Why Customer Retention = ROI, Customer Loyalty, and Business Growth

Lets discuss today "why" customer retention is so very important to the overall health and future success of your mortgage business. In this article we'll be touching on what is customer retention, how to measure it, why it's important, and how mortgage companies can improve it for themselves, and foster it for taking their business to new levels of achievement.

You will see that customer retention in this day and age is not only one of...if not the most important KPI that a mortgage company needs to pay attention to...and have a good strategy behind achieving best in class performance against it. It truly is a difference maker!!

We've taken some great insights from an article originally written by Sophia Bernazzani of Hubspot titled "Here’s Why Customer Retention is So Important for ROI, Customer Loyalty, and Business Growth", and here now reflected on and translated it to what it means to our mortgage industry and valued mortgage advisor community.

What is customer retention?

Customer retention is a company's ability to retain its customers over time — it's a percentage that measures how many customers are retained by the end of a given time period.

Customer retention refers to the ability of a company to — you guessed it — retain customers. Customer retention is impacted by how many new customers are acquired, and how many existing customers churn — by, not returning to buy from their original LO, and instead seeking services from a different mortgage advisor for their refinance or new home loan.

Why is customer retention so important?

This is very important, because it not only is indicative of how successful a mortgage business is at acquiring new customers, but very very telling of how successful they are at satisfying and bringing great experiences to their existing customers. These days...this experience goes far beyond the "administration" of the initial transaction. In the mortgage industry...it is becoming more and more evident that customers are looking for a trusted advisor, subject matter expert, and educator in the home financing world. Those that are able to accomplish this for their customers, in an "ongoing" visible relationship truly benefit from these efforts and their businesses are impacted in a tremendously positive way. Some statistics enjoyed are:

• ROI: Only a 5% increase in customer retention can increase company revenue by 25-95%.
• Affordability: It's 5-25X more expensive to acquire a new customer than it is to retain an existing customer.
• Loyalty: Retained customers buy more often and spend more than newer customers. They've learned the value of your service and keep coming back, again and again.
• Referrals: Satisfied, loyal customers are more likely to sing a company's praises and refer their friends and family — bringing in new customers, free of charge.

What is customer retention management?

Customer retention management is the process of maintaining relationships with your current customers to delight them long after they close their original loan with you. In doing so, you encourage these customers to remain loyal to your business, and see you as that trusted advisor and "go-to" resource for their home financing needs.

Here are now some impactful customer retention strategies that can you should consider implementing:

1. Highlight case studies during the sales process.
   • This is a major item that often gets so overlooked. You have so many positively impacted customers. New prospects will see one mortgage advisor seemingly looking the same as another...so what criteria do they use to decide to work with you? If you share the great experiences from your past customers, work with a couple of your raving fan past customers to write up a nice testimonial on your behalf...these case studies can easily become your most powerful calling card. Validating your status of partnership and the one they should be working with now!
2. Set expectations early and often.
   • This is about a couple of things. One, home financing is a "journey". There are many steps to take from time of inquiry to closing on the loan. There are many entities, people, and influencers in place...all have a role, and many have an impact on your customers results and outcome. Outlining this journey for your clients gives them a good picture of the yellow brick road ahead. Also gives them a clear picture of the many items and areas that you will be working hard to support them in. Remember...many times they will not see, and possibly not appreciate the behind the scenes work you are doing for them. This will enable them right at the beginning to fully appreciating having you there to guide them. Additionally, being fully transparent and honest with a customer is always the best policy. Each borrower comes to the table with their specific situation. You owe it to them to communicate realistic outcomes and situations ahead that "they" may encounter. Then keep up good ongoing communication so that they have a fully guided "GPS" on their route to closing their loan..
3. Communicate results on a regular basis.
   • As mentioned above this is a journey. But, everyone loves progress. Unfortunately in society today...with a "fast food" mentality, many might get frustrated as they are impatiently awaiting to get to the final end result...closing the loan. They could get frustrated with you, and the process in general. They could take this out on "you" thinking that things are not going well...or that you are not working hard enough. When in reality the exact opposite is happening. Breakup your journey into smaller chunks.

     Mini-milestones, each to be achieved on route to the eventual over-arching goal. Then each time a milestone is accomplished, communicate this loud and proud to your customers. Tell them what has been done...what "box has been checked - as expected" and thus what is now left over. They will get a good sense of many things being accomplished. They will feel you are fully on top of the vast moving parts, and fully appreciate you carrying them the rest of the way. They will have a good, exciting sense of positive momentum you have now created.

4. Create a roadmap for the future of the relationship.
   • Once you close the loan...is that it? Or do you have an opportunity to lay the ground work for the future growth of your relationship? YES you do! Once you close your loan...talk to your customers about their lifetime plan. Together you will realize that there are many more transactions that will need support. From refinances to new homes due to new families needs. Set a plan in place "now" to reconnect and work on these "mini-milestones" together, like you did with this one loan, but on their whole lifetime of home financing.
5. Make memories around your shared successes.
   • Unfortunately bad experiences carry a long term memory naturally. Thus it is vitally important to celebrate with your client the successes you have had together, and continue to have. Like refinancing to lower rates and saving them hundreds of dollars a month. Or strategically setting up the load to avoid unnecessary costs. Make sure these positive events get remembered...and thus will be part of what separates you from the rest when time come for a new mortgage need.
6. Ask for feedback and act on this information.
   • Vulnerability is a powerful thing. Add that to the fact that good people generally want to help. Thus put yourself in a vulnerable position, and be humble and tell your customers you constantly want to learn and get better. You need their help, and would appreciate their guidance on what could be improved on. This will elevate you in their minds to the next level. The fact that you ask "their" advice and opinion...means you respect and appreciate what they have to say and are ready to listen. Now, if and when you implement one of their suggestions...let them know about it, and how it has positively impacted you and other customers. They will feel a sense of ownership in it..and you as "their mortgage go to person"!!!
7. Map out a consistent customer experience.
   • Get your best practices of great customer experience in order. Build a process around it. Then execute it well over and over again. Consistency with your deliverable and service level is paramount. Your customers will be referring you new business...that new business will expect you to live up to the praises that your customer has promoted. Having a consistent process to deliver delightful customer experience will enable you to hit and exceed your marks over and over again, thus gaining exponentially more and more customers.
8. Create a customer relationship marketing strategy.
   • In the mortgage industry some say it is hard to stay in front of customers...especially since the nature of the product have potentially long time periods before next need. But is this really the case?? Remember, are you an "administrator" of the transaction, or truly an advisor for home financing. That being said...there are many ways to stay in front of a customer by providing knowledge, education and insight ongoing. Whether it is with emails, newsletters, webinars etc.etc. But, execution on a consistent level will require you to strategize and organize a plan to execute this ongoing relationship management.
9. Make sure that the customer has a relationship with the entire team.
   • Your borrowers want to know they are supported. By you...and the army you bring to battle with you each and every day. Take time to introduce your team to each of your customers. Explain their roles, and explain your mission as a company. This gives your customer a great sense of security...knowing that if they cannot reach you, that your "army" has their back and is hard at work on their behalf. That they can reach out and connect with someone and thus never feel lost and alone.
10. Use reciprocity to increase loyalty.
    • Your customers choose you to help them with their loan. They give you their trust and thus their business. When you successfully close that loan, it is a good idea to show your appreciation for them giving you that opportunity. Remember...they could have chosen anyone. Show them your humility that you appreciate them, and appreciate every opportunity to be of service to them. This could be a nice gift, could be a donation for their favorite charity, etc.etc. Something selfless in appreciation to them...will plant seeds to the kind of person you are...and the kind of person they want to work with again and again for their next mortgage need.
11. Arm yourself with the tools you need to successfully manage your customer retention program.
    • You are only as good as your knowledge, effort, and tools at your disposal to execute against the goals that you have put in place for yourself. If increasing customer retention is one of those goals, you need to take count on the tools, and solutions you need to get that job done right. Look for solutions that are going to be able to give you visibility into your customers (current and past)...Give you awareness when they might need your assistance now. Once that give you visibility when they are possibly at risk, so that you can engage to save them. And then tools and solutions that will enable you to stay in front of, advising, communicating and engage your current and past customers ongoing between mortgage needs. Good tools and solutions are extremely impactful to an LOs ability to successfully execute a good client retention strategy.

We hope the above insights are helpful in your own journey to establish and maintain long, fruitful and fulfilling relationships with each and every customer of yours. Customer retention is the rock solid foundation that the rest of your business is built upon. Including new client acquisition. Do this right...and your business will take off like a rocket ship! Fueled by the rocket fuel of your customer repeat business and relationships!

Stikkum was designed for the mortgage advisor, was designed for their past customers relationships, and designed specifically to keep the mortgage advisor fully aware of their customers mortgage behavior and fully engaged with each of their customers throughout their lifetime of mortgage needs. Stikkum's market leading mortgage customer retention alert engine notifies you upon your customer taking action on a mortgage need without you. Stikkum automates your personalized outreach so that your reaction to those customer behaviors is immediate, swift and impactful...thus enabling you to save and retain that "at risk" customer. Stikkum's mass communication engine allows you to seamlessly and automatically stay in front of your entire customer base ongoing with unlimited email and SMS Text messaging promoting your knowledge, service and support to your customers whether you have 100 or 100,000. Thus keeping you top of mind for your customers ongoing and especially when come time for their next mortgage need.

To explore more on how Stikkum can specifically help you execute your mortgage customer retention program, please visit https://stikkum.io

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