Andre is very successful at attracting mortgage prospects and refinancing existing clients. But as rates increase and more adjustable clients have already moved to fixed rate loans, it has become harder to make money. Andre would love to talk to his past borrowers about investing their home equity for retirement, but he doesn’t know how to start the conversation.
Bridging is the answer
You have a customer you would like to up sell. They have a need but don’t yet know it. You aren’t really sure how to approach them. Use “Bridging.” Bridging is a set of techniques you can use to sell or upgrade clients from your products or services to a higher level or a larger quantity. This is particularly important because not only will they buy from you more quickly than would a cold call, but there is a high likelihood you will be able to retain them as clients longer as they buy more products and services. But why worry about up-selling when they have already done business with you in the past? The biggest reason is to keep your client over the long-term. They next is to provide products and services to those who already trust you. According to one study, only 17 percent of mortgage clients will use their last vendor. The biggest reason for this loss of business is the lack of a personal relationship with the client.
According to one study done by LIMRA research:
1. There is a 35 percent client retention rate over five years with one product or service.
2. Two products—a 56 percent chance of retention over five years.
3. Three or more products—a 92 percent chance of retention over five years.
The more products you have with the client, the longer they will stay with you. These products could be a purchase loan, HELOC and even credit service. It could also be a equity management program in partnership with a financial planner. Banks know as they gain your checking account, they are much closer to gaining your next car loan, CD and securing your retirement accounts.
Hurt and rescue
What is the best way to bridge your clients into more products? First discover their needs and then move them to other products and services you offer. They method you can use to create this initial interest is a concept called “Hurt and Rescue.”
Listerine created a brand from the tagline, “The Taste You Love to Hate.” It tastes bad, so you know it works. But the real hurt was to make you worry about bad breath. If they could do that, you would gargle with Listerine every morning. Listerine marketers at first wanted to hurt and then rescue you from this fate that causes friends and strangers alike to flee from your presence.
Brokers advertise every day trying to scare homeowners into converting their adjustable mortgage into a fixed rate loan because rates could skyrocket. They offer to rescue prospects from this dilemma with a more stable payment schedule.
For example, in selling an equity management approach, very few clients will be looking for a way to better manage their pension fund assets. Most don’t look at their fund balance statements and don’t know if it is even making any money. But if they don’t pay attention, they won’t have enough money to retire. Only 50 percent of those eligible contributed to their 401K plans even though employers matched the employee contributions. This will give you the opportunity of helping them build a retirement account by selling them on investing their equity. But first ask questions creating a “hurt” or pain with the person responsible.
Here are five steps to help you bridge your clients into giving you more business.
As you ask these questions, your job is to let them know how much of a problem (hurt) their lack of knowledge creates and how you can “rescue” them from those worries. Here are five steps you can use to bridge your clients into an appointment and help them solve their problems.
1. Make an introductory statement
2. Ask a bridging question and search for needs
4. Trial close
5. Book an appt
Make an introductory statement
An example of this is to make a statement that scares or gains the client’s attention again using the equity investing approach:
►The average retirement account is only $29,000.
►Ninety-three percent of Americans won’t be able to retire without going back to work.
►You are paying twice as much tax as you should.
►You will need 15 times your salary at retirement to live on 80 percent of your earnings.
These are all examples of introductory statements.
Ask a bridging question and search for needs
These are questions used after the intro statement that brings the concept home to your client. You need to personalize the hurt statement with a query:
►The average college tuition will be $18,000 a year by the time your kids are ready. At this rate, you won’t be able to afford college for your kids when they hit 18. What will you do?
►You will need 15 times your salary at retirement to live on 80 percent of your earnings. You only have $50,000 saved right now. What plan do you have in place to hit this goal?
►Your adjustable mortgage could spike to eight percent this year. Do you want to pay that much?
After you ask the bridging question, try to find out how worried the client is and how much it bothers them. In many cases, clients mistakenly think they are okay with their plans. But they really haven’t thought about the future enough to make any plans at all.
Xerox research has discovered if you can get the client to recognize needs, there is a progressive chance that a sale will occur. Here are the stats:
►If you can uncover one need, there is a 36 percent chance of a sale closing, depending on your skills.
►If you can uncover two needs, there is a 52 percent chance of a sale.
►If you can uncover three or more needs, a sale occurs nearly 100 percent of the time.
Bridging works because it helps you uncover needs your client may not have thought about. I just bought a new Porsche 911 through my company. My auto insurance agent told me that if I had an accident, the other party could sue my company also because it owned the car. What plan did I have in place to protect my company from that risk? He then sold me a commercial policy on my auto, double the price of a personal auto policy.
As you listen to their needs, you will keep asking questions until you get up to three. When you get three, you will recap by saying, “Let me get this straight … did I get that right?” For example, “Let me get this straight. You want to lower your payments. You also want to take some equity out to buy an investment property, and you don’t want to pay PMI, Did I get that straight?” The prospect will either correct you or agree. Either way you win.
These are the money questions. This is where you ask if they would benefit if you could help them. If you can master this stage, your closing rate will be nearly 100 percent. No one will ever say no to you again. Because you will only sell what prospects have already told you they wanted. Examples of trial closes are: If we could do “so and so,” would that be helpful? For example, “If we could lower your payments, take some equity out to buy an investment property, and avoid paying PMI, would that be helpful?” When they say “Yes,” your prospect has just committed themselves to work with you to reach a solutions to their problems.
Book an appointment
When they say yes to your trial close, an appointment is assured. If they say no, go back and ask more questions, you haven’t probed for needs well enough.
Your clients already trust you. You have their attention when you want it. But it is up to you to continually stay in contact and help decrease risk, improve their lives and then solve problems. One of our coaching clients in South Carolina, has a mortgage business and tax practice. He calls his clients every three months to check up on them. His closing rate is 80 percent on every call. The reason? He bridges them to a product he creates a need for. Sure, he hurts and rescues. But mostly he listens. Your clients would rather buy from you than anyone else. Why force them into other relationships.
Keep in contact, listen and they will stay with you forever.
Kerry Johnson, MBA, Ph.D. is a best-selling author and frequent speaker at mortgage conferences around the world. He may be reached by phone at (714) 368-3650, visit www.KerryJohnson.com/coaching or e-mail [email protected]
This article originally appeared in the May 2014 edition of National Mortgage Professional Magazine.