Increase your business by 80 percent in eight weeksDr. Kerry Johnsonclient retention, referral generation, marketing strategies
Tim was on the verge of bankruptcy. After the refi boom and
subsequent rate increases, nobody seemed willing or motivated to do
a new loan. Still, Tim didn't want to have to start a new career.
Real estate agents seemed to spin his wheels. Though he was able to
meet with CPAs and financial advisors, they seemed more willing to
receive referrals than give them. Tim completed five loans in June
and only three in Julya classic downward spiral. There wasn't
enough business to even keep the doors open. Then he decided to do
something about it by becoming proactive about sales instead of
reactive. He became a sales-focused mortgage broker instead of
waiting for the phone to ring.
This month, Tim put 25 loans in the pipeline. He hired another
five sales pros instead of the standard cookie-cutter loan officers
waiting for the phone to ring. Tim is on track to originate 400
loans this year while many other brokers are closing their doors.
How did Tim do it? How did he turn his company around from a money
loser to a cash cow?
When your clients first approached you years ago, they shopped
your fees. If you had the lowest rate suitable for their credit
score, you received the business. Often, prospects would call, ask
your rate, and then hang up without even saying, "Thank you."
Prospects haven't changed, but you should.
According to the University of Connecticut, 87 percent of your
past borrowers care more about a relationship with you than about
the price or rate. If this seems illogical, consider the following
story. Al refinanced my house in 1999 and he didn't so much as dial
the phone to thank me for my business (although I did receive a
postcard telling me how much his company has grown). I have
refinanced once since then, with another lender. Two years ago I
added 3,500 sq.-ft. to my home, and I did a new first mortgage for
$1 million with a third lender. I didn't use Al. Why? Didnt Al do a
good job? Yes. Didn't he lower my monthly payment? Yes. Why did I
use the competition? Al lost the relationship. He didn't keep in
touch. While Al did send a postcard every six months, he made me a
transaction instead of a client.
What clients want
According to the Mortgage Bankers Association, only 17 percent of
loans during the past year were originated by the lender who
completed their borrower's last loan. This means that most brokers
and loan officers have lost contact with their clients. Brokers and
loan officers are still waiting for the phone to ring. But when
borrowers were asked if they would do their next loan with their
last lender, 89 percent said yes, if their lender had bothered to
follow up on the relationship. According to Forrester Research, the
following are the three key items your clients want:
1. An understanding of the product they have
Your clients really want to know the difference between an
adjustable-rate mortgage and a fixed-rate loan, between an
interest-only program and a fully amortized one. They don't want to
become experts. They depend on you for that. But they do want to
know what they have and what is available.
2. A loan officer who monitors each loan as if it was their
You are constantly looking for a program that will lower your own
monthly payment. You are also privy to the most current loans on
the market. Your clients want the same consideration.
3. Frequency in the relationship
They want to hear from you at least every three months. I mentioned
this to one loan officer who told me he sends a newsletter every
quarterdidn't that make a difference? The answer is, would you
rather hear from a trusted advisor personally or see their name on
a sheet of paper every once in a while?
How to originate 300 deals a year
Peter in Atlanta has 3,000 clients from business he refinanced over
the past four yearsa treasure chest for future business. Lately,
he's been striking out with calling real estate agents who are also
suffering from a down market. The problem is that they are
sometimes rude and often flaky. So, Peter started calling his past
borrowers. At first, it was awkward. He felt guilty calling a
borrower who hadn't heard from him in the past three years. But he
sucked up his call reluctance and completed the dials.
Surprisingly, nearly everyone seemed glad to hear from him. They
asked about his family and even expressed gratitude for the great
job Peter did on their last loan. Peter is now using a three-step
process that is earning him a 21 percent closing rate on all past
borrower calls. He is closing 21 applications out of every 100
phone calls to past borrowers. Here is his three-part strategy:
1. Catch up
Peter calls the client and catches up on their family. He asks
about little Johnny's soccer schedule and whether Dad volunteered
to be Johnny's coach again. Is Mom working or did she realize her
dream of being a stay-at-home mother?
Peter then tells the client where rates are right now and how that
will affect their home value. This appraisal estimate is the silver
bullet for real estate agents, helping them motivate sellers to
list their home. But even when the client doesn't want to sell,
they still want to hear about their home's value and what is likely
to happen over the next year. Peter did some research on their rate
before the phone call. He also knows ahead of time whether he can
save them money. He asks them if they would like to save another
$500 a month on their mortgage. Most say yes. But even when he
can't offer savings, he knows how to follow up with a product they
The average American household has $17,000 in credit card debt.
Peter pitches that for effect. He then asks if the client has more
or less than $17,000 to get the conversation started. He then trial
closes by asking if they could write off the interest payments on
their credit card debt and save 30 percent, would they be
interested? At that point, Peter starts the discussion about a home
equity line of credit and/or a second mortgage. Twenty-one percent
of all past borrowers ask to start an application.
After the questions about loan programs and consolidating debt,
Peter asks for referrals. He knows that every client knows
approximately 250 friends, relatives and neighbors they could
refer. So, he expects to receive three referrals on every phone
call. In fact, 55 percent of all of his clients will refer at least
five people. All Peter has to do is ask, but he doesn't make the
mistake of advertising for referrals like most loan officers do. He
doesn't say, "If you know anybody, please tell them about me." He
says, "Who do you know who could benefit from the kind of
relationship we have had so far?"
500 committed relationships
The American homeowner makes a home purchase every eight years.
They refinance every 4.2 years (more often over the last decade).
All Peter wants is to be there when they do their next loan. He
knows that if he only keeps in contact every three months, talking
to those he has a relationship with, he will automatically
originate 125 new loans a year, more if he keeps in contact with a
greater number of past borrowers.
Peter's formula is 10-2-10: Ten contacts a day, two appointments
a day and 10 closed loans a month. The math is simple, and the
results are spectacular. Peter can't hire enough new loan officers.
It's hard to find those who are willing to make the outgoing phone
calls, but those who do are now earning $200,000 a year, even in a
bad mortgage rate market.
Getting to the next level
Making the mortgage business profitable is all about relationships,
rapport and trust. This is easy to agree with, but how would you
like to receive an even better return on your time than Tim and
Peter? Then meet with your borrowers face-to-face. David did this.
At first, he started the three-month call script. He was shy about
forcing himself on those who didn't have a mortgage need, but
through coaching, we encouraged David to book appointments to get
to know his borrowers. Then magic happened. Even those who didn't
need a new loan on the phone decided to start an application when
David met with them. While Peter was able to close 21 percent of
his past borrowers on the phone, David closed 36 percent of those
he saw face-to-face. His closing rate on referrals was even
But why would you see someone in person when you can save time
on the phone? Would you rather see your real estate agent in
person, or would you be able to build the same level of trust on
the phone? Would you rather see your lawyer face-to-face on an
important case or is the phone just fine? The answer is obvious.
Your closing ratio in person will always be higher than on the
The mortgage business has changed. You can no longer stare at
the telephone, hoping it will ring. There are strategies you can
use to even double the business you were able to snare over the
last three years. But the mortgage business now is all about
relationship, rapport and trust. The better you can manage them,
the more business you will gain.
Dr. Kerry Johnson is a best-selling author and frequent
speaker at mortgage industry conferences. He operates Peak
Performance Coaching, a one-on-one coaching service, available at
He may be reached at (800) 883-8787 or e-mail