It's easy to give in good times, but commission cuts mean brokers have to think smarter when it comes to client's gifts.
In Japan, gifts should be offered and received using both hands. In Singapore, it's considered courteous for recipients to graciously refuse gifts three times before accepting gifts. And in Malaysia you wouldn't give a gift to someone until you have established a relationship with them.
While other countries have firmly established gift giving cultures - there are few hard and fast rules in Australia.
For many mortgage brokers, offering clients a gift upon settlement or to mark the anniversary of their loan serves a dual purpose: it gives brokers an opportunity to thank clients and strengthen the relationship.
"There are a lot of benefits," says Paul Morton, director of PDM Property Finance. "We do it just to look after our customers, but it goes a long way to establishing new business and we always get referrals from it later on. That's why we've found it to be a good marketing tool."
Time for giving
Many brokers like to give clients a gift upon settlement. Morton provides his clients with a hamper, which generates a positive response. "With the hampers, people are thankful and surprised and we always get calls back. If you've had a good run with the banks, it settles on time and everyone is happy, then it's a good way to finish off the transaction. And in the current times, it's a good way to smooth things over if it hasn't been timely."
Morton also rewards his top 50 clients by throwing an annual cocktail party before Christmas or just after New Year. The catered affair, complete with string quartet generally sets him back between $3,000 and $4,000, but the benefits are worth it, he says. "People seem to enjoy it and we do get spin off from it. It's been a very effective way of marketing really."
Karen Egan, principal of Club Financial Services in Gippsland, rewards clients upon settlement with a 'thank you' letter and a fridge magnet or key ring. Clients who do large multiple loans through her brokerage receive vouchers either to local restaurant in their area or an accommodation voucher. "These vouchers are personalised, and it is our way of saying thank you for their continued support," she says.
Egan makes contact with clients after two months of settlement to ensure they are happy with everything and again on the first anniversary of their loan. Clients also receive birthday and Christmas cards with a calendar. Clients who regularly refer business receive movie tickets, or personalised bottles of wine.
Sarah Eifermann, principal mortgage planner of SFE Loans, also rewards clients when they refer business. Currently she sends clients a hand-addressed thank you card in the mail with a scratch 'n' win ticket.
"It's just to reward their behaviour. It's not an expensive scratchie, but everyone likes them. And the more leads they send me the more scratchies I send them. So it's pretty simple," she says.
"It's more about making people feel important and making people feel valued for their efforts. And by sending them a card in the mail that's branded SFE Loans, I kill two birds with one stone - I'm giving them a gift, reinforcing the brand and rewarding their behaviour."
And just think of the marketing benefits should one of her clients actually win some top prize money, she adds jokingly.
Cost of giving
There is some truth to the adage that you've got to spend money to make money. But the recent commission changes have affected every broker's bottom line.
Egan has never had a set budget for gifts, but prefers to send something in line with the quantity and quality of referrals received - somewhere between $150 and $200 per voucher for large multiple-loan clients. But commission cuts and the increased costs of doing business have forced her to cut back.
"Referral sources are now thanked on a yearly basis, not for each individual referral," she says.
Eifermann agrees that it's very difficult to spend money on gifts, especially for new brokers who don't have a large trail commission base.
"Trails have been cut and that's your lifeblood, I can't afford to go out and be spending $400 a month on gift magazine subscriptions," she says. "I value my clients and I wouldn't have any income without the loans coming through, but at the same time with commissions being cut, I just don't have the spare funds available at this point in time."
As a result, Eifermann is considering cheaper alternatives. She is hammering out a deal with a small cosmetics company that is looking to grow its database. "I'm looking at rewarding clients with a free facial and a $20 voucher, but that would help grow her business at the same time."
Kathy Crawford, director of Australian Mortgage Assist, employs a similar reciprocal agreement that Connective has set up between its brokers and Residex to reward clients.
Under the deal, Crawford is allowed to distribute 40 vouchers for property reports valued at $75 each to her clients. Crawford sends the gift certificates to clients who haven't changed their borrowing in two to three years.
"We may do a mail out to those clients with a gift certificate saying 'do you know what your current property is worth in today's market? With all this uncertainty we can provide a free update for you valued at $75'. And the client either takes that up or they ring us and say we've got a friend who is looking at consolidating loans or refinancing and give them this gift certificate, and that generates another lead for us and more business."
But Crawford considers the Residex vouchers to be more of a marketing tool than a gift. When it comes to rewarding clients for settling a loan she prefers to give them something that doesn't come with a price tag.
"If someone is settling on a purchase we actually offer to pack a box. I believe that you can't put a value on time and everybody is short of time. So if you can give a new client an hour of your time and do something to help them move then that's better than gift, because you've actually given up the most valuable commodity that you have."
And with clients who refinance, Crawford will offer something a little different, such as getting the lawns mowed or the hedges trimmed. "And nearly every one of them has taken us up on that, would you believe it?"
If she does actually buy something for a customer, it's generally a plant and she will actually go to the house and put it in the ground for them.
Reward enough
Not all brokers believe gifts are necessary. Otto Dargan, director of Dargan Financial, says his customers receive the gift of continued good service. "It's something we used to do, but because we've been so busy lately it's been put on hold. I've found that regular contact is probably the best method to improve relations. I don't think incentives were necessary."
Jeana Scott, director of Altitude Financial Group, doesn't do settlement gifts unless something has gone amiss in the loan process. "In general I don't normally give incentives. As far as I'm concerned it's my service that counts."
Culturally sensitive
Certain gifts are culturally inappropriate. In Australia, a gift of flowers is nice, but a dozen red roses seem a little weird. And in an increasingly multi-cultural society, brokers should take the time to make sure their gifts are received positively. Muslims don't drink alcohol and gifts that contain alcohol such as perfume would be inappropriate. Shellfish and pork would also be inappropriate for clients who are Jewish or Muslim. For Hindus the cow is sacred, therefore leather or food products of this nature should be avoided.
PDM Property Finance director Paul Morton has a local woman make up gift baskets for his clients that are tailored to them, some packages may be filled with chocolate, whereas others might contain special teas, depending on the client's taste. "We put a bit more thought into it," he says. "We try to make it more personalized and spend a little bit more money to do it right."
