to find out what method works for their business and clients, trying various formats across a specific area. If information is collected, fed back into the database and new campaigns tailored accordingly, this should have a positive impact.
Even before the ‘credit squeeze’ there was plenty of room in the market for brokers to carve a bigger slice of commercial business, so making an effort with marketing now could help to build solid foundations for future business growth.
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