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Target Marketing to Single-Service Mortgage Households

Posted By Michael Bartoo, Regional Manager, GoMarquis, Thursday, February 16, 2012
Updated: Wednesday, November 20, 2013

4 Basic Steps to Success

In today’s environment, customer households have upwards of 12-15 financial services relationships (when taking deposit, credit, insurance, retirement, etc. products into consideration). Given this fact, it is absolutely appalling that the average financial institution has only 2-3 products/services per household. Expanding these household relationships is going to be a key driver of financial institution profitability in the future. There is no easier product or relationship to cross-sell from than a mortgage.

Step 1 – Do Your Homework

One of the biggest mistakes marketers, and especially financial institutions, make is not doing their research before undertaking an initiative like cross-selling to mortgage households. You have to identify what you’re trying to accomplish before spending resources (time and money). In simple terms, is this the best use of your time and money? To answer this question, you need to address following questions, as they apply to you:

How many single-service mortgage households do we have?
Obviously, if you have a very small percentage of households that are in this category, your time is better spent elsewhere.

What is the most common product mix that includes mortgages?
In other words, what is the most common "next likely product”? Preferably, you will be able to identify a single additional product (i.e. checking, certificate, credit card, etc.).

Are there similarities between the households that have that product mix and your single-service mortgage households?

To maximize the results of your program, review information {like geography (proximity to branch locations, types of neighborhoods, etc.), demographics (average household income, presence of children in the household, age, etc.), length of relationship with your institution, how they choose to do business with you (online, branch, etc.)}. Identifying similarities enables you to determine how much of a market for that additional product you truly have.

Will cross-selling that product increase the profitability of the relationship?
The goal of marketing is to increase the profitability, either current or lifetime (or both), of the relationship. If adding that additional product to the mix will not increase the relationship profitability, you need to be aware of that fact and be prepared to explain why you believe there is value to your effort. Spending marketing resources on efforts that cost your institution money is not usually a good idea!

Step 2 – Strategize

You’ve done your research. Now you need to ask the hardest question of all: Does this make sense to pursue at this time? This requires you to review your answers to the questions in Step 1 and decide what you want to have happen and what is the likelihood that it can be accomplished. This is a key step in the process and one that is often overlooked. A wise man once said "pick your battles” - If your chances of success are not good, or there is not much success to be had, pick a different battle to fight.

Ultimately, you need to visualize what success would look like.

Step 3 – Take Action

Be aggressive. Too often we hear about financial institutions that do not share information across departments – for example, mortgage information is not shared with the rest of the organization. To your customer/member, you are the same organization …start acting like it. Get rid of the information silos and start sharing that valuable information.

A great time to cross-market is immediately after you receive the mortgage application. Why? Because a mortgage application is an absolute wealth of information on your customer:

  • Assets (deposit relationships, investments, other real estate owned, automobiles, etc.)
  • Liabilities (credit cards, auto loans, mortgages on other property, etc.)
  • Net Worth of their Business

You do not have to wonder whether or not they’re in the market for a product (one of the biggest questions in marketing). That information is right there in front of you.

You have a period of time (weeks) during which they’re looking to work with you to complete their mortgage financing. Take advantage of that opportunity to move their current business from your competitors. Get support from your call center, branch officers, etc. to follow up your marketing efforts. Outbound calls in support of your direct marketing efforts increase your success rates exponentially. Use every resource available to drive your success.

Step 4 – Measure and Learn

Track the results of your efforts. Direct marketing is a continuous learning cycle. You will never run the perfect marketing campaign. Every marketing campaign you undertake should be reviewed immediately afterwards to identify what was successful, what could be improved, etc.

Developing a deeper relationship with your mortgage households can be extremely successful if you follow these simple steps. It really takes a few elements of common sense:

  • What is my opportunity?
  • Does it make sense to pursue?
  • Use all of my resources.
  • Measure and Learn from my efforts.

In fact, they’re pretty good rules to keep in mind for everything you do.

Happy hunting!

Tags:  mcif  segmentation  target marketing 

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