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Circle selling.

Circle Selling

When prospective borrowers begin to shop for a mortgage, they usually turn to the telephone. Acting on recommendations from builders, Realtors or simply by perusing the yellow pages, borrowers pick up the phone and call several lenders.

Visualize the plight of the poor customer. The customer is placed on hold, shunted from one extension to another, confused by numerous and seemingly disconnected loan programs and subjected to the high-pressure tactics of commissioned loan officers. Many telephone sales efforts could serve as classic studies of organizational dysfunction. If your company has a written telephone marketing plan or a written telephone policy, congratulate yourself. You are one of the few.

Most mortgage companies today see themselves as providers of mortgage services, not simply as suppliers of a generic commodity - money. But what services should a mortgage company provide? The service strategy of most companies is to work hard to do everything the customer wants as quickly as possible. That's not really a strategy at all - it's crisis management. It also reflects poor strategic planning and poor management. But employees console themselves with the belief that everyone is doing their best and running as fast as they can.

A communications service

There are several reasons why every company should consider offering excellent phone service as a communications service. * It's a customer's first impression of your company. How you treat him or her on the phone may be the deciding factor that turns that person on or off to using your services. * If a customer calls you, he or she is likely to be a hot prospect. That consumer has a need to fill and is motivated to buy. * Customers are increasingly independent. Even if Realtors and builders recommend your services, customers tend to shop around. They may be grabbed by another lender with a more welcoming attitude and better counseling.

Answering the telephone

Your receptionist is one of the key people in your organization. This individual can literally make or break your first impression. The first thing a receptionist must do when he or she answers the phone is to smile... send a verbal smile right over the phone wires. Ann Arbor, Michigan-based Washtenaw Mortgage Company research has shown that a cheerful attitude projects itself over the phone to your customer. This should be a rule for every employee who deals with customers. Be upbeat - it should be a part of your corporate culture.

The correct way to answer the phone is to say, "Hello, XYZ Mortgage Company, This is Jeanette [or Jerry]." There are three important features to note here. First, there should be a greeting ("Hello"). Second, the name of your company should be stated. Third, every individual picking up the phone should give his or her name. Customers want to know to whom they are talking, and it projects a feeling of openness and pride in the company. There are many acceptable variations on an appropriate phone greeting and introduction to the company. But the bottom line is that when properly executed, the customer feels welcome.

Meeting the customer's first needs

In most companies, a rate call is transferred by the receptionist to an individual qualified to counsel the customer and make an appointment for a loan application. However, it is important to answer consumer's questions immediately and forthrightly to leave the right impression of the company with the prospective borrower. When a customer calls and asks a question, such as: "What is the rate and points on a 30-year, fixed-rate loan?", it is important that the receptionist give the information to the customer immediately without making the caller wait, and without transferring the call. Customers hate waiting. The objection that most companies have to this approach is that the customer is likely to take the information and run before the loan officer has had a chance to talk to the customer about other loan options and the company's unique services and reputation.

In answering the customer's first question regarding current rates, the receptionist should say: "The rate today on a 30-year, fixed-rate loan is 10 percent with 2 points. We also have fixed-rate loans with lower payments. Are you interested in hearing about fixed-rate loans with lower payments?"

Students of needs-based selling techniques will recognize this approach as a question designed to get a "yes" answer almost all of the time. When the customer answers, "Yes, of course I would like to hear about loans with lower payments," the receptionist should say, "Well, I'm the receptionist and I am responsible for handling all of the other incoming phone calls, could I transfer you to one of our loan counselors who are qualified to explain the advantages of each of our other programs?" The customer usually agrees.

With such an approach, the customer immediately feels tended and gratified. He or she is more trusting and impressed with the service of the company, especially compared to treatment received elsewhere, where the phone is not quite so deftly handled. Thus, if there is a pleasant introductory conversation, when the loan officer picks up the phone, he or she is dealing with someone far more receptive than a customer whose first impression of a company is a negative one - stemming from the frustration of being put on hold.

Transferring calls

Many companies have call-transferring policies that seem almost expressly designed to frustrate customers and make them suspicious. Some receptionists are trained to ask customers questions to determine the town or neighborhood where the consumer is house-hunting. This approach is intended to help direct the call to the commissioned loan officer assigned to that geographic territory. If this tips the customer off that the first person to whom he or she will talk is a commissioned loan originator, the borrower may instantly be on his or her guard. Sometimes if the proper loan officer is not available, no one else with the company will even talk to the customer. Other times, a message is taken and the commissioned loan originator returns the call at a later time. This is an instant turn-off for potential customers. It is preferable to give those individuals whose job it is to respond to rate calls another title, such as "loan counselor." The correct way for a loan officer to answer the phone is "Customer Service, Todd [or Lisa] speaking."

If you want to win bragging rights for having the best phone service in town, the call must immediately be transferred to a loan officer or loan counselor with no self-serving questions, and the caller should spend as little time on hold as possible. If the first loan officer is not available, then the call should go to the next available marketing person. If no one from marketing is available, then the call goes to an appropriately trained processor, supervisor, underwriter, or right on up the line, until the call reaches an officer of the corporation or the president of the company, if need be.

When adopting such a policy, management must decide if it is serious about having quality phone service. The customer's needs should come first, or else perhaps the matter of quality phone service is not so important to your company after all. I can tell you what would trigger serious review of the quality of phone service in my company. It's when the president has handled two rate calls in one day and is storming out of his office asking his managers what on earth is going on. While it is often appropriate to take messages in the mortgage business, it is never good business to do so on rate calls.

When messages do have to be taken, everyone in the company should be charged with seeing to it that those calls are returned within an hour, or some other reasonable period of time. Receptionist overload is often the product of customers calling the company two or three times before their original calls are returned. I have seen companies cut their receptionists' work load in half simply by adopting a policy for timely return of phone calls and by enforcing that policy.

Rate calls - circle selling

Mortgage customers often only have very vague and general notions about what it is they want. Their opening questions tend to be very broad or focused on the little that they do know. Often this takes the form of asking "the rate on mortgages today" or simply asking, "Does your company do mortgages?" At this stage, the customer does not understand the benefits and features of mortgage products. It is mutually beneficial to both the customer and your company to explain those benefits and features and to describe how your company can meet that customer's needs.

The loan officer should treat the customer's first question, no matter what it is, as a general request for information. When the loan originator begins to explain the first program he or she should carefully state the most important thing about the loan first. For example, "This is a 30-year, fixed-rate loan. It has a level payment that never changes. It's just like the loan your grandfather had on his house." The loan officer can then begin to engage the customer in polite conversation, asking those questions needed to competently counsel the customer and to win his or her trust. If the customer appears to like a program, and if it truly fits his or her needs, the proper thing to do is try to close the transaction. "Well, this program seems to be the right one for you. It certainly appears to suit all your needs. Let's make an appointment for a loan application, or we could simply begin by taking an application over the phone." The customer may respond by immediately making an appointment for a mortgage application.

Stalling - what to do next

Of course, we in the mortgage business know that is not what usually happens. The usual reaction of customers is to stall, and because this is such a big step involving large dollar amounts, that is certainly understandable. Many companies offer their sales people non-industry-specific sales training on the theory that if they can sell one product, they can sell anything. This training often focuses on teaching loan officers how to overcome objections. But loan originators don't get a lot of objections. They get stalls. "I have to ask my wife [or husband]," or "I have to think about it," or "I'm really just shopping at this point," or "I have to walk my dog." It doesn't matter what the stall is. The customer has no real objection to your presentation, he or she just isn't ready to make a decision.

One legitimate way to overcome a stall is to give the customer an objection with an open-ended question. "I know what the problem is sir...the payment is too high. Would you like to hear about loans with lower payments." About the only thing a customer can say to such a question is "Yes." Loan officers may then explain any of their loans with low payments. This may include permanent and temporary buydowns, ARMs or graduated payment programs. Many loans have low payments as one of their features. The loan officer should explain only one of these loans. Again, carefully explain the most important thing about the loan first. (In this case, explain the low payment feature in detail.) Then, once again engage the customer in a dialogue concerning his or her specific needs. If the customer has a lot of short-term needs, such as money for furniture or the need to fit a new and higher payment into a family budget, the loan officer must carefully match the customer's needs to the loan features. One of the most important determinants of a customer's short-term horizon is the length of time the residents anticipate staying in the home. The truly sophisticated loan officer asks not only how long the customer will be in the home, but also probes the borrower's willingness to refinance the loan if interest rates fall, by determining how long the customer is likely to stay in this particular loan.

If the customer agrees that this loan seems to suit his or her needs, the loan officer should once again close by asking the customer to make an appointment for a loan application. If the customer is like most customers, he or she will immediately stall. The loan officer tosses the customer another objection. "I know what the problem is, the loan fees are too high. Are you interested in a loan with lower loan fees." The only possible answer to this question is "Yes." The process of explaining the loan with low loan fees begins in the same manner as before. The process of gathering information and building trust continues until the time comes to close (See Figure 1).

Proficient sales people will make more application appointments the second time they attempt to close than the first. They will make more appointments the third time they attempt to close than the second.

Customers have sufficient patience to listen to about three of these explanations - no more. In fact, the typical customer retains little of the details of the loan programs. Most of all, they remember the one important feature of the loan, which is explained in the first sentence. Thus, when the loan officer has made a third presentation and has been countered with the third stall, it is time to end the presentation. One option is to offer to send the customer some material in the mail so that the loan officer has the opportunity to contact the customer again. Another alternative is to have the loan officer say, for example, "Well it seems that the first program and the third program we talked about suited your needs best. Let's try to match the features of these programs with your needs and see if we can figure out which program is really best for you." Then the loan officer proceeds to take the customer through the same two programs again in exactly the same way, while trying to fit the customers needs and priorities into the features of the loan. When the most suitable loan is identified, the loan officer must close the deal.

If this fourth and final closing strategy fails, the loan officer then goes on to the final step, getting the client's address and phone number, if he or she hasn't done this already. This is accomplished by offering to send the customer some helpful printed material and information about your company. The phone number is needed because "it is the policy of our company to call a customer in a few days just to see if he or she has any questions about the materials we send." A customer can be told: "These materials should be delivered the same day or put in the mail immediately." Remember, other lenders are prospecting this customer too. When the follow-up call is made, the loan officer proceeds by going through the "circle selling" procedures once again.

Providing motivation

Customers usually can't be persuaded to come in for a mortgage application; they have to be motivated to want to come in. A lot of loan officers try to wear down customers or overcome all their objections and back them into a corner so they won't have a reason to not come in for an application. This seldom works. People buy products in anticipation of a need being fulfilled. If a customer can't see your product as uniquely filling his or her need, the prospect will usually succeed in stalling you until the cows come home.

The loan officer must get the customer to open up about problems that person is having in seeking, buying and financing a new home. In addition, the loan officer can use the power of suggestion to raise additional issues to which a potential borrower may or may not respond. As the loan officer takes a rate call, he or she keeps a piece of paper on the desk. On the left is written the customer's problems. On the opposite side is written the company's solutions. The sale is made when the loan officer has successfully elicited all of the customers problems, including unconscious problems suggested by the loan officer and validated by the consumer, and gotten the customer to understand all of the solutions. Here are some of the more common needs that customers have and that loan officers might raise. Every one of these needs is a potential value-added feature for every loan your company handles. * Problem: Customer is having trouble deciding if he or she can afford the house. Solution: Explain the tax advantages of homeownership at application pointing out the after-tax cost and tax savings. * Problem: Customer does not understand exactly how a home appreciates in value. Solution: Loan officer offers to explain the effects of appreciation rates at application. It is wise to have a chart showing a home appreciating at an average rate of 1 percent, 2 percent, 3 percent and so on. * Problem: Customer forgot to figure moving expenses into cash needs. Solution: Low closing-cost loans or temporary buydowns. * Problem: Customer balks at paying high loan fees. Solution: Find out how long the customer will be in the house and if he or she would consider refinancing if mortgage rates drop in the next five years. Perform a break-even analysis to see if it is in the customer's interest to pay high loan fees.

These are only a few examples of various customer needs; only some of which may have been in the customer's mind when the conversation with the loan officer started. The loan officer who can do the best job of understanding the customer's needs and providing solutions will be the one who motivates the customer to come in for an application.

Beating the competition - go


Circle selling seems like an excellent strategy for loan officers who have been relying on the approach of wearing down their customers. However, I guarantee that approach will not work. If you don't understand needs-based selling, pick up one of the many works available at your local bookstore, such as Conceptual Selling by Stephan Heiman and Robert Miller or The Best Seller by Forbes Ley.

Many times I have had the opportunity to speak to borrowers who are shopping for a loan. They seem to like my approach. They like the counseling I offer. But someone else has offered them the loan for $100 less in fees. I talk about our company's wonderful service, giving lots of concrete examples. But the competing loan officer said he had great service too. My response is: "Fine, let's see just how good their service is. Call my company and the other company and ask them both the rate on a 30-year, fixed-rate loan. Then tell me which company has great service." It never fails. Once my competitor places the customer on hold, the loan is mine.

The effects on a company of a total commitment to excellent phone service can be very dramatic. "Good service" ceases to be a hollow promise and begins to become part of a company's image and reputation. Employee morale goes sky high because of the positive teamwork necessary to implement the program. The company gets more loans because circle selling gets everyone taking rate calls to close loans more effectively. Sales soar as loan officers carry needs-based selling techniques from the phone into the field. It's the beginning of a move from being the supplier of a generic commodity product - money - to a service, sales and communications company with a first-class image and solid reputation in your community.

PHOTO : At closing: "That seems to meet your needs, sir. Since that one seems best for you, we should make an appointment to take a loan application or we can simply take your application over the phone."

Richard Greene is vice president of marketing at The Washtenaw Mortgage Company based in Ann Arbor, Michigan.
COPYRIGHT 1991 Mortgage Bankers Association of America
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:phone service as a communications service
Author:Greene, Richard
Publication:Mortgage Banking
Date:Nov 1, 1991
Previous Article:Winning with service.
Next Article:Bill Seidman's roundup.

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