This is a community of like-minded people that share a bold vision for the mortgage broking industry. They believe a quality mortgage broking relationship provides tremendous value to many Australians, want to see their industry flourish and strive for constant improvement and growth.
Many brokers think the only way to increase profit is to generate more leads (which will hopefully increase settlements and then profit). But this isn’t always the case. More leads equals more work – not necessarily more profit.
Instead, I’m going to share the Mortgage Broking Formula with you. Once you understand this formula, you will know how to improve four things by only 10% and this will translate into over 60% more profit! Much easier!
no-more-leads - Vimeo
My course is full of ideas on how to generate more leads, how to increase your conversion rate, how to increase your average loan size and to streamline (and outsource) your back-office to reduce your expenses. In short, my course will help you massively increase your profit.
In the video below I discuss how chasing short term profit often destroys long term value. A better approach is to focus your energies on driving long term value in your business. This might mean not trying to convert some prospects – especially rate shoppers. I share a story about one of my clients, the approach I took a few years ago which has translated into massive value. This video might serve as a quick reminder of the power of focusing on the right clients. Enjoy!
Generating short term profit is often at odds with creating long term value - Vimeo
The problem that most brokers have is that they only do marketing when business slows down. If you wait until business slows down, you will be tempted to employ short-sighted marketing tactics which cost money and typically don’t result in generating profitable business i.e. short-term profit does not generate loan term value. It’s a loser’s game.
The powerful and free marketing tactics take a bit of time to work. For example, the marketing that I’m doing today in my business probably won’t generate new business for 1 to 2 years. And the revenue I am earning today is a result of the activities I undertook 1 to 2 years ago.
Long term marketing is highly profitable because it costs very little and generates targeted, profitable and loyal clients.
Therefore, you need a system that helps you invest a little bit of time in marketing and which will, in time, generate a flow of very profitable business. A system must have three important attributes:
1) Always be marketing – your marketing activities should be regular and ongoing. Therefore, you need to automate as much as possible and get into the habit of doing small amounts, regularly. It takes some time and effort, but the rewards are significant. Life rewards those who are consistent and persistent.
2) Make regular deposits in the goodwill bank – the goal of all marketing is to build trust, not generate leads. Once you have built a high level of trust, people will be attracted to you when they have a requirement you can fulfil. You no longer need to sell. The law of reciprocity is the most powerful influencer of behaviour i.e. you must give valuable and relevant information on a regular and timely basis.
3) Focus on the end game (long term) – the end game is to attract clients that will be loyal (won’t be price sensitive) and that will refer other like-minded clients to you. That is how you build an incredibly valuable and profitable mortgage broking business. Therefore, to attract the right clients, you must have the right message. Conversely, advertising special interest rates and discounts destroys long term value because it trains the wrong clients that rates are the only important factor.
In summary, undertake regular activities, focus on building trust and resist the temptation of undertaking salesy, short-term type marketing.
This approach is illustrated by the Mortgage Marketing Hourglass below (click to enlarge).
The only way you are going to become more successful in 2018 is if you focus on improving one key measure: “hours per million settled”.
There’s only ever going to be 168 hours in one week – you cannot find anymore. And if you are consistently working more than 40 hours, then I’d suggest something is broken (unless you are a seriously high producer) because a happy, peaceful life is all about balance; some work, some play and some rest. Therefore, if you want to dramatically increase your settlements and profitability in 2018 without working more than 40 hours per week, you must focus on reducing “hours per million settled”. If you think you must work more than 40 hours per week to dramatically increase your settlements, you’re wrong. When I was writing loans, I settled > $100m p.a. and worked 40 hours or less.
Steve is a broker with 5 years of experience. He settled $50m in the 2017 calendar year. Steve’s goal is to settle $75m in 2018. There are 1920 working hours in a year (i.e. 40 hours per week, 48 weeks p.a.). Therefore, Steve settled $26k per hour in 2017 ($50m / 1920 hours). Steve’s average loan size is $450k. Therefore, on average, it took Steve 17 hours to settle a new loan in 2017. What about you?
Steve should work on two things inside his business to get to $75m
To increase settlements, Steve should focus on two things.
Firstly, he needs to reduce the time it takes to settle one loan. If he can reduce it to say 12 hours, he has the capacity to increase his settlements to $72m. He can do this by implementing an easy to follow sales system.
Secondly, through implementing a targeted market system, Steve could work to increase his average loan size. It shouldn’t be too difficult to increase it from $450k to say $550k-$600k. If he does this, his capacity increases to $92m (i.e. the impact of both improvements).
Now, these improvements won’t happen overnight (some will), but focusing on these two things throughout 2018 is the easiest way to get to $75m.
The solution is simple
Running a business without good systems is like trying to open a combination lock without the number code. It doesn’t matter how hard you try, you’ll never open the lock and you’ll just get more and more frustrated! But once you have the code (i.e. good systems), opening the lock is a walk in the park.
This is why it’s silly to think that all you need is to generate more leads to grow your business. More leads will just mean more work which leads to poorer work-life balance and, in time, probably unhappiness. Business systems are the ‘number code’ to success.
My suggestion is to focus on one thing
Instead of focusing on lead generation, I encourage you to focus on improving “hours per million settled”. To do this, I believe that you need to have three critical systems in place:
A marketing system – a system that requires only a few hours of your time per week that generates a consistent flow of quality leads. The good news is that I believe the best marketing activities are free (no cost). Therefore, you need very little time, no money, just good systems.
A sales process – you must have a consistent sales process that builds trust quickly, repels non-target and unprofitable prospects and attracts the right clients and converts them with minimal fuss. This is where I think most brokers waste the most time.
A loan fulfillment system – this is your back-office system. The aim is that you (the broker) should have very little involvement after an application is signed. The only way you can achieve this is to have excellent back office systems.
So, what do I do with all this extra time?
You might be thinking; if I do reduce hours per million settled from 17 to 12 per loan, what do I do with the extra time (assuming you don’t have more leads to work on)? The answer is that I believe that there are a few daily and weekly activities that a successful broker must do that are highly valuable. They aren’t valuable if you do these things once and a while. But if you do them consistently over 100 days, 200 days, 2 years, the more valuable they become. This is your marketing system (which I’ll cover in my next blog).
Therefore, instead of wasting time in an inefficient business, make it more efficient and then use your newfound time to undertake these high value activities. After doing that, you will soon have more leads to fill your time and increase settlements. Then, you repeat the process i.e. continually focus on reducing hours per million settled.
In my next blog (in 2 weeks), I will show you what a successful marketing system looks like and how to put one together. In part 3, I’ll talk about a successful sales system.
In December, I attended a Malcolm Gladwell conference (bestselling author of many books such as The Tipping Point and Outliers). I would like to share an important story with you that is very relevant to mortgage broking so bear with me.
He cited some research completed by two economists, Chris Anderson and David Sally (The Numbers Game) where they analysed years of data from the Premier League (soccer) and worked out that if all of those clubs worked on upgrading their weakest players, rather than their strongest players, they would score more goals and win more games. A lot more – something like twice as many goals – but I didn’t write down the exact number.
This is because soccer is a weak-link game. That is, the ball is passed between players many times before any attempt to score is made. If one player makes a mistake and turns the ball over, the opposition then has a chance of scoring. In short, soccer is a “game of errors” i.e. the team that makes the least errors, wins.
In contrast, basketball is a strong-link game because one player can take the ball from the oppositions goal and score without needing much assistance from any of her teammates. Therefore, upgrading your strongest player in basketball has the greatest impact.
Interestingly, as a side note, most Premier League club owners have ignored this research. It has been suggested that this is because they are driven by the cachet that signing a high-profile player creates for them and their team.
I believe that mortgage broking is a weak-link game because you can do everything right except for one tiny error – such as an interest rate discount not being loaded correctly – and it ruins the client’s impression of your service. Consequently, the likelihood of enjoying repeat business and referrals from that client are greatly reduced. The lifetime value of a client that has a perfect experience and one that has a less-than-perfect experience is massively different – well over $20,000 in my experience.
Therefore, a mistake such as a lender not loading the correct discount – a mistake that’s arguably not even your fault – could cost you $20,000! Of course, we could bitch and moan that we shouldn’t be punished for a mistake that’s not our fault – but that will get us nowhere. Sometimes life’s not fair. From a client’s perspective, they want a perfect, error-free, hassle-free experience – so that’s what we need to deliver, or we risk losing them. Clients don’t care who’s responsible for the mistake – just whether they happen or not.
If you agree with me that we are in a weak-link business, then you must ensure you don’t have any weak team members. Your team members include:
Any loan writers you employ;
All admin staff, receptionist, anybody that answers the phone and anyone who has any contact with clients;
The banks you recommend including the BDM’s; and
Any conveyancers you recommend. In fact, any business you recommend.
Take a few minutes now and have a think about who is the weakest member on your team.
Replacing the weakest team member rather than hiring a super-star loan writer will probably have the greatest impact on your revenue in the long run.
Hopefully, you have enjoyed that last week relaxing and recharging your batteries. But now that Christmas and New Year are behind us, your mind might start thinking about your business, clients and what you’d like to achieve in 2018.
January can be an unpredictable month volume wise, so it’s possible that you’ll have a bit of spare time. Perhaps some of that time can be invested in your business? In fact, I advise you to insert three 4-hour block into your calendar (I suggest one each on Wednesday 10th, 17th and 24th) and tackle the three tasks I discuss below. Go on. Do it now. Put it into your calendar.
Task 1: Focus on the 20%
Without a doubt, the best source of new business in 2018 will be referrals from existing clients and business partners. Typically, less than 20% of your clients will send you 80% of your referrals. Therefore, run a list of all the referrals you received during 2017 (I hope you record the source of a referral in your CRM? If not, start doing it!!!) and identify your top 10 to 20 referrers.
Once you have this list you need to speak to every one of these people (by phone or in person – emails are not effective enough) within the first 45 days of 2018 (i.e. by mid Feb). Reach out just to say hi, thank them for their support and remind them that you greatly appreciate their referrals, offer them something they would value (article, advice, invitation, etc), find a way to help them and so on.
You don’t have to beg for referrals, pay for them (i.e. offer incentives) or anything like that. You merely must maintain trust and likeability with these people and remind them that you exist. They will take care of the rest.
Mark in your calendar to contact these people again 2 more times during 2018 (i.e. again in April-May and Sept-Oct). Broking is a people business. You must invest time in cultivating these relationships.
Task 2: Save yourself 120 hours this year
What are the 5 most common questions or emails that your write to clients? Have a look back over your emails from 2017. I bet there’s a few topics/questions that you address a few times a week (on average). Questions like should a client fix their rate (pros and cons), what happens next i.e. once a client has agreed to lodge an app, a response to a new lead, a request from an existing client for a review of their rates and so on.
Identify these topics and write a template response for each of them. You can cut and paste bits from your previous responses to these questions. Then polish them up – here are two blogs that might help you do this: here and here.
Then save the 5 template emails in a word doc on your desktop (nice and easy to find) or in Dropbox. Alternatively, email the responses to yourself and save the email in a new folder in Outlook that you name “Templates”.
I estimate that we waste half an hour per day communicating answers to the same questions. Templating this will not only help you nail the response (i.e. communicate it perfectly) but could save you 120 hours over the next 12 months!
Task 3: Set your marketing calendar
Referrals are wonderful, but all businesses need to be prospecting for new clients. The key to marketing success is consistency i.e. the discipline to maintain the same messaging, regularly. The two biggest mistakes that brokers make are (1) they only start marketing when business slows down and/or (2) they change their messaging to attract short term business (e.g. a mortgage manager approaches you with a great solution for non-resident loans, so you start trying to sell/market this product – if it doesn’t suit your target then you are doing more harm than good).
The best way to achieve consistent messaging and regular marketing is prepare a marketing calendar. It is simple to do.
Take one sheet of A4 paper and write the months of the year on it excluding January (as its too late to plan anything for this month), combine June & July as one month (as I find most people are especially busy towards the end of financial year) and December (due to Christmas celebrations, etc.). Therefore, you should have 9 months to fill. Write down a marketing activity that you will do in each month. Some examples include:
Write a blog for your website – you should do this at least monthly.
Write a blog for another website – popular websites are always looking for good content and it exposes you to a whole new list of people. Contact these website in Jan so that you can scheduled in your blog.
Run a webinar. You can co-host it with a business partner such as an accountant, planner, buyers’ agent, etc.
Run a client seminar after work or a lunch/breakfast event in your office.
Mid-year share some tax planning ideas with your clients (via a blog, webinar, seminar, etc.).
Launch a podcast.
Invite top referrals/clients to a dinner, attraction, sporting event to as a thank you.
Write an eBook and email it to your clients – again, you can do this with an aligned business.
Send a direct mail to your clients inviting them to discuss their financial strategy with you.
Schedule a text message to clients if the RBA changes rates.
Once your marketing calendar is completed, insert reminders into your dairy i.e. when to start organising each marketing activity. Then stick the marketing calendar up on your desk as a daily reminder.
Word of warning: be balanced. Don’t plan to do too little but also don’t over-commit either as you’ll be setting yourself up to fail.
The beach or planning?
It is very tempting to spend any free time in January down at the beach. Whilst we all know that business planning is important and valuable, it’s not urgent – so it tends to get postponed. That’s why its so important that you block out your diary now – its only three 4-hour blocks – and it probably won’t even take you that long. I know from my own experience that these tasks are incredibly valuable. Good luck!
The quickest way to make a bad first (page) impression is to have have old, irrelevant or poorly written content on your website.
These days potential clients will likely suss you out online long before they ever shake your hand. And just like the grip of your handshake, the strength of your website can make a lasting impression in seconds.
The good news is that creating fresh, engaging content often requires just a few tweaks to your current writing style, which we’ll outline below.
1. A strong hook
You need a strong headline and introductory paragraph to really hook your readers. Strong hooks often do the following: shock, intrigue, surprise, create a sense of urgency or offer a solution.
Don’t stress if the introduction doesn’t come to you straight away – often the ‘Eureka moment’ will only come after you’ve written the bulk of the article.
2. Get to the point
Don’t spend six paragraphs subtly building your case before you get to the meat of the article. Use a maximum of three or four paragraphs setting the scene before giving your readers what they came to your post for.
3. Use subheadings, avoid slabs of text
Subheadings help break up your article and give readers resting points. They also allow readers to skip straight to the nuts and bolts of your article if they’re short on time.
Large slabs of text are hard to read on a screen, so break up your paragraphs and vary your sentence length. The rule of thumb is: stick to one idea and no more than three sentences per paragraph.
4: Keep it simple, stupid
You’re smart. Your clients already know you’re smart. Chances are that’s why they’re coming to you in the first place – you don’t need to knock them over the head with a thesaurus.
Write plainly, conversationally and avoid jargon. Consider injecting some personality or humour.
5: Don’t over-deliver, have a strong call to action
The purpose of your article is not just to generate value for your reader, but to generate value for your business.
There should be enough meat in your article to satisfy your readers’ curiosity, but you don’t want to give away all your secrets in a blog post.
Ideally you want your client to book another appointment – so make sure your call to action (CTA) clearly identifies what they should do so you can help them further.
6: Don’t be precious
Writing can be extremely difficult if you’re trying to get it perfect the first time.
Instead, begin a rough draft by identifying the key points you want to make. Use them as subheadings and then fill in the details under each point. Don’t put pressure on yourself – just putting your thought-stream on paper is better than a blank page.
Now, put the draft aside. Come back to it with fresh eyes or get a second opinion. When you re-read it you want to be ruthless. Cut out any passages that don’t meet your key objectives. Repeat until you’re happy.
Generally, client content should be no longer than 600 words. This blog post started out as a scruffy 1100 words before my colleague got out the red pen.
If all of the above seems just a little too much effort, then worry not.
We provide a syndicated content solution for mortgage brokers that will keep your website’s blog up-to-date for just $23 a week.
Basically, we do 99% of the work, then you publish it. Check out 99content.co
Are you an order taker or order maker? Put differently, do you spend most of your day taking instructions from clients or giving them to your clients?
The latter is more enjoyable. When you are an order maker you can spend all your time and energy on making sure you deliver the best advice and maximum value to your client. However, as an order taker your primary focus is typically on winning (or retaining) the client so you get paid.
Also, order makers have more control over their destiny. They can choose which clients they deal with, what type of business they do, set the standard for the quality of advice they give, etc.
The best way to become an order maker is to be in control of the transaction. And the best way to be in control is to create the transaction. Consider two very different client scenarios:
(A) An existing client approaches you after been offered a lower rate by a lender that’s not on your panel and wants you to match it; versus
(B) You approach an existing client to better understand their wealth accumulation plans and discover that investing in a property is a very suitable strategy for them to consider.
In situation A, the client is in control. Therefore, you (the broker) are nothing more than a sales person, that is easily dispensable. However, in situation B, you are well on the way of becoming a trusted advisor. Someone of value. Someone that is respected and appreciated. Someone that is quickly becoming indispensable.
A variation to situation A is you proactively calling an existing client and offering them a lower rate. This is exactly what order makers do.
Question for you…
Review a list of last month’s loan lodgements and ask yourself how many of the transactions did you create/initiate?
I propose that you should spend at least 5 hours per week (one hour per day) creating transactions for existing clients. Some activates you can undertake include:
Write a blog that shares an idea about how to build wealth, a case study of a successful client or a question they should be pondering
Arrange a phone call or meeting with a client and ask them what their wealth accumulation strategy is. Team up with a commission-free, independent financial planner that you can call upon if/when the client needs more advice. Virtually all clients want to be told/shown what to do and not have to work it out themselves.
Proactively review your clients’ mortgages and submit for an additional pricing discretion with their existing lender, if necessary.
In everything you do, position yourself as a valuable resource of knowledge and contacts – so clients will call on you if they have a problem, question or issue.
Order takers – these brokers are selling a commoditised product. That is, their service offering is mostly based around the promise of saving time and getting the lowest interest rate. They spend all their time chasing transactions, not relationships.
Commoditisation fighters – these brokers understand that competing on interest rates is a race to the bottom. They realise that they must offer their clients more value. Spend time and effort building trust and a personal relationship with their clients. And help them get closer to achieving their goals.
The Top – these brokers are true champions – offering something so unique that they will almost never by commoditised. One such broker (in my opinion) is Chris Bates. I follow him on LinkedIn (see his posts here). He’s doing the hard work of trying to find way to help his clients daily. Endeavouring to ask his clients better questions. thought provoking questions.
FinTech is likely to dramatically change the financial services industry including the mortgage broking industry. If you are an Order Taker, your job will be replaced by a computer soon enough (although the good news is that I doubt many Order Takers would read a blog like this). Once the Order Takers are gone it will make it harder for the Commoditisation Fighters to earn a living. However, The Top will almost never lose their power.
That is why brokers like us do the hard work to raise the bar each and every day. Putting our clients best interest first. Focusing on solving their problems and adding as much value as we cane. Becoming a valuable resource. Keep up the difficult work on your ascent to The Top. It worth the investment.