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David Hayward | Money Institute | April 28, 2011 Quite often we hear about the challenges to selling, overcoming obstacles in the sales process, closing the sale, clinching the deal and just how competitive the mortgage market really is. At face value this appears true because of the thousands & thousands of mortgage brokers, groups, banks and bank lenders all competing for the same customer. The stark reality is, there is not a great deal of genuine differentiation in either product offers or service offers from the majority of those involved in the mortgage industry. This is not just speculation but based on direct observations of over 1500 mortgage professionals over the last 5 years. When pressed for distinct competitive differentiation over 90% would say..’great customer service’. The problem with this, besides it not being accurate, is it is too general and not specific enough. What part of the customer service spectrum are you better at than your peers and competitors? How do you know? How have you tested this? Just completing the functionality of your job efficiently is not a basis of such a critical point of differentiation. So if it is not customer service, what is your distinct competitive advantage? Which leads to the heading of this article. The next big thing will be value selling. This is the crux of all successful sales processes and sales people. It is the point where the customer is prepared to exchange their value (usually in the form of some type of payment) for the value of the service you offer and provide to them. In other words ‘Fee for Service’. Which creates somewhat of a problem for the broker as the customer doesn’t pay you for the value you offer but the bank does. In essence this waters down the real value you bring to the transactional process of acquiring the right home loan for the customer, which will meet their needs now but also consider the future needs as well. There is no doubt that despite plenty of opposition, Fee for Service will become the norm in the Australian Broker market within the next 5 years. It is already the case in the UK. The industry, closely aligned to brokering, the Financial Planning sector has already moved down that path. And it makes sense for many reasons. Firstly to offset reducing bank commissions & trails. Secondly to increase revenue per customer interaction, so you can get paid for the service & not just the product. Thirdly because it is really the only way to differentiate yourself from the thousands of others like you. Customers will pay for a professional service IF they perceive value in that service offering. The value can be attained by utilising the knowledge, experience, insights & skills you have acquired by becoming truly an expert in your field and applying this to the customer’s full advantage, over time so they can see this value. To help you do just that, it may be worth you looking at the new Mortgage Analyst accreditation program developed by us to help you ‘Value Sell’. Futher informaiton on "Becoming a Mortgage Analyst" can be found at:
http://www.moneyinstitute.com.au/mortgage-analyst/index.php
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Comments
Don't you think your experience and knowledge is worth anything? Have you met a branch lender recently? Do you use a tax agent or an accountant?
Banks pay brokers for the loan application, not for structuring and ensuring the client gets the right product and more importantly structure. Don't you think that if brokers had alternative professional fees, then we would gain control of the market and lenders would be forced toincrease commissions to get our business?
I think this precisely demonstrates my point. The broker doesn't feel he offers any value over a bank lender. That being the case, the customer will perceive the same thing and brokers will never be able to charge a fee comensurate with their expertise. Look at the headlines today regarding financial planners and make up your own mind about where this is heading.
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