The “do whatever it takes” sales strategy — a common mantra in mortgage banking — is often promoted as the best way to be successful in selling. This is no surprise when originators are on 100% commission and sales results drive their income. Many managers believe that each producer determines his or her own success based on the effort put into the job. Their worldview is every salesperson is an island unto themselves because it is a “dog-eat-dog” selling world.
In my consulting practice, when I ask executives about what sales sequence their sales force uses in the field, they answer, “I don’t really know” or “originators use whatever works for them. Our job is to support them with the tools they need to succeed.”
Imagine if airline executives said to their pilots, “You can fly the plane however you want because you are experienced. You don’t need a checklist or standards because you know what you are doing.” I don’t think that any consumer would want to fly on that airline.
Now, with all the refinance volume that is being generated due to record-low interest rates, managers think, “Who needs a sales sequence when business is so good?”
For sales managers, there are no words more frightening than “structured sales process.” Often, managers are reluctant to adopt a definitive sales sequence because they contend “it sounds too much like micromanaging and originators will quit” or “our LOs are on commission. They are experienced and can do what they want.”
In my opinion, this logic has never made sense, especially since the lender is on the hook for the entire lifespan of the loan while the average tenure of originators is only 2.6 years at any given firm, according to Stratmor. This equation does not bode well for the lender.
I just had a conversation with a mortgage executive who is adding a new service that will track data on how much business their originators receive from real estate professionals. This is certainly a good thing but if producers are not receiving referrals from Realtors, the problem is not a lack of information but more likely, poor selling skills. Obviously, this technological advancement is for the management team and not the originator.
The Advantage of a Structured Sales Process
At its core, a structured sales process is all about delivering an excellent customer experience consistently throughout the lender’s sales organization. It might seem obvious that organizations would want originators to provide the same high level of service to every customer but clearly this is not the case. Otherwise, the Consumer Financial Protection Bureau would not have logged more than a million and a half complaints about lenders and their salespeople.
While top producers may have figured out an effective, repeatable sales model for themselves, the majority of originators have not and require additional guidance. As Stratmor has reported over the years, lenders are losing money on approximately 60% of their sales staff.
Of course, a refinance wave can save originators who are customer service reps at heart but the marketplace can change on a dime. A smarter strategy for lenders is to take some of their current profits and train their sales teams on how to implement a winning sales sequence regardless of the business environment. A structured sales sequence is the best bet for long-term success when the refinances finally do dry up.