The Importance Of Transparency With Your Clients

When trouble is brewing, be candid

Insider

Contributing Writer

As a company in the mortgage industry, and especially if you’re on the more traditional side, you’re probably already used to providing a high level of transparency in your marketing due to licensing requirements and regulations. It’s obviously proper business practice, and frankly necessary to avoid being misleading in your marketing efforts or employing bait-and-switch advertising tactics. However, once you’ve covered yourself from both a legal and ethical perspective, there lies a gray area where companies must decide just how open they want to be in their communication with customers and how much they want to pull back the curtain when delving into certain issues.

Many companies in the mortgage space first ran into this dilemma when COVID-19 hit two years ago and they had to put a pause on originating loans. Some companies chose to fudge the truth and string their customers along, hoping to get operations back up and running before any damage was done. Other companies chose to stay silent, leaving their customers in the dark and hoping to have better news before long. A final group chose to be transparent with their customers. While the thought of telling clients that you cannot originate their business was no doubt terrifying, these companies decided honesty was the best policy regardless of the outcome. As we saw at the end of this scenario, the companies that chose to be upfront with their customers tended to come out of this period relatively unscathed, while their silent or dishonest counterparts suffered serious reputational damage.

As we go into a rising interest rate environment, and companies are forced to increase their own rates, and in turn, make major changes to their businesses, we are already witnessing a similar situation start to unfold where, once again, many companies are not choosing to be as upfront with their clients as they should be. It’s time for companies to realize that honesty really is the best policy, and here’s why.

Set Expectations

There is nothing worse than working with a company that overpromises and underdelivers. When the final product pales in comparison to the expectation that was set, it shatters any sense of trust that customer ever had in the company. The same is true when companies withhold crucial information from their customers that has a direct impact on them.

For instance, if your company has product program changes in progress that may directly impact a customer’s file, set those expectations as early on in the process as possible. Even if the rate on a loan could potentially be higher than your customer is hoping for because of rising rates by the time you rate lock, it’s better to make that abundantly clear beforehand rather than come back with higher pricing than what you promised initially. That way your customer either knows what they are getting or, in a best-case scenario, could end up with lower pricing than you quoted, so it’s a win/win either way.

Setting proper expectations is so crucial because if you choose to overpromise, and can’t make good on it, any confidence that customer had in your company is gone and most likely that customer isn’t coming back. Also, there is the reputational risk of that customer sharing their experience with others, because it is true that people who have a bad experience tend to be much more vocal than those that have a good experience. Trying to stretch the truth to save a deal will cause much more damage in the long run.

Put Your Cards On The Table

Setting expectations is one piece of the puzzle, but just how much should you share with your customers? Obviously, any major product or process changes that would have a direct impact on clients need to be communicated. Not just what those changes are, but also, if possible, why those changes are occurring and what that means for those customers. Especially if it’s not a positive change, knowing the reasoning why might not make the news any better, but it can certainly take the sting off and it instills trust with your customers as opposed to just taking an “it is what it is” approach.

Beyond that, when choosing what information your company shares with your customers, think about any other updates that, while they may not have a direct impact, would still be important, or at least interesting, for them to know about. Big hires, such as additions to the executive team, retirements, resignations, and promotions of employees into key roles in the company should be communicated, as this may have bearing on internal processes, new teams being formed, or ultimately affect customers’ current points of contact.

Expansions of a company, whether new divisions being created or physical expansions, like an office or branch opening in another state, is great information to also share. News like this can potentially attract new customers or opportunities. Finally, strategic partnerships with other companies in the industry are often great information to share with clients, and again, another way to increase credibility and potentially offer more value to your customers. Having more open communication with your customers should be viewed as an opportunity to better connect, not a chore, because it also allows them to feel more invested in your company.

Keep The Lines Of Communication Open

At the end of the day, it is ultimately up to your company to choose how much you want to share with your customers. There will always be certain situations, like confidential matters, you will need to keep close to the vest. However, there are things like changes to your products and processes or major company updates that are important to be upfront with your customers about. Instill confidence and trust in your customers by ensuring your company is communicating and being transparent.