This month I’m going a little off the beaten track but I was recently inadvertently reminded of one of the basic principles of marketing and I wanted to share my humbling experience with you all.
As I’m sure is the case for everyone who works in the mortgage industry, I regularly get asked by my friends and family about getting mortgages. I don’t have the detailed knowledge of a mortgage adviser but I usually manage to help them out with a few pointers before suggesting that what they really ought to do is sit down with a professional. They generally get their mortgage sorted and are grateful for the initial guidance I gave them.
Guidance
Recently, my best friend took a break from bragging about how much better than Everton his Spurs team are doing this year, and gave me a call to talk about mortgages. He explained that at the ripe old age of 31 he is now ready to put himself on the property ladder and asked if I could help him out. I ran through my usual spiel with him and pointed him in the direction of a mortgage adviser. Off he went to call them to get the ball rolling.
At this point I’d like to share the results of my own brief factfind with you. My friend is looking to buy somewhere for £220k and wants to put down a deposit of £15k. Although he is self-employed as an accountant in the film industry, he has been constantly in work for the last three years. He has always been on fantastic money, something that has been the source of amazement amongst the rest of my friends as he spent most of his time at university either in bed, in the pub, or at a party.
Generally he gets £1,000-1,200 per week in wages and when he is away working on a foreign film set he gets put up in luxury hotels and paid extra allowances (usually about £40 per day – more than enough to cover living costs and leave him in profit each day). He drives a slick Alfa Romeo car, goes on holiday at least twice a year, and is kitted out with all the latest gear in terms of laptop, ipod, stereo equipment, etc.
He still spends most of his life in pubs, clubs and at parties, although he has now added expensive restaurants and clothes shops to his armoury. Despite this lifestyle, he doesn’t have any debts. In summary, he is earning a good whack and living life to the max – but within his means.
No problems?
Taking all of this into account, I figured he would have no problems finding a mortgage. After all, he only needs to borrow just under 3.5 times his basic annual income and has a high net disposable income. I was sure he’d end up with a mainstream lender. A few days later he called me up in fits of laughter. The mortgage adviser had told him that the best deal for him was with Mortgages plc on our 95 per cent Near-Prime Plus. It had transpired that on his previous film he had been on PAYE until about 12 months ago, and this had been a key factor. He ridiculed me for not realising that we could do his mortgage for him and made it quite clear that Mortgages plc can be very relieved that I don’t work in their sales team (to be fair I’m quite relieved about that myself).
I made various excuses about us not selling direct to the public and also reminded him that I am not a mortgage adviser. But the fact of the matter is that I was amazed he had been recommended one of our mortgages. Here I am, heading up our marketing function (which includes product development and all the associated market research), and I had not managed to recognise a member of our target market when I’ve been his best friend for the last 12 years. Not only that but over 40 per cent of our lending is on our near-prime products, so it’s not as if he was an unusual case.
In recent years I have given numerous quotes to the press explaining that our borrowers are not all debt-ridden members of society who live in the poorest areas of the country. In our product development process we have recognised that we need to target high-income earners. And self-employed applicants are a major part of our lending. Yet I had not recognised one of our customers when he was stood before me.
I had unknowingly formed a view that nobody I knew could be a non-conforming or sub-prime borrower.
Know your target customer
My message this month is that you should take a few moments to consider how well you actually know your target customer. Not just in simple terms such as ‘people in my area who are looking for a mortgage’. You should know what they do, how much they earn, how they spend their money, and where they go to spend it. If you know this, you will be on the right track to start setting a marketing strategy to attract them.
On that note, you’ll have to excuse me, I’m off to put up some flyers in some trendy pubs and clubs around West London.
