How to get referrals from current clients
Many loan officers wait until after closings to ask for referrals from their clients. By this time, it is too late. I have seen so much money wasted on expensive closing gifts, the clients never realizing that the expectation of the loan officer was referrals, not just a "thanks for the great service." Closing gifts are OK, as long as this is made clear to the client.
At the close of the transaction, the client has just spent the last 30 days jumping through all of the hoops (stipulations and conditions) and is now ready to get on with his life. After a closing, the client is thinking about other things, such as packing, moving, changing addresses or implementing his next project. His mind is no longer focused on getting his mortgage secured, and, therefore, he is no longer acutely aware of anyone around him who might need his loan officer's services. The analogy would be that of buying a new house. When a client is in the mode to buy a house, he becomes acutely aware of every for sale sign that he sees on the road. After the home is purchased, this awareness goes away.
Similarly, once a client has applied for his mortgage, he is acutely aware of others around him who could use our services, because of top-of-mind awareness. He may engage a colleague in conversation at work, and if the colleague says he's thinking about buying a home, then the client says, "Hey, so am I." Our strategy is to take advantage of this top-of-mind awareness at the key time between application and closing, instead of after closing. You want to strategically program your client to respond, "Hey, so am I. You need to call my mortgage loan officer, John Smith. He's the best." Now, this doesn't happen by coincidence just because you give great service. It is a strategy that the loan officer implements so that the client is programmed at the first meeting.
Setting the stage—the "during"
We encourage our loan officers to meet their clients face-to-face for the loan application. We want our clients to know that we are a real company, that we have bricks and mortar and that we have helped thousands of other clients just like them. We want them to know we are local and that they can visit us anytime. A visit to our office takes the commodity element out of the equation and the client can see the value of working with us. The system starts with the client's first appointment with the loan officer. The lobby has a greeting board that has the client's name on it, welcoming them to our company. While the client waits in the lobby, he completes an "all about you" form, which collects some personal information about him as well as what other professionals he works with, such as CPAs, financial planners and insurance agents. The purpose of the form is to have some information that allows the loan officer to break the ice when he first sits down and to identify other professionals that the client may be able to give an introduction to (warm lead), thus producing some new referral relationships. While one spouse completes the form, the other usually picks up the notebook on the coffee table that has the closing surveys from our last six months of closings. These are actual surveys that clients complete at closing, grading us on our performance. We also survey real estate agents if it is a purchase transaction. There are no other reading materials in the lobby, just the survey notebooks and our company's mission statement, philosophy and licensing certificates. In other words, no other distractions are present.
The loan application—the
When the loan officer and client meet at the conference table, the loan officer takes a couple of minutes to conduct some small talk, review the "all about you" form and ask him how he was referred. The loan officer then takes about 10 minutes to go through a flip chart presentation that explains who we are and what he can expect from us, as well as what we expect from him (referrals). This presentation also includes an explanation of the mortgage process from application to closing. Before a conversation about interest rates and payments even begins, the client has committed to send us a referral before closing if we meet his expectations. We explain to the client that since we do not advertise, we are completely dependent upon the client to introduce us to our next client. The client never refuses to fulfill this part of the commitment. We also teach our loan officers to never make promises they cannot keep. It is much easier to meet a client's expectations when you under-promise and over-deliver. There are so many things that can go askew in a refinance or purchase transaction that are beyond our control. We make sure that the client understands this problem, and we commit to honestly communicate any problem to the client as soon as it comes up, along with two or three options to solve the problem. This way, we never have clients that get upset during the processing of their loan applications, because they have been properly prepared. As soon as you tell a client that his deal is a slam dunk, you have positioned yourself for doom, because no matter how contrite a problem may be, the client was set up to believe that there wouldn't be any problems.
Processors handle the file after the initial application and coordinate it all the way through closing, including collecting conditions and communicating directly with the client, the real estate agents and the title company.
Tuesday status calls—looking for the "wow"
Every Tuesday, the loan officer (or his assistant) calls the client and the real estate agent (or referral source) to give a status on the file. The purpose of the call is only to give a status and to look for a "wow" moment. A "wow" moment occurs when a client thanks or compliments the loan officer on his service. Most loan officers miss this opportunity and usually just respond with an, "Aw, shucks. You're welcome." Instead, the response needs to be, "Hey, thanks for noticing. May I ask you a favor? Who is the next person you know who could use my services?" Everything up to this point has been a setup. The loan officer provides such extraordinary service that the client says, "Wow!" Now, the loan officer has earned the right to ask for a referral. The expectation of a referral was set at the initial application, and now that the client recognizes the great service, the loan officer needs to remind the client of his commitment. It's like setting the hook, after which a fisherman feels a fish nibbling on his bait. If you don't set the hook, you won't catch the prize—an introduction to your next client. Most loan officers miss this opportunity. The window of opportunity is only open for a brief moment, and the loan officer has to be alert and cognizant of the "wow" moment. The real purpose of a Tuesday status call is to remind the client of his commitment to us and to get referrals.
Attending the closing is key. The loan officer attends and personally takes the client and the real estate agent surveys with him. The real estate agent surveys are completed while the closing officer has the client sign the mortgage documents. It is at this time that the listing agent usually says, "Wow. You are the only loan officer that actually does Tuesday status calls. I really value that service." Having identified a "wow" moment, the loan officer then asks if the listing agent's current loan officer does this (which he usually does not), and then asks permission (in front of everyone at the closing table) for an appointment with that agent within the next seven days. The listing agent never says no. After all, who is going to say no when he just acknowledged, in front of everyone, what great service the loan officer provides? This is a warm introduction to a new referral source that has already experienced our great service from the other side of the table.
After the client has signed all of the documents, he is presented with his survey. If a referral has not yet been had, the loan officer will then ask the client if we met all of his expectations. He usually answers with, "Yes. Why do you ask?" The response needs to be, "Because we usually have received two or three referrals by this time from our other clients. So we thought maybe we did something wrong." This guilt always makes them think harder about whom they can refer. After all, we asked for a commitment at application that if we met all of his expectations, he would send us a referral. He will always say "sure" at the application, so the loan officer must cash that ticket in on a Tuesday status call or before the end of closing.
Getting referrals from current clients always produces an extra one-two closings per month. Once the system is set up, it becomes automatic. If you want two extra closings a month, you need to conduct this strategy on every prospective client at the first meeting. If a client refers someone to you before the closing, then there is an 80 percent chance that you will get referrals from him after the closing.
Referred clients are much better to work with than purchased leads. Referred clients already know and trust you. Purchased leads do not, and as a result, they are more likely to shop around, causing you to trim your profit margin.
Mark Yerke is senior vice president of Yerke Mortgage Company, based in Columbus, Ohio. Mark is also a past president of the Columbus Mortgage Bankers Association. He can be reached at (800) 962-0122 or e-mail email@example.com.