Is it time for evolution or revolution?

In a recent New York Times article, Carla Cooper, CEO of Daymon Worldwide, a private-brand development company, was asked what her playbook is for turning around a situation. Cooper said, “you have to get faster and faster at this. You have to quickly evaluate and assess the business and the people, and then figure out what needs to be changed and what doesn’t need to be changed. It’s either going to be evolution or revolution. You have to decide which. Then you set the strategy, the structure and the people, and it has to be in that sequence. What a lot of companies do is avoid having the tough discussions.”

Cooper’s comments hit home. As our industry moves into a purchase money marketplace, I see companies repeating the traditional strategies when volume is off: namely, pirating branches and loan officers; paying outlandish guarantees and using suicidal pricing policies with the hope that they will address the problem and turn around their business. These strategies may have worked in the past but don’t apply now because the issues are structural and not temporary. Why are the problems structural?

The National Mortgage News reported that a survey by Chicago-based lender Guaranteed Rate stated that many buyers would rather do almost anything else than go through the mortgage loan process again. While about half of respondents found the buying-lending experience easy to navigate, nearly 25% said they’d rather gain 10 pounds and almost one in 8 would rather spend 24 hours with the person they disliked the most. Roughly 7 percent of survey respondents would rather have a root canal or spend a night in prison before going through the mortgage process again. The survey results indicate that something is seriously wrong with how mortgage lenders deliver services to the public.

So, why are a large number of borrowers unhappy with the process? One J.D. Power director observed that today’s borrowers want correct information regarding the mortgage process and timely updates regarding the loan status. These two customer requirements seem so basic there must be more to it. Obviously half of the customers are receiving the service they demand and I would point out that it isn’t a coincidence that 10% of the producers originate 50% of the volume which I think represents the happy 50%. In my opinion, the problem lies in what are the other 90% are doing when talking to customers and handling loans.

The traditional strategy of “renting” originators has resulted in sales professionals who may have succeeded back when a customer’s options were limited or declining interest rates made the sale easy. However, these sales professionals are no longer a match in today’s shifting environment. What drives great service is a knowledgeable sales person who can answer questions and update the customer during the loan process. This is especially true for first-time homebuyers.

Smart lenders recognize that hiring and training the sales staff is a long-term solution that requires the right sales talent, a consistent and educational sales message and field managers who can ensure that the customer is being wowed at the point of sale.

Can your sales professionals deliver accurate information to customers in a timely manner? If not, what are you doing to address the problem?