Building a client retention strategy

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It costs anywhere from five to seven times less to maintain a current client than it does to prospect for a new one, depending on which figures you pull from an endless array of available studies on the topic of client retention.

This is why Fred Testa, a senior mortgage consultant with Invis in Vaughan, Ontario, insists on over-servicing his clients. He knows that if he doesn't keep in regular touch, his clients won't sit around and wait for him - they'll seek out the services of another mortgage professional. Worse still, if this happens, he risks losing coveted referrals from these past clients as well.

"Service, to me, is by far number one," says Testa. "If you're not talking to your clients and staying in touch with your clients, somebody else is."

And staying in touch with your database during slow times is even more essential.

"We have hit a slower period of time along with the US economy. It does have an effect on us whether we want to admit it or not," says Testa. "Basically, it's my database that's keeping me alive because, if I had to wait for a realtor to drop off a deal to me, I wouldn't be able to feed my family each and every week."

He reaches out to his clients about fives times throughout the course of a year - four times a year as the seasons change and he sends a card, calendar and fridge magnet at Christmas. Each season, Testa sends an update by mail that keeps his clients abreast of anything that's going on in the mortgage industry, including the option to refinance to pay off debt right after Christmas or home improvement tips in the spring.

Wayne Einhorn, president of EDI Achievement Coaching based in Ajax, Ontario, teaches brokers/agents an 18-touch system. Through extensive research, EDI has pinpointed the frequency that best keeps brokers/agents top-of-mind with their clients, which entails reaching out to them every 2.9 weeks.

The 18 annual touches include: 10 mailed newsletters that keep your clients apprised of important mortgage information; a personal call each quarter; and four electronic newsletters that offer relevant updates on mortgage trends and opportunities.

Above and beyond these 18 touch points, Einhorn also recommends brokers/agents hold an annual client appreciation event, such as a BBQ or a cocktail evening.

Given the time it takes to ensure you're staying in touch with your clients, using a customer relationship management (CRM) program can be a lifesaver. The problem is, many brokers/agents shy away from the true capabilities that CRMs can encompass.

Testa uses Invis' CRM to automate his customer touch points. "I know that it's working because, right now, between 55% and 60% of my business is past and present clients," he says. This also includes referrals from his database.

Testa believes that his clients often know people who are in similar situations to their own lifestyles. For instance, first-time homeowners often know at least three others who are in the process of buying a home. "If you over-service your client, they're going to refer you to those three or four other people that are in the same situation as they are," he says. "I do manage to turn one deal into three."

And the benefit of a good CRM is that you can be as involved or uninvolved in your customer touch points as you choose - or as time dictates.

Testa admits that, although he's been in the brokering realm for more than 11 years (and he started out on the lending side more than three decades ago), it wasn't until six years ago that he realized the importance of working his database and started using a CRM.

"The first year, I didn't really see a huge amount of dividends but, in year two, three and so on, it has been more and more and more," he says. "That's usually because most individuals don't call you as soon as they get something from you the first time - it usually takes four or five times before they'll recognize your name and they'll call you."

One CRM that brokers/agents have been finding useful over the past year is provided by GoMax Solutions.

"Because most brokers don't tend to want to do a lot of administrative-type work, we've created a CRM that's very simple," says Daryl French, a mortgage specialist with CENTUM LendingMax Corp in Kelowna, British Columbia, and a partner with GoMax Solutions.

Essentially, brokers can choose a default program or create their own activity plan that lasts for the term of the mortgage - beginning when the funding date is set and continuing right up until renewal.

"With the click of a button, we've put together these programs that have six to 12 contacts per year with their clients, as well as a monthly newsletter or a monthly News and Rate Advisor," he says.

Aside from the CRM capabilities, GoMax Solutions also includes document storage, e-mail, revenue tracking and a personal website in one platform - at a flat monthly fee of $100 per agent.

"You have to generate one more deal a year and it's free," says French. "It's not a cost - it's an investment."

Linda MacNally, a mortgage specialist with CENTUM LendingMax Island Corp in
Victoria, has had proven success with the latest option available through GoMax - a monthly automated News and Rate Advisor.

In one month, she received a few inquiries after the advisor was sent out and ended up funding two deals. As a result, MacNally says she easily made $3,000. Even if she gets that result every other month, she says this is a good boost to her business.

MacNally appreciates the GoMax task bar because it takes virtually no time at all to set up follow-up reminders, which helps her avoid missed opportunities.

Making the call
One challenge Testa faces is that he doesn't have the time to make personal calls to his database at least every quarter - as suggested by Einhorn.

"I've been in the mortgage industry since 1974 and my database is just over 6,000 clients - it's impossible for me to pick up the phone and converse with everybody one-on-one," Testa says. "I would love to do it, but I just don't have the time. So it gets done, at this point in time, by mail."

In situations like these where the mere size of the database makes it impossible to stay in touch via personal phone calls, Einhorn suggests brokers/agents choose around 100 names from the database - the ones who are most likely to send repeat business your way, including solid sources such as realtors and lawyers - and label them 'advocates'.

If you're at the very least offering a personal touch to your advocates by phone, your database is still working for you, he says.

Electronic direction
Adding an e-mail touch point to CRM repertoire is the next thing that Testa is looking to roll out with his clients.

"Unfortunately, somebody that's born in the 50s isn't as IT savvy," he says with a laugh. As such, he relies on backend support from Invis to help ease him through the process of using new technology.

Einhorn says most consumers are almost ready to make e-mail touch points a useful next step in the touch-point world.

"What we're finding with the consumer is they're moving slowly toward an electronic touch point. But they're not there yet - and that's why we've been very reluctant to give up our snail mail touch point," he says.

French from GoMax is an advocate for the website becoming an integral part of any CRM system. As such, when brokers/agents send out electronic newsletters, they should be linking articles to their websites and giving clients reasons to keep visiting the website.

"It's a great opportunity because your face and name are usually front and centre on your website," he says.

Face-to-face visits
Although it may not be practical for you to meet each client face-to-face for every deal, it's especially important to forge this type of personable relationship with first-time clients.

When people can put a live face to a name and/or voice, they are much more likely to trust you.

"If you meet the client, go through everything with them and explain everything to them, you normally pick up referrals," says Testa, adding that the more clients you personally meet, the better your chances they will close with you.

And once you've explained in detail during a face-to-face meeting why your client should go with one particular mortgage product over another, you are positioning yourself as their trusted advisor.

"I always try to put myself in my clients' shoes. What would I do? Nine times out of 10, that's usually the right solution for the client," says Testa.

Keeping track
If you're going to invest money to stay in touch with your database, you have to have a strategy, Einhorn suggests.

And a big part of such a strategy involves tracking where new deals come from.

"We want to know what the return on the database is, and our experience is that we can get it as high as somewhere between 10% and 12%," he says. If you have 100 names on your database, for instance, this should translate into 12 new deals you can expect to generate from your existing database on an annual basis.

By tracking the return on investment, you can pinpoint how much business you can expect to generate if you were to apply the same 18-point system next year.

For very little money, a specific toll-free number can be attached to a mail out or electronic newsletter to help brokers/agents track the deals that come in on specific touch points, says Einhorn.

If, for example, a brokerage wants to invest a few thousand dollars in a database giveaway - such as calendars or magnets - the toll-free number will ring through to the brokerage's main office number, but can be tracked because of the number used to originate the call.

Top client retention tips
1. Stay in touch on a regular basis. Although experts have pinpointed 2.9 weeks as the ideal frequency for staying in touch with your clients, ensure you are keeping in touch each quarter through a variety of means - including a personal phone call, a mailed newsletter or an electronic newsletter.

2. Provide value. You need to have a reason to reach out and touch your clients. If you provide useful tips - such as relevant product updates or home renovation help - they are more likely to open up correspondence from you.

3. Service, service, service. When someone comes to you, make sure you treat them well and go out of your way to make their experience memorable. Not only are they likely to become a customer for life, but they are also more apt to send you referrals.

4. Be accessible. Make sure your clients can reach you when they need to. If you can't take their call, try to get back to them within an hour to prove their questions and concerns are a priority for you.

5. Use a CRM. An automated process that stays in touch with your clients for you is an invaluable business tool. Many products available offer default programs that can be set up at the click of a mouse as well as more customized options for the more technologically savvy brokers/agents.

6. Know your products. Ensuring each client receives the best possible product for their specific situation is essential in making sure you're remembered for the right reasons.