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Customer Loyalty, The Net Promoter Score, And Relationship Marketing In The Finance Industry

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In the finance industry there is no stronger sales driver than customer trust in your services. Further, the most successful route to being trusted is to be trustworthy, or worthy of trust. Faking trust is not easy, and the consequences of failing at it are large. Sadly, the global banking industry has a reputation akin to organised crime, and downline mortgage brokers and financial advisers often inherit part of that reputation by association, and others earn their own ordinary reputation simply because their relationship marketing (or their service) is flawed. Our Magic Lantern approach is the framework we put in place to build upon trust with a customer; it comprises of communication strategies, digital support, and customer support that that the finance industry – deliberately or otherwise – tends to largely ignore.

The reason BeliefMedia generates up to three times more business than our five closest finance marketing competitors combined is no accident; it’s impossible to rely on pedestrian-style advertising alone without optimizing every touch-point within a conversion funnel or in the retention stage once a user vacates the primary funnel journey. This post-funnel Relationship marketing usually emphasizes customer retention and satisfaction, rather than a focus on sales transactions. If your ultimate goal is to convert customers and build upon existing relationships it’s important to have a proven system in place that ensures best-practice outcomes, and we provide our clients multiple marketing and communication modules to ensure this area of their business isn’t ignored.

On first contact with any broking business we talk to them about the referral strategy that they may have in place. Sadly, not a single broker we’ve ever dealt with has had a program in place that comes close to being sufficient to grow or nurture a relationship long-term. We built EDGE a few years ago as a referral support tool, and while it’s gone on to generate billions in mortgage referrals it’s only one part of a much broader broader strategy necessary to build any real trust. Note that EDGE is designed to support a post-settlement relationship and does little to assist with trust building before a client is on-boarded into your business (we handle this very differently).

One of the many recommendations recently made by the “Productivity Commission: Competition In The Australian Finance System” report sanctioned by the Australian Government is that broker remuneration be reassessed to more align with “reasonable expectations”, which included the removal of broker trail. One of the many observations we made in a previous article was that smaller lenders rely on brokers for promoting various products (thus increasing competition) and then further replying on brokers to provide product support once a loan was written (in the absence of a branch network). We find over and over that brokers are failing with the most basic product care expectation to which the report referred (and the smaller banks rely upon), and they’re generally doing very little to build upon the relationships (and trust) that are most likely to yield the most profitable source of incoming business. So, outside of our own clientele, very few brokers support products in a way after settlement that might justify the trail being paid. Could it be that trail removal was actually a justified conclusion? Brokers are in the service and education industry… neither of which tends to be serviced in a manner that we would consider satisfactory.

The top brokers in Australia all have one thing in common: their exceptional relationship management. In analyzing the online presence of Australia’s finest, and by way of a few podcasts we’re yet to publish, we’ve determined that virtually all of the top performing brokers do not advertise on Facebook, Google, or any of the other digital lead generation platform upon which others often rely. That’s not to say that advertising isn’t effective (it’s what we do better than anybody), but it does point to the veritable fact that the most profitable brokers in Australia are simply the best at building and maintaining client relationships. We’ve typically found that there’s an inflection point for any type of business where advertising becomes a supplemental source of business – almost a means of brand awareness – rather than any primary means of survival. Another commonality among the broker elite are those with well-defined social strategies. In fact, we’ve identified the fastest growing brokers in Australia (or the upcoming top-performers) as those that rely on social more than they do any paid promotion.

Loyalty and service are neither a substitute for profit or a gimmick for making easy money. It’s the latter (using “service as a selling point”) that most brokers print over their website and wear as a badge of honour, yet few actually have the business culture or technology in place to support their claim. A broking business is built on service; if the service is provided then longer-term profitability is assured.

Whether you engage in paid promotion or not, and assuming you’re looking at relationship outcomes that will ultimately convert into a referral network, it’s important to assess how your existing clients perceive your business operations. Studies shown over and over again that it costs five times more for a company to attract a new customer than it does to retain a current one. However, in a world where digital marketing can be overwhelmingly effective (if structured correctly), online lead generation has becomes the easy part – for brokers, anyhow. Nurturing clients, building a referral network, and converting existing customers has become the new challenge.

Measuring Your Relationship Status

Measuring the trust that you’ve earned from your clientele is possible by way of a customer survey, and it’s part of our default Growth Program. In order to provide feedback that may lead to SOP improvements in any stage of your marketing funnel experience we must first understand the likely points of failure in the early life-cycle of your clients. It’s almost unethical to run a paid marketing program before we’re able to identify the forward-facing risks, and it’s during this bottom-end funnel evaluation where we’re able to identify the relevant threats and/or errors before mitigating with corrective SOPs and training (usually related to NTS, or Non-Technical Skills). While outside the scope of traditional ‘digital marketing’, this real-world analysis is an essential step if we’re to curate the highest-converting marketing experience (it’s also supported by a team that are industry experts in the field).

Net Promoter Score (NPS)

The Net Promoter Score (NPS) is based on the theory that if a client is truly pleased they will recommend you to their friends and colleagues. First published by author Frederick Reichheld in his book The Loyalty Effect, the NPS measures the level of satisfaction based on the response to the question: “On a scale of 0 to 10, please indicate how likely you would be to refer this firm to friends, acquaintances, or business associates.” This question is supplemented by additional survey questions that gauge the client experience. Based on the answer to the primary question above we will gain the knowledge of which clients are:

  • Promoters (9 or 10) – Loyal enthusiasts who will buy more and recommend your firm to friends and colleagues.
  • Passives (7 or 8) – Clients who appreciate what you do, but see your services as a commodity that could be traded for a competitor’s lower fees.
  • Detractors (6 or below) – Clients who are currently caught up in a bad relationship and are just waiting for someone to come along and make it easy for them to switch.

NPS is determined via a simple calculation. The percentage of Detractors is subtracted from the percentage of Promoters to calculate the NPS score for your firm (NPS = Promoters – Detractors). For the purposes of the calculation, the Passives group is ignored. The company NPS could be as high as +100 or as low as -100. While a single question is unlikely to be an overly scientific means of assessing consumer sentiment, it is effective at taking a snapshot of consumer satisfaction because it’s really the only question that might be used to gauge client advocacy.

The NPS question is just one of the questions in our client survey (asked in two different ways), and it’s used as the primary question in all telephone surveys. All our questions are designed to identify areas of perceived weakness and reported strengths, and they’re all returned to our client in a de-identified graph format.

The NPS score isn’t perfect – particularly in the finance industry. Other metrics, such as refinance rates and client drop-off during the early term of a loan may contribute towards a more reliable score. However, the NPS is better than nothing, and used universally tends to be a reasonably good indicator of loyalty.

If an individual isn’t likely to recommend your business, ask yourself why. If they are, determine why they haven’t done so already. The real-world implications of the NPS is that we’re able to identify what business practices aren’t working, and what initiatives are yielding results. If the NPS clearly shows one broker performing better than others (usually high performers), then perhaps their practices can be evaluated to determine an approach that might be shared to others in your group. While the NPS is far from perfect it does force a business to reconnect with their sales experience – not such a bad thing.

The only means of assessing improvement of an NPS score is to regularly source feedback. We tend to involve ourselves into subsequent surveys conducted after our ‘formal’ relationship comes to and end, and then again every year to provide an ongoing snapshot of how our systems have improved upon business relationships. We provide all our clients with survey software but it’s usual to conduct the questionnaires on our end to provide the distance necessary to illicit the most honest responses.

The most appropriate time to conduct the first customer survey might be after EDGE has reached the ‘conversion stage’ of a sequence.

The Business Acid Test

One qualifier of trust might be that you’ve referred your own clients to somebody else. While it might outwardly appear a little backwards, there are times when a competitor or another broker might be able to do something better than you. Do you care more about the customer than you do about your bottom line? Acknowledging your external network (that essentially provides the ‘same’ service) might sometimes be a foundation upon which trust can be built. The Acid Test as we define it in our program Business questionnaire is simple: “Have you ever recommended a competitor to one of your better clients?”

The truth is that most brokers have referred customers to other people. However, referring your clients elsewhere can be managed in a manner that makes them an advocate for your business – not somebody else’s.

One of underlying messages to brokers is that they’re in the service and education business, and that service should be provided at any cost despite the perceived profit (or loss). The service is a vocational obligation that should be consistent with the service mantrathat is likely plastered all over your website or LinkedIn profile.

We preach that the most difficult loans often result in the most profitable channel of referrals with a monotony that makes our clients sick of hearing it, and the brief case-study as described below serves as an example. A borrower of just $200,000 had approached our client to consolidate some of his debts (against his small home). He was riddled with debt, had multiple defaults, high credit card debt, and had a bankruptcy to his name – basically the client nobody really wants to deal with. Under my instruction, my client drive the borrower to a high-risk lender himself and walked him through the process that ultimately led to an approval – an outcome most brokers would have either struggled with or walked away from. Four days after settlement the borrower referred his first loan to my client – a 7.5 million-dollar loan in the Eastern suburbs of Sydney. After he was plugged into EDGE he later became an extremely profitable referrer. There was no question in the borrower’s mind throughout the process that my client was ‘his broker’.

What makes the example above worthy of mention is that this was a client that was referred elsewhere. Our client – rather than abandon this gentleman and leave him to write horrible reviews on Facebook – took it upon himself to take ownership of the borrower’s welfare.

No source of lead generation should ever be ignored, and no opportunity to provide a service or education should be turned away; this includes troublesome loans. If a client truly cannot be serviced by any existing resources – even by a third party – then perhaps they might benefit from a structured budgeting program, or a referral to a financial planner. Either way, it’s your job to hold their hand during the process.

Whether you’re looking to improve upon lead generation, client retention, or referral relationships, connecting with existing clients is usually a sensible place to start. Your brand is no longer what you say it is… it’s about what you’re customers are telling you it is. Are you listening?

It’s absolutely no accident that our clients have the highest NPS scores in the industry – regardless of size. A broker won’t earn the elusive high NPS by being ordinary; the opposite of extraordinary is what everybody else is doing.

Want to triple business without spending a single cent on advertising? Call us and find out how.

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If you’re looking to build your business with the most effective marketing, lead generation, advertising, and referral strategies available on the market, call us on 1300 BELIEF (1300 235 433) and talk to one of our experts.

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