They say it’s not what you know, it’s who you know. I’m not sure this is absolutely true but it does emphasise the power of good relationships. We all know someone who’s had a helping hand from friends or family when they started out in business. Some call it nepotism, some call it good luck. Whatever your view, it’s worth understanding how forming solid relationships and affiliations can go towards building your business and ultimately improving revenue streams.
At the risk that this article may be teaching the proverbial grandmother how to suck eggs, as most brokers are relationship builders by nature and already understand the importance, I am approaching it from the marketing discipline and hopefully outlining new theories and opportunities for you – the broker – to explore.
Cross selling
The simplest place to start building useful relationships is within your own database. These are people with whom you already have history. They know you, you know them and, hopefully, you have helped them in the past. The old adage says that it costs 10 times more to attract new customers than it does to retain existing ones, so your client bank should provide you with a cost-effective way to increase revenue. I have yet to meet a broker who is unaware of this fact, but some unwittingly let these relationships slide in pursuit of new business.
The most obvious advantage to maintaining good relationships with existing clients is their potential to provide you with repeat business, if not immediately, then in the future. A good example of this is helping them to remortgage after the initial promotional period of their first mortgage expires. But there are numerous other advantages. Each of these ex-clients may provide you with the opportunity to supply them with a new product or service. If you supplied them with a residential mortgage, how about investigating their need for commercial mortgage finance? Is there a new lender in town whose offering would meet their needs? If so, be proactive and contact them straight away.
The other clear advantage of maintaining good relations with your client database is that they are more likely to provide you with referrals. Don’t be shy about this – if you did a good job helping them source their mortgage, why wouldn’t they want to pass on your name to their family and friends? We all know that word of mouth is the strongest and most revered marketing method. Prompt this by keeping regular, but unobtrusive contact with your client bank and consider posting them a letter outlining your full range of services, enclosing a few business cards in case they’d like to pass them to their family and friends.
Lender relationships
I once undertook some research with intermediaries to ascertain how they initially selected, and why they remained with, certain lenders. On average a mortgage intermediary had 10 lenders within their ‘consideration set’. From these 10 lenders, on average the intermediary used six lenders on a more regular basis. Given that we have around 100 mortgage lenders in the UK, having just six regular providers seemed limited.
Delving deeper, the reason intermediaries gave for returning to their preferred lenders was a combination of product offering and service. To them, good service meant a positive relationship with a lender that made them comfortable enough to recommend a product to their client. A good relationship between lender and broker is usually strived for by both parties. The lender wants the intermediary to place more business with it, and the intermediary wants the best available service for their client.
Speaking as a lender, there are simple ways for intermediaries to strengthen relationships and improve the level of service received. At InterBay we provide 2 points of dedicated resource for every intermediary – the local Business Development Manager who’s out in the field, plus the office-based Loan Manager. Getting to know both of these contacts and forming a positive relationship with them is vital. Every intermediary gets good service with InterBay but those with long standing positive relationships will surely be the ones who can call in favours, ask for the out of hours phone call or have their contact go the extra mile.
Referral sources
Speaking as a lender, there are simple ways for intermediaries to strengthen relationships and improve the level of service received.
The best example I can give for developing solid referral sources is one we use when a residential mortgage intermediary wants to start working with commercial mortgages but is unsure of their options for generating leads. In the case of commercial mortgages, the best business referral sources are local professionals most likely to supply them with leads:
Estate agents who sell commercial and semi-commercial property;
Accountants who work with small business owners or investors;
Solicitors who deal with small
businesses;
IFAs who provide insurance and investment but not mortgage sourcing.
To support this activity, we provide brokers with a set of unbranded letter templates so that they can write to their targeted referral sources, introducing themselves and their proposition. We also suggest that the intermediary follow-up this initial introdu-
ction with a quick meeting to discuss the potential for referred business face-to-face. If the intermediary needs support with this meeting, a lender’s local business development manager or sales representative should be able to help by providing an assisted visit.
Networking
The word ‘networking’ can have a negative connotation. But done well, it’s a useful tool which will help you build new contacts and widen your circle of friends. The key to good networking is to approach any new contact with genuine interest in what they do and the hope that both of you will benefit with a win-win situation from meeting one another. It only takes a little confidence to walk up to someone and find out what they do, how you could share information and if there is a potentially useful
business link.
A good example of effective networking is an intermediary who recently submitted 3 commercial cases to InterBay having attended a meeting of local business-people in his area. He walked away with 3 deals, 3 people walked away with the hope of financing (or refinancing) their business premises, he also found some useful contacts for his personal business needs. Not bad for an evening out!
Intermediary relationships: brokers and packagers
Intermediary relationships
It never hurts to form allegiances with other intermediaries or to call them by another name – your competition. It is far better to know who they are and what they do than to create a distorted caricature. You may find that your business proposition and theirs do not overlap and, in fact, you may be able to provide leads to each other. In the case of competition, knowledge really is power.
A lot has been written about the so-called ‘death of packagers’. Before joining InterBay I worked for GMAC-RFC ,which had a great panel of packagers, all doing good business. At InterBay we’ve been trading in the UK for the last nine months and have already seen a good proportion of packager business. The lesson here? Don’t write off the packager. There are some great packagers out there who really add value to their broker contacts. Packagers seem to especially come into their own with niche product areas, such as non-conforming or commercial. Seek out your packager contacts for their expertise in an area you need
support in.
Relationships with the press
Part of my job is to deal with public relations and the press. Many people have a natural hesitance to speak with journalists, fearing that their words will be misconstrued, twisted or reported negatively. This is just not the case. While it’s a journalist’s job to report news, their ultimate aim is to write useful and interesting pieces for their readers. I would encourage intermediaries to develop a positive relationship with their local journalists, so long as they feel comfortable with the potential exposure. On doing this, they may be given the opportunity to comment on financial news or write articles about the kinds of services they provide.
But before you do anything, make sure your internal staff relationships are strong.
It seems obvious doesn’t it? But any good marketer will tell you that a company builds its reputation or brand from within. This is vital when applied to relationship building. If you are serious about forming positive relationships and affiliations that will help you build your business, then your staff have to be fully on-board. They need to understand your aims and objectives, they need to know who you are targeting as new relationships and they need to know how you’d like them to interact with these relationships.
It’s who you know
To conclude this article I want to quote a mortgage intermediary from a seminar I attended recently. One of InterBay’s senior sales team was educating a room full of intermediaries about commercial mortgages.
He asked if any of them had success with commercial mortgages before – and a broker raised his hand. When he spoke about referred business being key to his success, he said: “As with a lot of things in life, sometimes it’s not what you know, it’s who you know.”
