Not all clients are created equal…

By Calum Ross

I have now been in the mortgage industry for over 12 years and I have learned a lot of great techniques and practices from some of North America’s top mortgage professionals. Over those 12 years I have invested heavily in education – over $250,000 in personal and professional development alone (courses, seminars, business school tuition, etc.).

While that may sound like a staggering figure, consider this figure: $1.5 billion. That’s what I have personally funded in mortgages over those 12 years. That is not volume pooling, but represents the over 5,000 mortgages I have arranged for clients who would all consider themselves my personal clients when asked who their mortgage person was and is.

I certainly wouldn’t have been able to do it alone – but with the help of as few as three full-time and up to five full-time salaried team members, in the last 10 years I have never had a year where I funded less than $100 million dollars in volume and never had my average basis points per deal drop below 89 bps in any calendar year. Statistically, I only have to buy-down rates on less than one in 20 deals I fund.

No. 1 tool

Over and over again, people ask me what is the single-most important skill that I’ve learned, and without question one very simple technique consistently remains at the top of the list. In fact, if you master only one skill set in mortgage banking, I’d say that it should be this: nothing will pay off better for you than effective database management. It requires no formal schooling, very little technology, and very little organizational skills, still this one technique should singlehandedly double your income in less than a year.

Let’s stop for a moment and imagine you in this hypothetical situation:

You are a frequent flyer and you have made it your mission to always support Airline A. You have been loyal to them with all your bookings – flying both your short- and long-hauls with them, amassing not only a lot of flights, but also thousands of miles. You stop to do the math, and find you’ve spent literally thousands of dollars with that airline while simultaneously getting to know exactly how their system operates. Now imagine after all this support you find out that that Airline A has one complimentary upgrade to a better seat on your next flight yet they decide to give it to some random new customer who happens to check in first and you are left with no legroom and feeling disrespected. You see, Airline A truly means well, but they simply have no system for measuring the frequency or profitability of your relationship. As frustrating and crazy as this situation sounds, this is exactly what many mortgage professionals do every day when they serve all their customers the same or, even worse, when they treat their high-maintenance clients even better!

While airlines may not get the service right all the time, what they often understand better than most industries is loyalty and the profitability of their clients. As mortgage professionals, we are often our own worst enemy. Like many sales people we have the best of intentions, we get so busy doing deals and busy in reactive mode that we don’t stop to proactively consider who our biggest supporters are and try to pay special attention to the clients and referral partners who are a big part of our long-term success. All too often we confuse activity with productivity and accidentally consider our highest maintenance referral sources as our best. So let’s stop being random about how we treat others and put a plan in place to make this year different. By understanding the importance of the frequency and monetary value of your clients and referral partners, you can build a very profitable business where you give your best to your best. 

How to Categorize Your Client - see page 2

Rank and reward

For simplicity, let’s consider that there are three possible categories a client can fall into, although you’ll see that there are really four:

1. A VIP Client is defined as an individual who has referred two or more clients; referred a client during the transaction; has transacted with you three or more times; has a mortgage(s) in excess of $750K (or has generated more than $7,000 in revenue); has two or more mortgaged properties. If they have any one of these attributes, they are VIP.  These clients need to get a highly personalized call or touch point from you quarterly, plus a bi-monthly mail piece (yes, not email!). The more personal, the better – 12 of my top clients one year had a personal gourmet chef come to their homes to prepare the dinner of their choice for them and two friends. For this category think total wow! It should represent no less than 10 per cent of your database and no more than 20 per cent.
2. A Preferred Client is one who has used you more than once; has referred you to one client; has a mortgage over $500K (or has generated more than $4,500 in revenue); or has identified an additional mortgage need in the course of the transaction.  Any one of those conditions makes them “preferred.” These clients need to get a highly personalized call or touch point from you semi-annually, plus a bi-monthly mail piece (again, not email). Once again think personal – if they really matter to you, then know more than their financial details. This group should represent no less than 20 per cent of your database and no more than 45 per cent of your client database.
3. A Client is an individual who has used your service and whom you have no problem with and hope to look after their other mortgage needs and/or future referral business. These clients need to get a bi-monthly mail piece (again, not email) and some form of one-to-one contact. These are clients who enjoyed your service, but you didn’t necessarily connect with them and, no offence, they likely weren’t wowed by you either – it was just a mortgage deal for both of you. As a group, they should represent no less than 45 per cent of your database and no more than 70 per cent of your client database.
4. Finally, there is the somewhat taboo category that people sometimes give me grief for – clients and referral sources you need to let go. These are the clients who one week before closing engaged you in rate war, they were rude to your co-workers or they just were not very nice people. That’s right: fire them! Life is too short to work with people you don’t like. Give yourself a raise in your emotional well-being and send them to that mortgage broker who seems to enjoy abuse. Not only will you be happier when you do this, but you’ll be more productive. This should not be more than five per cent of your clients or it may be the target marketing or your message that is attracting these overly demanding clients to your desk. While this will be awkward at first, trust me on this – there are enough people who do business your way to have to worry about those who don’t … I am living testament to this!

Now what?

Once you have your clients broken down in those categories then put in a mortgage value that makes sense for your market. Since my average mortgage is around $400K, I have made the preferred clients a mortgage of 1.25 times that amount. The VIP clients have a mortgage of nearly twice the average. You will also notice that the more they use me or refer me the more I elevate them through the ranks. The purpose of this ranking is not only to give extra credit to large mortgage clients as you can very easily reach the VIP status and never have a big mortgage or be a high income earner. Always remember - the point of this exercise is to be able to give your best to your best and to use your time wisely.

If you follow these simple steps you will notice two significant changes in your life. First, you will all of a sudden enjoy your job more because you will have a deeper relationship with your clients and they will appreciate you more. The clients will know you care and go out of their way to support you more. The second thing you will notice is that your hourly income will go up dramatically. By forming meaningful relationships with your top clients, who happen to also be the ones who’ve bought into you, your rate shopping will go down, the amount of work you do to have them get their documents in will go down, and you will actually enjoy talking to your clients again. I have said this before and I will say it again many times, in fact: “people don’t care how much you know until they how much you care.”

Use the next year to insulate yourself from increasing rate wars and the high blood pressure of dealing with annoying people and show love to the clients who support you and make your job easier. Give your best to your best and I guarantee you that your happiness and income levels will soar! Until then, I wish you all continued success.