Last week, a lender reached out to me regarding consulting services because the company’s production was down 20% from the previous year. This is a familiar scenario in mortgage banking where companies that once had high volumes are experiencing lower production and higher costs. The big question is what can lenders do to turn around their sales results?
The underperforming lender I spoke with had tried sales training from a well- known firm but that wasn’t enough to change sales performance. The company tried to hire more originators, but it was challenging because they could not pay what other lenders were paying. The firm thought a CRM might help but didn’t want to make the investment in a difficult marketplace. In other words, the lender was all over the place in their actions and nothing seemed to work. Finally, the lender turned to a third-party consultant to help them change their poor performance.
While engaging an outside advisor is a great first step in providing an objective view of a company’s sales performance issues, senior executives often find the recommendations difficult to hear. In the case of the underperforming lender, structural changes were needed in order for their business to survive in the new world of origination. A simple fix wouldn’t address factors impacting production such as weak loan demand, lack of affordable housing and volatile interest rates.
What advice did the lender want from the consultant? Senior management wanted a one-day engagement filled with quick selling tips. When it was time to put everything on the table to be reviewed, they wanted a quick and easy solution. A 20% percent decline in production YOY should raise a determination to do whatever it takes to turn things around and make necessary changes but the lender ultimately declined to implement recommendations for fear of “rocking the boat.”
So, why are smart business owners afraid to pursue a different path when it is obvious that the current trajectory is not delivering the results they need to survive? In Margaret Heffernan’s terrific book, “Willful Blindness,” she argues “that the biggest threats and dangers that we face in business are ones we don’t see — not because they’re secret or invisible, but because we’re willfully blind.” She asks, “What makes us prefer ignorance? What are we so afraid of?” These are excellent questions that I encounter in my consulting practice every day. Shouldn’t a 20% decline in business trigger action that involves objectively reviewing your current strategy? Does a company’s production need to fall to 50% before managers realize that cosmetic changes will not accomplish what is needed? What is the percentage that will trigger a new path?
Certainly, some companies will issue press releases claiming to be making significant progress in becoming a digital lender. Unfortunately, when these strategies are reviewed more closely, it is still more of the same just wrapped in the latest buzz words. They might add a new CRM or install a mobile app but the reality is that underneath the business process, the same outdated structure exists.
In the past, business leaders valued stability and consistency. Any strategy that disrupted the norm was frowned upon. Maintaining the status quo meant that being mediocre was good enough. Not today. It is clear that “business as usual” no longer applies in a world where the customer’s home-buying journey has forever changed. Consumer access to information 24/7 means that lenders must reach out much earlier in the process with personalized, relevant messaging while providing a stellar customer experience.
Today, lenders and originators must be willing to disrupt old sales strategies and adopt new ways of prospecting and selling that match with what customers and referral sources need. Lenders who keep their heads in the sand and refuse to change will not survive.