How to take a larger slice of the renewal pie

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Although it may seem like madness to some, the idea of writing a letter and sending clients back to their lenders with it, it freed up what would have been several hundred fruitless hours over the past six years and also helped build a strong network of supporting and grateful referral sources and clients alike.  Admittedly without a lot of direct compensation up front.

As I entered my sixth year of brokering, I found myself writing these letters not just for random callers, but increasingly for my very own clients whose mortgage I had placed in 2009. There is a bit more of a sting to giving back a client you worked hard to obtain and to retain for five years. There had to be a better way. With these clients it was also not simply a matter of a short chat and a quick letter dashed off. Instead the expectation on their side was still there for a solid hour or more of catching up, consulting, market review, talk about future goals and strategic mortgage planning. 

Catch and release might be fun while fishing, but it is not any way to run a business.

This is part 1 of a 2 part series. Check back tomorrow as Woodhouse fully explains his renewal rate buydown tactic.

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  • Jim Tourloukis, Advent on 2015-03-23 2:11:49 PM

    Hi Dustin
    Thanks for sharing your approach. It is very interesting to actually get in front of the deal as you do and put the onus on the client to review with the lender directly. We actually do a similar thing when a potential client calls us requesting a rate. However, we do not send them a letter nor do we spend much time with them (at most 7 minutes is all they get at this point). We tell them to shop around and only come back to us once they have done so. It eliminates much of the wasted time.
    For renewals, we have had tremendous success retaining about 75% of past clients at renewal. However, we have only done this in the past year and a half (we never focused on past clients until we re-joined Verico in 2013 to use their CRM tool). The key here is the lenders which you do business. With some lenders you have no chance at all at renewal. With others, it is pretty simple to retain. You just need to know how to approach the deal depending on the lender at play.

  • Jim Tourloukis, Advent on 2015-03-23 2:13:42 PM

    oops. I meant Dustan, not Dustin. Sorry

  • Ron Butler on 2015-03-23 6:56:18 PM

    Jim makes a great point: know your adversary! Some FI are easy to take renewals from and some are totally hopeless. Several banks will go to the wall to hold on to a client and you have to know where to direct your energy.

  • Ottawa Broker on 2015-03-23 8:36:59 PM

    I find it interesting that the article won't name the lender that brags about a 91% retention rate with renewals. I am assuming the lender spends considerable money advertising in the magazine so they won't be named because brokers would think twice about using a lender that has a 91% retention rate at renewal.
    Myself, about 90% of my business goes to lenders that pay at renewal and that way the clients are not dragged through another approval process every 5 years.

  • Arbitrage on 2015-03-24 8:37:02 AM

    @Ottawa Broker - it's almost certainly First National. Our BDM used to brag about it for some inexplicable reason. I wonder if he noticed the dramatic drop off in business after those sessions. I'm with you on the renewals. I have been able to average 70% renewal lender over the last 3 years and simply can't understand the thinking behind brokers not making this strategy a primary focus of their business. There are enough quality renewal lenders today that neither you nor your client are sacrificing anything by supporting them. If they make competitive offers at renewal the client stays, and we get paid. If they don't then we hunt for greener pastures and again get paid. In either scenario I feel that placing clients with a renewal based lender is better for them (no undue pressure or influence from some brokers to move at renewal), better for me (working with lenders at renewal, not against them), and better for the lender (a renewal is significantly cheaper for them than a new origination). Healthy for the client and the industry as a whole IMHO.

  • Scott Tremblay on 2015-03-24 4:22:18 PM

    I like the strategy. I have been moving this way, and may consider the letter approach. If brokers move toward the Renewal/Trailer models as first choice the pressure will be on non renewal model lenders to follow what we are looking for or struggle going forward. Already seeing the shift. Great for client, lender and broker.

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