David Quick is managing director of CETA
Mortgage intermediaries can learn a lot from the enthusiasm among major financial services companies for cross-selling products and services.
A large proportion of the ‘junk mail’ generated in the UK is from companies seeking higher sales and profits by tapping into existing customers. And insurance is an obvious cross-selling proposition for companies ranging from banks to water and power companies to retailers and holiday operators.
This makes for some tough competition for those who are specialists, but the success of companies such as Direct Line and Saga at levering their brands across a range of products shows what can be achieved.
Looking at wider
opportunities
Mortgage intermediaries focus on home loan advice, but the opportunities that stem from this should not be underestimated. Buying a home is a huge financial commitment for most people and after completing the loan the next problem they face is how to protect their assets at reasonable cost.
Buildings and contents insurance, life insurance, accident, sickness and unemployment (ASU), income protection and health insurance are all obvious opportunities for brokers. But why stop there when today’s online networks can give you access to an even broader range of products such as travel, pet, or even caravan insurance.
Property letting is a booming business and there is a host of standalone and bundled insurance products that fill this niche, ranging from landlords’ buildings and contents and tenants’ contents insurance to emergency breakdown cover, landlord legal protection and short-term unoccupied property insurance.
The customer may have a trade or occupation that requires insurance, either mandatory, such as employee liability, or relevant such as public or product liability. With competition in the consumer market so fierce, it makes sense to broaden out your appeal to the commercial or small to medium enterprises (SME), where local contacts and quality of service are still important differentiating factors. Brokers should also be looking beyond insurance to financial services products such as secured loans or even vehicle financing.
Admittedly a typical new customer is likely to have only one thing on their mind – how to find the money to buy a home. It is up to the broker to build up trust by getting to know the customer and their individual circumstances, offering good advice, recommending suitable loans and explaining why they meet the client’s needs.
Striking the right balance
Of course it is important to strike a balance between up front advice and sales and longer-term business. Insurance sales are a key weapon in building this relationship. Customers may only seek a broker’s advice on a new mortgage perhaps every few years but insurance renewal is far more regular and can have an equally positive effect on cash flow.
Insurance gives the broker an excuse to interact with the customer more frequently, giving more opportunity to impress the client. Good personal service through the year provides benefits not only in terms of sales and profits but also client retention. We all recognise the fact it is easier and cheaper to keep a customer than to find a new one.
Brokers must not only keep the clients happy but the regulator too. It is now not enough to comply with the conduct of business rules regarding mortgage and insurance sales, but also with the Financial Services Authority’s ‘Treating Customers Fairly’ (TCF).
The emphasis must not only be on getting to know the customer initially, but in following up over months and years. Knowing the products is only one side of the equation – it’s important to build up knowledge on your clients. The more you know about them and the more frequent the contact you have, the better chance of generating future sales and profits. TCF shouldn’t be viewed onerously, but as an extension of good business practice that will ultimately work in favour of both client and broker.
The benefits of technology
Technology is a key element of developing good customer relationships. Databases give fast access to comprehensive customer information, e-mail allows cheap and effective communications that can be targeted at potential clients, while websites can provide useful information to consumers as well as cost-effective online transactions.
Newsletters are a proven method of generating business. A quarterly mail-shot highlighting a different business area is cheap to produce and the customers also like being kept in touch and informed of new products or service. Most importantly they can be very effective – brokers we have spoken to report returns of 3 per cent to 4 per cent almost without fail when they use this tactic.
Technology is a hugely powerful tool when used in the right way, but there is also no substitute for one-to-one contact. Picking up the phone and giving a customer a quick call shows you have not forgotten them and can help persuade them it’s in their best interests not to forget you.
Ends
