Banking on CRM: Customer Relationship Management (CRM) Initiatives Can Help Sustain the Benefits of the Fading Refinancing Wave. Lenders Can See Solid Returns on an Investment in CRM Technology

By Alcorn, Lowell; Wiryawan, Anton | Mortgage Banking, February 2004 | Go to article overview

Banking on CRM: Customer Relationship Management (CRM) Initiatives Can Help Sustain the Benefits of the Fading Refinancing Wave. Lenders Can See Solid Returns on an Investment in CRM Technology


Alcorn, Lowell, Wiryawan, Anton, Mortgage Banking


THE RECENT BOOM IN REFINANCING VOLUME WAS LIKE THE "DREAM WAVE" IN SURFING: You know it is the ride of your life, but you also know it will end too soon. Now interest rates are on the rise again, and as the biggest wave of refinancing in decades crests and threatens to subside, senior executives in the mortgage industry are asking, "What's next?"

Executives are also wondering:

* How can my organization continue to increase loan leads while improving lead management and pull-through rate (the rate at which loan leads become actual loans)?

* As customer needs change, how can we enhance our management of customer relationships, deepening them and reducing our customer attrition rate?

* How can we do a better job of cross-selling?

* How can we work more profitably with our partners?

Organizations can find the answers to these questions by focusing on customer relationship management (CRM)--a discipline that involves increasing an organization's knowledge and understanding of customers, thereby developing more profitable customer relationships.

At the heart of profitable CRM is the ability to identify new prospective customers and marketing opportunities. And you must offer the right products and services to existing customers at the right time via the right delivery channel and at the right value. It's the ability to wow them with "customer-centricity"--giving customers what they want when they want it.

Many financial institutions already have tools in place to assist with this process. However, most of these tools are focused on the product-selling process and not on creating and managing customer-driven business opportunities. The loan origination systems that most large lenders use offer need analysis, product recommendation, prequalification, application processing and document-handling capabilities. But these capabilities may not be enough to grow organizational profitability.

The new generation in CRM

To take full advantage of the ground gained during this most recent wave of refinancing, lenders also need the ability to:

* Evaluate new market opportunities, determining profitability in various markets (i.e., small, medium or large homes) in order to decide which to pursue through marketing activities.

* Analyze an entire customer portfolio to uncover new business opportunities by identifying those existing customers who should be targeted for product cross-selling or up-selling.

* Create effective, integrated marketing campaigns through which potential and existing customers who have been identified and segmented are approached with targeted marketing messages specific to each segment's needs.

For example, to determine which existing customers should be targeted for cross-selling, an organization can identify customers who are using banking products, but who do not use mortgage services. Or, an organization may want to gather a list of existing customers who are not using mortgage services, but who live in an area with rising home values.

Once a lender has these prospective new mortgage customers in sight, it needs to be able to quickly design and launch marketing campaigns directly targeted to customer needs. These campaigns should be integrated and coordinated, involving multiple distribution channels such as direct sales, direct mail, partners, e-mail and phone outreach.

Then, when prospective customers respond to a marketing campaign, a lender needs to be able to distribute the resulting leads to its sales force, giving sales representatives the tools to communicate clearly and quickly with customers and to cross-sell and up-sell the appropriate products.

There is a new generation of comprehensive CRM solutions available today that can help organizations realize these goals. These offerings enable organizations to better understand their customers and allow them to execute personalized campaigns across all channels, optimizing business development strategies through constant measurement and evaluation of campaign effectiveness. …

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