Customer Profiling: Evaluating for Engagement

Every company needs a legion of eager, self-starters fanning out across the marketplace to generate production and profit. But it takes a lot more than personality, proficiency and product knowledge to make the connections necessary to become a consumer’s choice for one of the biggest transactions they will make in their lifetimes: mortgage financing. For salespeople to be effective, they can’t simply hit the pavement with what they want to sell – they must first spend some time considering the people who need what they have.

Delivering an elevator speech about 20% down jumbo loans to a renter in the first-time home buyer price range is the mortgage equivalent of trying to sell a speedboat in the Sahara Desert. Before a lead can convert, a consumer must engage, and consumers only engage with what they find relevant and interesting. Taking time to profile your target customers saves time and increases effectiveness. Customer profiling isn’t a one-time exercise: consumer mindsets shift with market conditions – and your marketing approach should too.

In order to properly connect with the public, companies and mortgage loan officers (MLOs) should first take time to assess target customers and uncover their apprehensions. Next, juxtapose the goals and concerns of your prospect audience with your own agenda and the messages you typically use. You may find that what you’re saying, promoting and sending out doesn’t address the questions and concerns of the people you’re targeting. One major area of public misunderstanding offers tremendous opportunity for companies and MLOs to educate and truly be of service: down payment requirements.

Perception vs. Reality

Anxiety about having to amass a significant amount of money is easy to understand when we see how often 20% is touted as the typical down payment by the mainstream media, financial advisors and even industry experts like Zillow Chief Economist Dr. Svenja Gudell, who regularly uses 20% as a baseline in her reports and market commentary. The commonplace usage of 20% as “the” required down payment explains the public misconceptions, but professionals in the mortgage industry know better. Recent financing patterns noted in the National Association of Realtors (NAR) 2017 Profile of Home Buyers and Sellers proves 20% down payments aren’t necessary – or even common: 

  • 88% of recent home buyers financed their home purchases and the average loan-to-value was 90%
  • First-time home buyers who financed their purchases put 5% down
  • 43% of home buyers saved for their down payments in six months or less

Whether the professionals questioned by Genworth were responding with what they think consumers have trouble with or based their answers on actual client experiences, the belief that 20% down is required to buy a home is certainly prevalent.  

Companies and MLOs need to do regular “mindset checks” and compare their own opinions with current consumer data and evaluate whether their marketing, outreach and overall communications are accurately addressing consumer attitudes and concerns. For example, drip campaigns and messaging that urge consumers to act on favorable interest rates, the importance of getting pre-approved for a mortgage and promoting the long-term benefits of homeownership won’t be effective if the recipients don’t think they’ll ever be able to come up with a down payment. Debunking this misunderstanding provides mortgage professionals with a great opportunity to engage consumers.

Speak to the Issue(s)

Review what your company and loan officers are saying and sending out – is it outdated, dull or so generic that it’s meaningless? Since down payment is a universally daunting aspect of the home buying process, a large portion of the public will find communication that addresses that obstacle head on relevant and helpful. Whether initiating a long-term campaign or simply firing off emails to various leads, try provocative subject lines like these to capture interest:

  • 5 is the new 20…
  • Home in six months?
  • Take 5 (percent)…
  • 0 to down payment in six months?

Include information like stats from the NAR report in the body of prospect emails so your leads will see that a large portion of successful buyers were able to get into their homes with less than what most people assume is the minimum:

Dear [Prospect],

Did you know that most home buyers aren’t putting 20% down? According to the National Association of Realtors 2017 Profile of Home Buyers and Sellers…

  • 5% was the typical down payment for first-time home buyers
  • 10% was the average down payment for all home buyers

Additionally, 43% of recent home buyers were able to save for their down payments in six months or less.  Do you know what options are available to you? I’m here to help you find out!

Though down payment isn’t the only issue facing people interested in becoming homeowners, it affects most potential buyers, so the topic has broad relevance for marketing. Evaluate other market segments such as your past clients, sphere of influence and geographic target areas for other specific issues as well.  “Getting your name out there” is fine, but converting leads and closing transactions is better. Make customer profiling a regular, periodic exercise to ensure that your outreach is effective and profitable. You’ll find that it pays to keep up with what your target customers are thinking.