When I first set out on my marketing career, I recall going on a course in which we analysed why consumers buy specific products and services.
The case study we used was that of Black & Decker, manufacturers of the power drill. The Black & Decker drill was used as an example of a product which people want because of the benefits it delivers, rather than the product itself. Think about it; you don’t really want a lump of metal and plastic which contains a high power electric motor. What you really want is the ability to make holes in the wall quickly and easily.
The same principle
Exactly the same principle applies to mortgages. Consumers don’t want mortgages; they want the ability to buy the home of their dreams and a mortgage is a means to an end. I would go one step further and say most people view mortgages as an evil necessity. By and large, mortgages are seen as being complicated, expensive and boring. Arranging a mortgage holds about as much appeal as a trip to the dentist, but people are willing to endure the pain for the ultimate gain – a bigger and better home.
All of this is good news indeed for brokers. Our national obsession with home ownership continues to fuel a growth in lending which has consistently run ahead of the rate of inflation. In 2006, gross mortgage lending hit an all time record of £346 billion –a 20 per cent increase on 2005.
Unfortunately, recent rate rises and speculation about further rises to come mean that the market is inevitably going to slow down this year. How much it will slow depends on who you speak to, but the Council of Mortgage Lenders’ most recent forecast is house price growth of only 7 per cent this year and 5 per cent next, with gross mortgage lending levelling out at £360 billion in 2007 to 2008. This means brokers are not going to see significant growth in their businesses simply as a consequence of growth in the mortgage market. If growth is your objective, then you need to do something over and above what you have been doing in the past in order to boost revenues.
Solving the conundrum
The answer to this conundrum may come from my old friends at Black & Decker. Black & Decker recognised early on that they weren’t in the game of supplying drills, but were actually in the game of enabling people to make holes quickly and easily. Actually, that isn’t strictly true. If it were, Black & Decker would have restricted its business to power drills. But as you know, Black & Decker manufactures everything from electric screwdrivers to lawn mowers.
Visit its website and you’ll see that its marketing strapline is ‘Powerful Solutions’. Yes, it recognised that it delivers solutions to consumers but those solutions need not be restricted to holes in walls; they can be anything delivered via a power tool. Remember the Black & Decker workbench? A classic example of a fresh look at an age-old problem and typical of Black & Decker’s way of approaching old problems from a new direction.
What it has done is taken a more holistic view of the needs of its customers. Black & Decker’s mission is to make life easier for them and take the hassle out of DIY. It’s not that different to being a broker – your mission is not to arrange mortgages, but to help take the financial hassle out of home ownership.
It may be worth doing what Black & Decker has done – take a fresh look at your business and a more holistic view of your clients’ needs and think about what you can do in terms of reducing the hassle factor for them.
In other words
What does all that marketing talk mean in practical terms? Take Home Information Packs (HIPs) as an example. The view of most brokers I speak to is that HIPs aren’t much to do with them and that they will inevitably be sold by estate agents. However, when consumers think about selling their home, one of the first things they do is find out how much they can borrow for their next home – they want to know to what degree they can trade-up. A significant portion will consult a broker before they go to an estate agent to put their home on the market.
You are, therefore, in an excellent position to cater for all their housing-related financial needs, from arranging a HIP to a mortgage and related insurances, conveyancing services, even a will writing service.
At this point I suspect a number of you are saying that you do this already and if your clients want a wider range of services then you are happy and able to provide them. Excellent, but if that is the case, why do you continue to describe yourself as a mortgage broker? It doesn’t very accurately describe what you do, does it?
The reason you use this descriptor is, of course, convention. You’ve always been called a mortgage broker, clients know what a mortgage broker is and what else would you call yourself? I’m not sure without giving the issue some considered thought, but I believe it’s an issue worth considering.
If a catalyst is needed to make you think again about the way you market your services, just take a look at supermarkets. There’s no doubt that soon they will be selling houses, arranging mortgages and insurances and providing HIPs. Will they do it in a way that is easy and convenient for their customers? You bet. Will they come up with a catchy phrase? As sure as night follows day. Are they a threat? I’m afraid so, if you don’t position what you do differently.
If you don’t make your business more appealing to consumers, another organisation will. Why not make the first move?
Julian Wells is head of marketing at Mortgages plc and an associate member of the Charted Institute of Marketing
