In mortgage origination today, loan officers and account reps must sell in an environment where customers are much more knowledgeable than they were just five years ago. The balance of power has shifted to the buyer of services and not the seller. In all types of businesses, the seller is facing customers who research before they contact the vendor and comparison shop with practically everything they buy. It seems that everyone is haggling and is willing to walk at the drop of a hat. Customer loyalty seems to be a thing of the past.
Last week, a New York Times article discussed the shifting balance of power and how many retailers are scrambling to figure out what works in this new world. How can sellers best manage the newly empowered customers?
While many retailers from J.C. Penneys and Macys to Walmart are trying to address new pricing strategies, the grim reality is that when the merchandise is not unusual enough to draw customers, sellers resort to offering discounts.
How does this apply to mortgage banking? As more mortgage products are increasingly plain vanilla, companies are under the gun to distinguish what differentiates them from the competition. When it comes down to it, the customer wants to know: Is lender A really that different from lender B?
It seems to me that what is important in pricing strategy is the quality of the originator and how he or she presents value to the customer. While there are endless pricing models and pricing gurus, I think it always comes down to customers wanting good products and a fair price. I didn’t say the lowest price. If it is always about the lowest price, companies don’t need a sales force!
Originators must be able to convey value to a prospect; understanding that not every customer values the same thing. It seems evident that originators are at the front lines when evaluating what is important to a prospect. Here is the rub: If originators don’t have the talent or knowledge to sell value then how are customers going to be able to determine why they should give them the business? When customers can’t figure out the value proposition, they will invariably default to the lender that has the perceived lowest price.
As we move into this new world of mortgage banking, the importance of having originators who can effectively present value is more critical than ever. Just because originators are experienced does not mean that they are trained or capable in presenting the company’s unique value proposition.
Isn’t it time to look at the quality of our originators and whether or not they can convey value to prospects?