Times Are Tough
But when the going gets tough, the tough get better!
By Jason Hayden, Managing Director Finware Australia
You've read the headlines. Everyone is telling you times are tough right now. The sub-prime market continues to experience fallout throughout North America and UK/Europe.
We've seen 9 interest rate hikes in 24 months (www.rba.gov.au), creating further barriers to entry for entrants into the residential property market.
We're also seeing greater broker attrition rates than before. Phil Naylor, CEO of Mortgage & Finance Association of Australia (MFAA) said "25% of brokers entered the industry in the past year, but, at the same time, another 20% left the industry."
He also has figures showing that 40% of brokers have been in the industry for less than 2 years.
So, considering you may not have back-to-back appointments this week, do you explain to your spouse you're at home because times are tough? Do you keep your head in the sand and continue doing what you're currently doing? Or are you thinking of using the extra time to improve your business?
So what now?
So now that I've presented you with the sobering facts, what are you going to do about it? Well, you have a few options:
a) Move onto the next big money earning career
b) Tell someone else about how tough times are
c) Get on with it.
If you choose a), and decide to follow the herd getting out of the industry, it may be a case of the grass being greener on the other side of the fence. Because, let' be honest, we all know that's not the most far-sighted option when you're running any business that faces tough times.
Telling your fellow broker how tough you're doing it, is clearly a waste of time and energy.
Another alternative is to merge with another brokerage firm, which is certainly a rising trend. We've seen any number of mergers creating larger entities, even amongst the aggregator firms, the theory being you need to be big to survive. Just don't forget profitability needs to remain at least constant, if not increase, to create the returns you are looking for by growing through a merger.
A third, and more effective option, is to take advantage of this temporary lull, put on your overalls, get into your business' engine room and start fixing your systems.
Invest For Growth
If you want your business to be boom-ready, you need to invest now. The best way forward in tough times is to get realistic about your processes and IT systems that form the backbone of your business.
Any halfway decent mortgage broker will have some kind of software to track their business' loanbook, manage commissions and trails and will have some kind of customer database. However, you need to be mindful that systems and processes are NOT software. This is work that you have to do as a business, to make the business change, then you use your software to accommodate and facilitate your business change.
For starters, have you considered developing closer relationships with your referral partners? As the broking industry becomes more competitive, it's worthwhile formalising and improving your firm's interactions with other support businesses such as insurance brokers, real estate agents, property developers and financial planners to create a network of referral business. Do you currently track leads you give to your business networks and those coming from other companies? Can you easily create a marketing campaign based on where your leads come from? Are you managing any referral fees to and from your business?
Another area to consider working on is your ability to cross-sell or up-sell to existing clients. Selling to an existing customer is more profitable than acquiring a new one. For example, can you currently identify which of your first home owners may be eligible or ready for an investment property?
While we are on the subject of identifying any opportunity to be in touch with your clients, are you really working your database to its capacity? Most brokers tend to forget about existing clients when the good times are rolling, then wonder "why aren't my customers calling me?" when they start noticing their trails "trailing off". During the tough times like these, when consumers are feeling the pinch, they start shopping around for a better loan. Who are they really going to call if they have not heard from you for several years? Your company name may not even be top-of-mind by then.
Do you capture leads from your website, or do ad-hoc visitors leave without being invited to interact with you in some way? When visitors do interact with you, is your back-end set up to capture these leads, then create a workflow to add them to a marketing campaign or receive some form of automated communication with you - such as a monthly newsletter?
These are all questions for you to consider and ponder while you have some breathing room to implement business change.
But at the end of the day, it's up to you to get your hands dirty, and start making changes now!
What About Your IT Systems?
While I mentioned that processes and systems are not the same as software, once you have identified the areas within your business processes for change, software is a large part of accomplishing and supporting this change.
Finware has a suite of specialist software to enable mortgage brokering businesses to maximise both existing potential within their client base, as well as the ability to attract new clients. Finware's flagship product, iLend™ has a full CRM system that records a client's complete history from acquisition through to retention and ongoing communication. The software allows you to send automatically pre-populated correspondence, based on an automatically assigned task within the workflow, to your clients. You can even create a structured a mail merge campaign from the database, using marketing reports such as "loan balance", "rollover" or "anniversary".
Additionally, with the latest fully-customisable workflow tool, it is possible to create automated "touchpoints" with your clients, using pre-designed templates to send letters, invitations to special offers, newsletters and reminders.
Finware also has a number of additional modules to support other business processes. iRefer, which is fully integrated with iLend™ allows your referrers to easily submit leads. The tool allows you to keep track of where your main business is coming from, and also gives your referrers access to track their submitted leads online.
iNews provides an easy way to keep in regular contact with your clients and prospects, and also gives you the ability to add your own articles and delete supplied articles which have been written by a range of journalists and industry professionals. It's also a great way to draw clients and prospects back to your website.
Further Information:
For Further information, please do not hesitate to contact the undersigned.
Natasha David
Sales and Communications Manager
1300 762 444