Two decades ago, financial services companies spent little on marketing. Lacking technological resources, they focused on their traditional core markets and seemed unable or unwilling to compete. Then came deregulation, and with it a flood of new technology applications that changed the way firms communicate with and deliver services to their customers forever.
The Chartered Institute of Marketing offers the following definition of marketing: ‘Marketing is the management process responsible for identifying, anticipating and satisfying customers expectations profitably’.
Mortgage brokers need to be sure they can not only satisfy current customer demands, but also that they are fully prepared to meet the consumer aspirations of tomorrow.
It is important, therefore, that as a business you constantly conduct comprehensive, professional analysis of your customers and the market to help you fully understand your current position and plan a marketing strategy.
- Marketing in the mortgage sector is characterised by several factors:
- High cost – buying a property represents a major item of expenditure for customers;
- Complexity – most financial products are hard for the average consumer to understand, making comparisons with competitive offerings problematic;
- Scale of competition – few other markets have as many companies competing with each other;
- Low purchasing frequency – most properties are generally bought relatively infrequently.
As regards channels of distribution, for some products the key issue has been the increasing emphasis placed on direct-selling, particularly through the internet. The beauty of the internet is that it makes mass marketing accessible to all, not just the major players.
The internet
These days there are few people in business that do not utilise the advantages of the internet every day – whether it is for research purposes, booking travel arrangements or merely keeping up to date with e-mails. Do you remember how frustrated you feel when a website you need fails to match your expectations for ease-of-use and delivery? And what happens when you find a site that you find entertaining, informative or unusual for any reason? You add it to your ‘favourites’.
That is what you want to happen for visitors to your website. Your home page is the shop window for your business and the functionality of the site is your staff – helpful or otherwise. Like shoppers who are drawn towards a bright and busy high-street shop window, so potential clients are pulled into a website with a vibrant homepage.
Most brokers and firms will already have a web presence, but do all of them know why they have one in the first place? Is it to inform and educate, or is it to interact with customers? Is it going to be a driver of firm leads? Or was it simply made because competitors had one and you didn’t want to feel behind the times?
An effective website must be more than an online brochure giving company information and a contact e-mail address or telephone number. Prospective customers must be provided with a reason to come back and revisit the site. Offering something that adds value – a web log or 'blog' for example – downloadable information and other interactive tools such as mortgage calculators is one effective way of making a firm's website look and feel professional.
Reaching prospective customers via the internet takes some thinking about. Most websites are found using search engines, making the issues of search engine optimisation and search engine marketing of paramount importance, where the chances of a potential customer coming across your site are increased.
However, 'viral marketing' – the passing of web links or content from one user to another, is one of the most used and most successful means of attracting possible new customers.
You can also pay to be on a search engine. ‘Per Click’ advertising will yield almost instant results, but can be expensive. Natural searches are cheaper, but are also a long-term commitment and firms will have to wait longer to see returns on their investment.
The internet also permits key relationships to be forged and mined for value. For mortgage brokers, this would be links with the local solicitors, accountants, and estate agents through which business streams would flow.
A broker now has the opportunity to not only provide clients with mortgage advice through their own expertise, but also offer them access to virtually every other financial service available through online associations and agency agreements. In doing so, a small firm with a specialised expertise can still offer the wider services needed by a diverse range of clients.
There are plenty of low cost and free agency agreements available in the market and, as such, firms need to choose which services they need and want to offer clients.
Sites offering these agencies are keen to take on brokers to boost their own distribution and, in return, many firms will also offer incentives to such as free sourcing software, which can take cost out of their own operation.
However there are concerns about using the internet – especially in terms of advertising. Adverts must be Financial Services Authority (FSA) compliant. The FSA requires firms to ‘Treat Customers Fairly’ and to this end it requires firms to pay due regard to the information needs of clients and communicate information to them in a way which is clear, fair and not misleading.
The top five errors identified by the FSA in a recent exercise were; using old risk warnings or none at all, not displaying an APR, not displaying an adverse credit warning and using incorrect wording when referring to the FSA.
The role of a network
Many brokers have chosen to join a network and expect it to take care of the majority of their marketing needs. Some networks, however, are better at this than others. The network should be able to provide guidance to ensure any advert that an appointed representative may want to use is FSA compliant.
Clients and advisers are often directed to the product providers’ websites where the information may be out-of-date. It’s imperative to check that the information on the site is correct, otherwise you leave yourself open to the possibility of prosecution and a loss of reputation may result. But brokers cannot afford to hold back on marketing activities because of a fear of getting something wrong.
A good network should also have a lead generation service and regularly issue marketing aids regarding the levels of service advisers can offer and others explaining the mortgage process. There should also be brochures on the need to take out protection insurance. If you are successful in getting a client to sign up for a protection product it opens another door to cross-sell a whole range of general insurance products and so open a whole new revenue stream.
Perhaps the best marketing tool at your disposal is staring back at you from the mirror every morning – yes it’s you. You may have years of experience and it’s simply a question of taking that to an audience that will be impressed by your expertise. Nothing conveys this like being the author of a book or guide. Another option is to become a regular contributor in the local press, which will build you a reputation that will drive people to your business.
If you’re an AR, your network should be willing to advise you on how to raise your profile – it’s in its interests to help you be successful.
Mike Hughes is chief executive of Burns-Anderson
