What My Dry Cleaner Can Teach Mortgage Originators About Rate Shoppers

What My Dry Cleaner Can Teach Mortgage Originators About Rate Shoppers
JC Kadii, Mortgage Virtual Assistant™, close-more-loans.com

One of the most productive ways to learn effective closing techniques is to study your own purchasing behavior. When you make a decision to purchase something, ask yourself “Why am I doing this?” or “What made me decide to make this purchase?”

I recently asked myself “Why do I cheerfully drive 5 miles past at least 10 other dry cleaners and willingly pay 30% more for my dry cleaning?” Is there some sort of hypnosis going on? Are they planting subliminal messages in my brain?

A study of my dry cleaner’s behavior (and mine) led me to the following insights.

Your clients are purchasing a solution, not a price. I want clean, neat clothes. I want one crease in my pants, not two or three. I know I will get these things from this particular dry cleaner, so I cheerfully pay.

What solution is your client seeking? Do they want to move into their new home? Do they want to refinance so that they can lower their monthly payments? Are they trying to get away from their ARM?

Lowering your fees will not lower your clients’ expectations. The client has the same expectation whether you charge them nothing, reduce your origination fee by 50% or charge full price. Yes, I’ve used other dry cleaners (not because of the price, but because I didn’t want to drive the 5 miles). After one or two horrible experiences, I am back with the one that I know will do the job.

You have to charge appropriately in order to devote the time and resources it takes to solve your clients’ problems. Period. In order to lower their prices, other dry cleaners have to subcontract their work out to the lowest bidder. They are, essentially, a storefront. My dry cleaner does all of his work on site. This enables him to provide the quality and quick turnaround I expect.

Your clients are no dummies – they can calculate their return on investment. As I figure it, I have two options. Option 1: Pay 30% more now for clothes that I know will be clean, neat and ready when I need them. Option 2: Pay less now, plus 50-100% later if I need to get clothes re-cleaned. Even if the dry cleaner agrees to re-clean clothes for free, there is a cost associated. For one, I’ve wasted my valuable time going to pick up clothes twice.

An interesting way to guarantee customer loyalty — let them go. One of my clients uses this strategy to deal with prospects who tell her “I need a quote in 30 minutes” or “I’m talking to six mortgage companies so that they compete for my business.” She lets them know that she stands behind her estimates, and communicates the other advantages of doing business with her company. If they want to leave to price shop, she lets them go. Most of them come back, if not for that loan, then to refinance out of the horrible package they’ve received from another lender. Once they come back, wild horses won’t drive them from her. They never question her rates or fees again.

I once read a book where the author suggested taking this a step further — if a competitor is price cutting, send them business! Send them so much business they won’t be able to keep up. The more people they disappoint, the more they damage their reputation (an unsatisfied customer tells at least 8 people). Prospects who go to them will willingly come back to you and pay your fee. Frankly, I do not feel comfortable doing this, but it is an interesting suggestion.

When you know that you solve your clients’ problems, you have no need to quibble about your fees. My dry cleaner knows he’s good. He not only does a quality job, his employees provide great customer service because he pays enough to attract quality employees, and he invests in technology to make his business more productive.

Remember, your clients are searching for solutions. You are not doing yourself or them a favor when you discount your fees. If you do not provide the solution, they will leave, taking your good reputation with them. As long as you are solving your clients’ problems, you should be fairly compensated.

ABOUT THE AUTHOR

JC Kiadii, Helping Lending Professionals Generate Quality Leads in the Digital Age. 770-469-7385. Are you reaching out to the 87% of new buyers who start their search online? Our team provides results-driven mortgage Internet marketing services. Visit our website and sign up for the More Closings email newsletter to receive the 4-week e-course on Building a Quality, Responsive List.