The Firing of Ford CEO Mark Fields and Mortgage Banking

Recently, Ford Motor Company abruptly terminated its CEO, Mark Fields — a move that surprised many people in the financial sector. Apparently, the board of directors and chairman Bill Ford, Jr. believed that Fields had not done enough to put the company ahead of the curve regarding future technology in its industry, specifically in the areas of electric cars, self-driving cars and ride-sharing development. I think there is a lesson here for mortgage bankers whose management approach is too often about maintaining the status quo vs. forging a new path ahead. In today’s retail environment, merely staying competitive isn’t enough to attract and keep new customers.

There is no question that companies with lackluster production must reinvent themselves. In my sales consulting practice, I see two types of senior management teams: those that embrace the “pull” marketing world we live in; and those that still believe “push” marketing is the only way to sell their product and services.

In essence, pull marketing is about getting the customer to come to the sales staff while push marketing is all about pushing a company’s products. As the buyer’s journey has become more technologically integrated, push marketing simply doesn’t work like it once did.

In my opinion, mortgage companies will need to accomplish tasks that are neither easy nor simple in order to succeed in the years ahead including:

  1. Re-evaluate and re-size sales teams to match today’s lending landscape
  2. Invest in all things mobile to reach customers who want to interact electronically a majority of the time
  3. Implement a pull marketing approach in marketing and selling efforts

While these issues are not new, increased costs and tepid interest in housing finance by younger consumers have brought these issues to the forefront.

A particularly difficult sector is distributed retail. When looking at the financial numbers, it is clear that for many mortgage companies, distributed retail barely makes a profit. While this is not a shock considering the large upfront guarantees and high bps in this arena, it is worrisome that most managers are still following a growth strategy based on adding more originators who are average at best and then overpaying them.

In a purchase money marketplace “warm bodies” are not what a sales organization needs. Sales organizations must have sales professionals who will prospect and bring new customers to the lender. Unfortunately, this requires that underperformers be addressed quickly or not hired in the first place.

Another big strategic question lenders must answer: How to speed up their customer interface and build a relationship with prospects who have negative impressions of the banking industry. Quicken has proven that it is more effective to have a centralized environment that reaches out within a minute when a customer indicates that he or she is interested in a mortgage loan. Can distributed retail match that effort? Rarely is this the case. Distributed retail is more like Comcast’s Slowskys turtles and their use of DSL. The reality is that to be a successful mortgage firm today, using a Slowsky strategy will not work.

A sustainable mortgage business needs to be based on the premise that most people rate their retail providers on two issues: speed and ease of use. Management teams need to recognize that a consumer’s time is a precious commodity. Filling out forms and answering the same questions repeatedly are not an effective sales process. A top priority must be to fix a company’s sales process to make it faster and easier for a customer to conduct business with you.

In addition to speed and ease of use, lenders must also address how consumers want to be solicited. Does it make sense to base retail selling strategies on unsolicited marketing approaches? The days of sending unwanted marketing material and cold calls to consumers are practically over. There are even apps and phones that can call block unwanted solicitation.

And finally, Stratmor recently published results that should be a wake-up call for all mortgage companies: The average length of time originators in distributed retail stay at a company is just 2.6 years. A quality customer experience is nearly impossible to deliver with this level of turnover. Companies need to take a closer look at why retention is an issue. In my experience, the answer is often rooted in poor quality first-line managers.

Embracing the future will require answers to these and other difficult questions if mortgage companies are going to thrive in the years ahead. Slow and steady no longer wins the race. Time is running out for the laggards in the mortgage arena.