During a recent conversation, a mortgage executive expressed concern about installing a structured hiring and selling process even though the organization had a 40% turnover rate. In his opinion, the company’s claim to fame was centered on allowing managers to hire who they wanted and to implement their own sales process. The company’s role was to provide technological and back office support and the manager’s job was to hire and produce volume. This approach might have worked when refinance dominated the market but in a purchase money environment, lack of self-sourcing can be detrimental to long-term sales success.
In my consulting practice, I see this scenario frequently. The reality is that implementing a structured hiring or selling process based on best practices is what separates the top-performing companies from the rest.
In the early days, mortgage banking was rooted in out-servicing their bank competitors by returning phone calls, developing relationships with their customers and being easier to work with. At the time, this was enough to generate business and service levels were really defined by each individual. As competition increased, the business evolved into too many lenders chasing the same clients.
Unfortunately, there are still managers out there who allow good service to be whatever an individual delivers. This results in inconsistent service levels and a hit-or-miss strategy to providing a great customer experience. The bottom-line is that having a structured sales process doesn’t make a company bureaucratic. Instead, it increases the likelihood of the customer having a positive experience across all platforms.
In my view, it all starts with who you hire and determining whether producers have the sales talent to deliver an excellent customer experience. While some managers fear that using a pre-hire assessment would make finding good originators more difficult, hiring salespeople who are not matched to mortgage banking doesn’t make any economic sense. Filtering sales candidates by whether they have mortgage experience or know someone at your company is not entrepreneurial but frankly a failure of leadership because at some point, hiring too many poor originators will tip the balance and damage a company’s earning potential.
In a world of finite resources, a structured hiring process can help prevent costly mistakes. A company with a 40% turnover rate is a train wreck waiting to happen. Consider that in a company with a 1,000 loan officers, 40% turnover means constantly replacing 400 loan officers. Without a structured plan, recruiting standards and quality will inevitably lapse.
Likewise, letting each individual salesperson define his or her own service levels from prospecting to closing and follow up is haphazard at best. Too often, originators don’t know how to connect with new referral sources in today’s much tougher prospecting world. Managers who believe technology will resolve this issue are failing to recognize that the originator’s role is to create demand for the lender’s business and that involves person-to-person contact.
Finally, what does research show when companies have structure in their hiring and selling activities? In a Harvard Business Review article, Jason Jordan and Robert Kelly found that both large and small companies with a formal sales process generate more revenue. I don’t think this is surprising. Having a systematic sales process is a cost-effective way to provide a consistently positive customer experience which encourages referrals. When each branch does its own thing, managers can’t establish what really works across the sales organization.
In the year ahead, implementing a structured hiring and selling process in your sales organization will enable producers to deliver their best and allows you to scale your business.