Overall, the industry has achieved a great deal in the last 5 years and is now responsible for originating roughly 55 – 60% of all new mortgages in Australia. Clearly, consumers are voting with their feet but that doesn’t mean the industry is without actual or potential blemish. Constant vigilance is required at all levels.
Measuring the success of the industry by the behaviour of the lowest common denominator (those brokers who do the wrong thing) makes no sense though. As we’ve seen post-Royal Commission, brokers are certainly not immune from transformative forces such as the recently legislated Best Interests Duty (commencing 1 July) and the release of several draft legislative proposals that are expected to be enacted by mid-year.
Ultimately, aggregate industry success and its positive contribution to the wider community can only be identified one customer relationship at a time – the individual assessment of customer outcomes and their experience of working with their broker. Their sentiment and willingness to remain a customer and refer new customers are key questions that need to be answered, together with the underlying drivers of those outcomes, including compliance obligations. No amount of regulation will change that.
But, to date, the industry hasn’t been in a position to marshal and communicate data that authentically represents the aggregate performance of all brokers, extracted from the voices of individual customers. Imagine how powerful it would be to measure a combination of customer experience and compliance obligations at industry level to inform the community, regulators and government.
The fundamental importance of building and maintaining strong customer relationships is beyond question. Brokers who focus on building long-term relationships are much more likely to enjoy success than those who treat their customers as just another ‘transaction’ or ‘deal’.
Gathering feedback from customers has always been a smart move but it has now become a critical task for each broker, their licensee and the industry more broadly. Not just any feedback, but the type that helps drive targeted performance improvement and more confident decision-making by business and other key stakeholders.
2020 is the best of times to be building great brands based on actionable insights, customer by customer, using authentic feedback to simultaneously assess compliance performance, fuel revenue growth and enable better customer experiences.
A word of caution though. Collecting feedback that is primarily focused on measuring superficial, surface metrics such as satisfaction, NPS (Net Promoter Score) or to generate positive reviews for lead generation won’t get the job done. Nor will shadow shopping if undertaken in isolation. What is required is a well-designed and comprehensive feedback mechanism that values everyone’s time, asks the right questions and delivers actionable insights informed by serious research.
Not sure why customer feedback should be your best friend? There are numerous commercial benefits arising from the use of feedback and here are ten (10) that you should consider.
Customers feel listened to and valued. The simple act of asking for feedback ensures your customers’ opinions and feelings are acknowledged as being important to the future of your business. Customers will feel like their opinions count. They’ll feel that you care for them and are genuinely concerned about whether they’re happy with the process of using your services and the outcome you have been engaged to achieve for them. The act of collecting feedback through a survey can have a profound positive impact on the quality of the relationship.
Customers provide affirmative quotes, narratives and stories. Satisfied customers are more likely to provide content that can be used to promote your business and these are a good source of testimonials and case studies that you can use in your future marketing activities. Remember, prospects will invariably look for tangible and credible evidence (social proof) to validate their decision to become a customer.
Customers are reminded of their experience. Responding to a survey reminds the customer of their experience and, assuming it was one they were happy with, referrals are more likely to occur and continue into the future.
Brokers receive ongoing and timely reminders. Through the regular collection and dissemination of customer feedback, your brokers are reminded that their diligence and customer focus is paramount to ensuring a sustainable business.
Make better decisions. As businesses grow, senior managers may become isolated from what is happening on the front line. A well-implemented and ongoing customer feedback process provides the information needed to make better decisions around a wide range of business issues.
Address pain points. Receiving regular customer feedback enables the business to correct any issues or concerns customers may have. When customers provide feedback, you will be able to save money, time and improve relationships for the benefit of the business. Feedback allows you to address issues as they arise as part of a continuous improvement loop.
Stay on the same page. Not being in tune with your customers is like living in a parallel universe. The way you think your customers feel about you and your brand is not always the same as what your customers really feel, no matter how often you may talk with them.
Minimise reputational damage. A dissatisfied customer may tell many other people about their bad experience – social media is a very powerful megaphone – which could harm your personal or brand reputation and have an effect on lifetime value, market share, profits and business valuation. Being able to nip problems in the bud through the collection of timely feedback will help you protect your reputation.
Maximise win-back opportunities. Some customers will not tell you they are unhappy with your service; they will simply stop doing business with you. This can easily be avoided if you seek out their feedback soon after a loan is settled or they discontinue their loan application. Customer win-back processes are an important step to maintaining your growth trajectory.
Generate loyalty and referrals. When you receive customer feedback, it allows you to better understand your customers’ needs and concerns. This information can help you go above and beyond the call of duty and exceed customer expectations to develop loyalty and generate referrals.
In today’s environment, there are also several benefits to be derived from customer feedback from a compliance perspective.
There are a range of compliance measures being introduced by the government as a result of the recommendations made by the Hayne Royal Commission. These will place additional obligations on licensees and their representatives and impose tough penalties for non-compliance.
As these measures are all focused on ensuring better consumer outcomes and restoring trust and confidence in the financial services industry, it makes a great deal of sense to ask customers about their experience of working with their broker and to utilise their responses to demonstrate the extent of compliance with new obligations.
When you think about it, responses collected from customers concerning the compliance obligations of brokers could also enable stronger defences to be mounted against future claims.
Best Interests Duty. Mortgage brokers are required to act in the best interests of their customers and to prioritise their clients’ interests when providing credit assistance from 1 July 2020. Licensees and credit representatives are liable for the conduct of individual brokers.
As the new duty is a principle-based standard of conduct, licensees and credit representatives will need to establish suitable mechanisms so they can monitor broker conduct and collect authentic data that either directly or, in combination with other evidence, demonstrates compliance.
When combined with internal compliance mechanisms such as record keeping, documentation and file reviews, externally sourced data collected directly from customers in the form of feedback, will position licensees and credit representatives in a strong position, if called upon by regulators and government, to demonstrate compliance.
In another sense, BID represents a very positive development for the industry as brokers will have a higher legal duty to act in a consumer’s best interests than say an employed bank lender. This is an opportunity to develop an extremely compelling offering, particularly if brokers are able to leverage customer feedback to validate their performance.
Breach Reporting. Draft legislation has recently been released for industry consultation. Expected to take effect from 1 April 2021, this legislation will require licensees to report reportable situations (core obligations and additional reportable situations) to ASIC in a timely manner.
Investigating and Remediating Misconduct. Under draft legislation recently released for industry consultation, licensees will be subject to a specific obligation to notify clients of suspected misconduct, conduct investigations into suspected misconduct, and remediate affected clients. There will also be an obligation to maintain records to demonstrate compliance with the requirement to notify, investigate and remediate misconduct. This legislation is also expected to take effect from 1 April 2021.
Reference Checking and Information Sharing. Under draft legislation, expected to commence from 1 April 2021, licensees will have a specific obligation to undertake reference checking and information sharing regarding a former, current or prospective employee. ASIC is expected to set out details in a separate legislative instrument.
It would seem, in the case of all newly proposed compliance obligations described above, that a sensible approach would be for licensees to consider the use of customer feedback as a data collection mechanism to help inform if specific circumstances exist to activate these obligations and to have available to them suitable data for sharing and reporting purposes.
This doesn’t necessarily require different forms of feedback for different purposes and at different times, but could be incorporated in a single feedback service such as MyNextAdvice, which is continually evolving to support industry requirements.
PI Insurance. The current environment for getting cover is quite challenging, so being able to demonstrate a lower risk profile should assist considerably in finding decent coverage. This means being able to show that your compliance regime is very strong – documented processes and systems, access to relevant data, rigorous compliance enforcement, proactive risk identification and mitigation. Increasingly, being able to readily access authentic data linked to individual broker performance will play an important role in accessing coverage. Such data can be originated through customer feedback.
In summary, customer feedback is and will continue to be your best friend if you are committed to building a high growth and compliant business and doing your bit to lift trust and confidence in the industry.
Please get in touch if you are interested to learn how we can help you achieve both of these outcomes.