Many loan originators rely solely on referrals. They have been successful with other marketing strategies, including advertising, seminars, and direct mail, but subsequently developed such a loyal customer base that they no longer have to search for leads.
Of course, top producers work at creating an ongoing referral stream. It takes a commitment of both time and money to reach the point where past customers and Realtors routinely refer borrowers to you. The benefits are obvious. Not only do referral specialists receive a steady supply of potential customers, these borrowers are generally pre-sold on the originator.
Following is a look at what several successful originators are doing to create an effective referral business.
Starting Place
Nancy Deane emphasized that the time to begin asking for referrals is when you start originating. A former supervisor shared with her a basic but often forgotten strategy. “He told me to make a list of everyone I knew, including my hairdresser, attorney, dentist, doctor, and everyone else,” said Deane, a senior loan officer with Colorado Express Mortgage in Denver, Colo. “I started to talk to them about my new career and asked for referrals.”
Of course, loan originators and their teams realize the importance of the point of sale, the initial transaction with the customer. If the borrower isn’t sufficiently impressed with the originator’s product knowledge, attentiveness, reporting techniques, and, of course, emphasis on a speedy transaction, creative follow-up tactics most likely won’t help to generate future referrals.
Jim Schmidt, a loan originator at Poli Mortgage Group, in Northfork, Mass, believes that being willing to meet with customers at their home or workplace helps cement the referral relationship. “I meet with almost all of my customers personally, because I believe it’s essential for building trust and rapport,” he said. “We often have the closing for refis at the customer’s home as well (with the attorney present). I’ve found that by providing this type of service—in addition to an efficient closing—I have a stronger overall relationship with the customer, which makes it easier to ask for referrals.”
Originators also find other ways to make an impact. For instance, after borrowers return their applications, Deane sends them a flier answering “12 Commonly Asked Questions,” addressing such areas as the Good Faith Estimate, Truth in Lending, loan-closing timeframes, and other areas, which customers have found to be helpful. Prior to closing, she sends customers a thank-you letter, along with a copy of their appraisal and a pair of movie tickets. “I’m telling them how important they are to me,” Deane noted. “By providing these value-added items, I’m setting myself apart from other originators and the customer keeps me in mind when they’re ready to refer a potential borrower.”
John Bell, president of Citizens Trust Mortgage in Maitland, Fla., provides borrowers with a gift pack as soon as they’ve been approved. It includes coffee, crackers, and cookies, along with a card (from him and the Realtor) that thanks borrowers for the business and asks for referrals. The basket is sent to the customer’s office so that the customer’s peers will see it. “This generates interest among other people and we get more exposure,” he said. “I know that the gift basket and referral reminder—coupled with a timely closing—influences the additional referrals we receive.”
Referral Dialogue
The most successful originators have learned how to consistently solicit referrals without seeming desperate or pushy. They ask for referrals at the first meeting, once the application is completed, at closing, and various other occasions. Many referral specialists have a formal schedule for their requests. For example, Deane asks three times during her first telephone meeting:
1. At the beginning of the conversation, she asks who referred the borrower and states, “I work by referrals.”
2. During the subsequent discussion of the GFE, expenses, and related areas, she will ask “How do you think the process is going so far?” and then reiterate, “Keep in mind that I work by referrals and I’d love to roll out the red carpet for your friends and associates as well.”
3. When she’s done, Deane asks if there are any questions before she sends the application to the customer for review, and concludes with “I’d appreciate knowing anyone you encounter who is looking for a loan, especially if they have the same qualities as you.”
Deane emphasized that she’s never had a customer complain about being asked for referrals three times in one conversation. “Typically customers will see it as a challenge, wanting to give me referrals as soon as they can. They want to be on the team.”
Schmidt has his own routine for requesting referrals. “During my initial meeting with the borrower, I give them five business cards and explain how important referrals are to my business,” he said. “Then I say that if at the end of the process they are pleased with the way I’ve handled their loan, I’d appreciate it if they shared my name with anyone they know in need of a mortgage or refinance.”
Ongoing Visibility
In addition to asking for referrals at the appropriate time during and immediately after the loan transaction, you must stay in front of customers in the post-closing phase. The competition is approaching your customers on a regular basis, so you need to stay in contact with past customers, Realtors, builders, attorneys, and any others from whom you’re expecting referrals.
Rick Stern, president of The Stern Mortgage Company, Palo Alto, Calif., uses direct mail to remind customers of his quest for referrals. His mailings range from 4th of July and Memorial Day cards to humorous greeting cards and postcards that detail how loan products have helped clients achieve success. The referral reminders include:
“If you or anyone you know could benefit from our expertise, please tell them and tell us. We value your help and referrals.”
“Your referral of friends, family, neighbors, and co-workers is the highest compliment you can give us.”
“With each mailer we remind our client base that we depend on their referrals for our business,” he said. “Not only have our clients returned, they have referred their parents, children, friends, neighbors, business associates, and others. Referrals are golden, especially in a down market. It’s so easy to ask, and it always produces results.”
Deane sends a series of mailers, including a letter that highlights the referral process. It includes a definition of referrals and concludes with “As always, when you come in contact with friends, colleagues, or family members who are thinking of purchasing or refinancing a home and who would appreciate the same level of service that I provided to you, just give me a call with their name and number, and I will be happy to follow-up with them.” Deane added that, “This always gets a positive (referral) response.”
Originators also use the telephone to maintain contact and ask for referrals. “I will call many of my customers just to say hello and ask if we can do something for them, while also asking for referrals,” said Steve Hines, president/originator at Southern Capital Resources in Birmingham, Ala. “Unless you’re in contact with people like this, it can be ‘out of sight and out of mind.’ I’ve received many deals just by asking on the phone.”
Twice a year, Deane calls customers to make sure that her Customer Appreciation Program is still beneficial and to ask for their referrals. “It’s a great way to touch base with them, to ask how I can help and see if there is anyone they know who might need my service. Nearly 60 percent of them will say, ‘I was just talking to someone who needs a loan and I’ll give them your name.’ They become an extension of our team.”
Of course, e-mails can be an effective means of generating referrals. Lindsey Hall, a mortgage consultant with Alternative Mortgage Funding Corporation in Winter Springs, Fla., adds the following to her e-mails: “Oh by the way…if you know of someone who would appreciate my services, call me with their name and number and I will be happy to help them.”
John Weller, a senior loan officer with NexGen Lending, Denver, Colo., includes a similar phrase at the end of his e-mails: “If you know of anyone who is looking to buy, sell, or refinance a home, please call me with their name and phone number. I will be happy to follow-up with them and will honor the fact that you put my name to yours.”
In addition, business cards are a prime opportunity to get your message across. Michael Bischoff, president of Biltmore Financial Bancorp in Palatine, Ill., has the following note on the reverse side of his cards: “By Referral Only. Our company dedicates 100% of its energy servicing our referred clients. You will receive our undivided attention and dedication that you have come to expect from us. What this means to you is the highest possible level of service from us. In response to this we ask for your heartfelt endorsement to family, friends, and work associates.”
“The greatest compliment we can receive is a personal referral,” is the simple statement on the business card of Steven Marshall, president of Bellevue Mutual, Bellevue, Wash.
Enhancing Referral Networking Opportunities
Most successful originators are constantly seeking new opportunities to develop non-traditional referral relationships. Hines has established successful business affiliations with branch managers of large banks and private banking representatives. “Customers frequently asked us about car and equity loans and I would refer them to the larger banks. I saw the potential for forming mutually beneficial relationships,” he said.
Hines also has a referral network with financial planners and CPAs, which has been aided by his own background as a CPA. “We got to know many of the key people by participating in their organizations, attending monthly meetings, and speaking at luncheons,” said Hines. “To make this referral exchange work, there has to be a give and take, a sharing of referrals. It can’t be a one-sided situation.” However, Hines pointed out that the exchange doesn’t have to involve an equal sharing of referrals. “Sometimes, part of the giving can be acknowledging your appreciation of their efforts.” In addition, he noted that referring partners are also appreciative that their clients have been well served.
Larry Montani, a mortgage officer at First Interstate Financial Corp. in Shrewsbury, N.J., concurs that a reciprocal arrangement is essential, and has taken extra steps to ensure he is providing value. Montani has a file of business cards and brochures for all types of vendors that he distributes to clients. “I am constantly asked whether I can refer a mover, plumber, landscaper, financial planner, or accountant,” he said. He is adding a networking section to his Web site that will eventually have 50 vendors from 50 different professions.
Stern advised that originators shouldn’t overlook their community organizations when developing referral relationships. He has been involved in a number of different organizations and has seen first-hand the value of associations formed with other volunteers. “My relationships have been the cornerstone of my success,” he said. “Part of this has been the ongoing associations with stockbrokers, attorneys, Realtors, and others. I see them at events, on the street, and elsewhere and they refer me to borrowers. This has been very effective for me over the years. They’ll think ‘he’s a good guy (because of his involvement) and he’s also a broker I should call.'”
As these and many other originators would agree, it takes time to create an effective referral business. However, the payoff is substantial. Once the system is in place, originators often can dedicate most of their time to cultivating relationships with past customers and referral contacts. Deane stressed, “It takes a while to develop this program, but you’ll see amazing results.”