When I ask executives about the role of the loan officer, many answer that the originator’s job is to take the loan application and match the customer with the right product that the consumer qualifies for. There is no question that this is an important function but in my view, originators must do more to create sustainable success.
When originators perform a product selection role, selling activities are geared to simply responding to someone who has raised their hand and said they need a mortgage. Under this scenario, the consumer has already decided to buy a house or refinance and it boils down to whether they can pay cash, need to finance the purchase or just get a lower interest rate. The problem is that those who have made the decision to purchase a house are a very small part of the market at any given time. The real opportunity in housing finance is the larger market of potential customers who could purchase a home but have not for a variety of reasons. This is where a good salesperson can make a world of difference by creating demand for both housing and housing finance.
The consumers who haven’t thought about buying a house are a potential goldmine for the mortgage origination industry. Obviously, these consumers need to be sold and only a good sales professional can make this happen. The best producers are able to convince potential buyers of the value of owning a home and that financing is the best strategy.
So the question today isn’t if the originator can use social media or a company’s CRM, it is more about whether the salesperson can present a value proposition that resonates with consumers who haven’t thought about whether they qualify for a house. These originators are individuals with the sales talent to create demand. For others, creating demand is a challenge that they are not able to deliver. Similar to the college-level athlete who never makes it into the NFL, not every producer can sell at the highest professional level.
Underperformers simply wait for the customer to appear which is why they may be successful during refinance markets. These producers are good at knowing their products and how the sales process works. Customers may like them and give them satisfactory customer service ratings. But tapping into the larger market and transforming a renter into a home-buyer requires producers to reach out earlier in the purchasing sequence. That requires selling skills.
In mortgage banking, an estimated 60% of originators are categorized as underperformers. These originators need to be fed leads from a bank’s portfolio or through lead generators. Unfortunately, these producers are classic “order-takers” who are paid as if they create demand instead of being compensated as customer service reps which is what they really are.
Tibor Shanto, a business sales expert calls these order-takers “Supply Side” sellers. These producers gear selling activities to fulfilling supply. Shanto further explains that “these people are about resolving pain (e.g. someone who has purchased a home already and needs to lower rates) and they have the solution.” In other words, there is already inherent demand. But when it comes to the larger market where there is no demand and they have to create it, they are at a loss.
According to Shanto, successful sales professionals use a business model that operates on “Demand Side.” This selling approach involves presenting a powerful value proposition that helps the customer (whether a potential home-buyer or referral source) move from being unaware to awareness. Generating demand is a winning strategy for long-term success.
Are your originators creating demand? If not, what are you doing to address the problem?