Last Monday, Macy’s CEO Jeff Gennette announced a new strategy to save the retail giant in this difficult business environment. In an interview with The Wall Street Journal, Gennette said that the department-store chain will shrink its less productive stores and cut back on staff at these locations. He said the smaller locations will have more self-service options, fewer cashiers, and areas to pick up or return online purchases.
While this approach will reduce expenses, it also translates into less service for the customer. This is an all-too-familiar strategy for companies that have run out of ideas on how to improve their sales results. Cutting expenses without a strategy to compete and differentiate your company in the marketplace is just another short-term fix that fails to address the real issue: How to appeal to a new generation of prospects who want convenience without sacrificing quality service.
A better strategy would have been to follow what Amazon CEO Jeff Bezos said about his own company which advocates a customer-centric approach for long-term success. According to a CNBC report last week, Bezos observed, “In fact, I predict one day Amazon will fail. Amazon will go bankrupt. If you look at large companies, their lifespans tend to be 30-plus years, not 100-plus years.” Bezos further noted, “If we start to focus on ourselves instead of focusing on our customers, that will be the beginning of the end. We have to try and delay that day for as long as possible.”
It may seem obvious to make the customer’s needs a top priority but in my experience as a mortgage sales consultant, many companies struggle with this part of the equation. Whether it is a bank, credit union or an independent mortgage banker, dysfunction at many companies is the order of the day. It can take the form of fighting between operations and sales; enforcing rules that don’t make any sense for a problem that doesn’t even exist; or worse, having no organized sales approach and zero accountability for poor sales performance.
Regardless of the way dysfunction manifests, the end result is that customers’ needs get lost in the shuffle and cease to be the main concern of the company. Before you know it, the customer isn’t wowed enough to refer their friends and family to a lender and their originators. This is the start of the inevitable decline for the lender.
Certainly, cutting expenses enables lenders to live for another day but does nothing to match with what today’s customers want and need during the home buying process.
Leaving the sales force to figure this out on their own constitutes a lack of leadership. Correcting today’s sales problems isn’t going to happen if we are expecting the direction to come from the bottom up. It should start at the top.
Similarly, standing pat and waiting for another refinance wave doesn’t make any sense either. The old days of selling when customers didn’t have access to information and relied on the salesperson to direct the buying process are gone forever.
So, what are many mortgage bankers doing now to compete? The vast majority are either hiring more originators hoping that some of them will create the needed volume to fund the machine or removing a layer of managers to cut expenses. Both strategies are short-term solutions that are not enough to turn around a business. Unless there is a vision to create and improve loan demand, reducing expenses will never be enough to make the company sustainable. Just look at Sears and what happened to this once famous brand — a lot of cutting expenses without generating revenue.
To win in today’s competitive marketplace, companies must start by asking what makes the customer’s life easier and better. Companies that use this question as a litmus test for every new sales initiative will not be disappointed.