Boosting your brokerage through referrals

Major companies have spent millions attempting to manipulate the workings of word-of-mouth recommendations through 'viral' and 'buzz' campaigns, while the Yale School of Management has a team of academics evaluating firms' attempts to engineer such person-to-person referrals. But even without your own marketing firm or team of experts there are ways brokers can maximise their recommendations from satisfied clients and referral partners.

We spoke to several successful brokers in an attempt to uncover how they had maximised the use of their referrals.

The power of the existing customer

As Mortgage Professional Australia's top ranked broker for 2007, Apple Home Loans' Roger Guo has had a busy year settling loans worth more than $160m.

He told Australian Broker that over 70% of his business came from referrals.

"Of course referrals are very important for us because most of our business is from the existing customers and, of course, from the network referral," Guo says.

Apart from referrals from existing customers he says that Apple relies on recommendations from real estate agents, property investment consultants and solicitors for new customers.

Of these alternative sources of referrals, Guo identifies real estate agents as the most important, adding that Apple pays referring agents a fee in return for pointing clients in their direction.

Not surprisingly, Guo highlights the importance of cementing strong relationships with referral partners through regular phone contact as well as through socialising out of work hours.

"If you have time, go for a drink," Guo says, noting he regularly meets up with his referral partners for lunch or dinner. In fact, the importance of putting energy into a wide range of relationships, not just with the relevant client, is a recurring theme among successful brokers.

Sales-free investment seminars

Michelle Coleman of Investors Direct noted her firm runs a series of quarterly seminars aimed at building a rapport with potential clients and tapping into their networks.

"[The seminars] do build a bit of a reputation in the marketplace," she says. "We don't sell things there. We just educate people about investing and the mindset of investing in property and finance." Coleman, who settled over $110m in transactions this year, says the investment seminars are a crucial source of new clients, as existing customers bring along family members and friends.

She says the seminar model suits her organisation, which is firmly focused on attracting investors as clients.

Standing out from the crowd

According to customer experience management specialist Iven Frangi, firms looking to succeed, particularly in a crowded market like broking, need to stand out from the crowd.

"Most businesses can't be spotted in a crowd," he notes, adding that differentiating yourself from the other similar businesses is crucial to success.

"The further you can get along the differentiated line the better off you are," he explains. "You have to figure out what you're going to do which is significant to your client base and then tell them that you're going to deliver something significant."

For brokers like Coleman, differentiation has been achieved via an emphasis on investor education. For others, such as Harry Tan from HJT Mortgage and Finance, a focus on helping small business owners structure multiple property investments has proven fruitful. "We tell our customers that we offer three key services ... which are totally different to other mortgage brokers or banks," Tan says. He notes HJT focuses on property protection, minimising investors' tax commitments and helping small business owners and professionals structure their cash flow to service loans on two or more investment properties.

"We help [clients] set up sufficient funds to service the loan," Tan says.

"Some [clients] don't realise the importance of shifting their money around."

"We set up a cash flow structure for each individual customer who has a significant loan. From that they're protecting their repayments to the bank and they're also protecting their properties."

Tan maintains that this focus on delivering a tailored service to clients means referrals look after themselves.

"To get a referral is a tactical thing... but if you want a tactical win you have to focus on strategy," he says.

Part of Tan's strategy is to only draw loans from the major banks."Sometimes we're disadvantaged as those lenders aren't as flexible, but our emphasis is on safety," he notes, adding that for him potential involvement with a company in trouble isn't worth it. "If a client isn't sleeping well, I'm not sleeping well. My philosophy is if I can't sleep well I won't do it for my customer."

Originally from Shanghai, Tan also holds investment seminars in both Mandarin and English, advising both Australians interested in investing in China and Chinese keen to break into the Australian property market.

Taking a broader view

According to Frangi, more expansive strategies for attracting clients such as investment seminars are part of a broader trend, as businesses get more flexible in an attempt to reach potential customers.

"These days, people are looking at businesses from a far broader perspective and businesses are interacting with people from a far broader base of contact points than they used to," he tells AB.

In part, Frangi attributes this shift to the rise of the internet which has allowed consumers to quickly source alternative service providers.

"Clients are saying this is how I want to be treated and if you won't treat me that way I'll find somebody who will," he says. Australian Property Finance broker Greg Sterland, who settled almost $98m in loans last financial year, attributes his success to the importance he places on treating clients with respect.

"My philosophy is always to treat people the way I want to be treated myself," he explains, adding communicating effectively is particularly important.

Sterland notes his firm has a policy of staying in contact with clients throughout the sales process, implementing a system which ensures the client is contacted at seven different points."You become part of the family so to speak, and it's not an act - it's genuine," he says.

This commitment to forging relationships with his clients has resulted in many flow-on benefits for Australian Property Finance, with referrals accounting for about 80% of new clients.

Even an unsuccessful loan applicant can bring new opportunities, Sterland says, recounting the story of a young couple who had five unpaid defaults. Taking the time to sit down and discuss ways the pair could clear their debts and put themselves in a position to eventually buy their own home resulted in him writing over $3m in loans for 7 of their family members.

"If you can give people an experience they can't get anywhere else, they won't go anywhere else," Frangi explains.

"The key is to stop thinking like a sales person; start thinking like a customer."

Frangi helps firms seeking to improve the experiences of their customers, by mapping the business from the customer's point of view. He notes that what is seen as reasonable from the firm's perspective, when looked at from the point of view of the client, could be intolerable.

A four-day wait to buy a house, with the lender returning several times seeking further documentation may be standard practice, but very stressful from the perspective of a family anxious to secure a new home, he explains. Communication and information is key in such a situation.

"The brokers who are doing it best are the ones who have highly developed recognition systems for people who confer benefits to them. I don't mean they give them money. In a lot of cases, they keep them in the loop about information."

"A lot of it is personal," Frangi says."It's not highly sophisticated stuff and it's not expensive."

Technology tools that work

There is also software which brokers can use to help map and improve the experiences of their customers, such as Salesforce and Netsuite.

"Most small brokers aren't using their technology resources sufficiently to enable them to deliver a customer experience seamlessly and quickly," Frangi notes.

"What most brokers don't do is define for the customer 'this is how I'm going to treat you'. They define 'this is what I'm going to sell you'."

"It's not about being a big business; it's about being true to the brand you're putting into the marketplace."

But while being true to your brand may help your business stand out from the crowd, the relationship between broker and client, like all human relationships, at the end of the day comes down to building and maintaining trust.

"When I'm talking [to a client] about a loan, I'll say before we talk about a loan 'let's talk about whether you can afford it'," Sterland says.

"It makes people think about a 30-year commitment because I'd rather not write a loan than have that client come back to me and say they're in hardship."

"And what I find is that, indirectly - because you want to do the right thing - it comes back to you in spades."