The ups and downs inherent in business cycles guarantee that we will eventually see another economic downturn. It is not a question of if a contraction will occur, but a question of when and how severe. The mortgage industry is highly dependent on credit availability- when credit approvals and loans are hard to obtain, everyone from loan officers to processors, to the lender itself, suffers. It is imperative that you have a plan for when the market slows. Having a ready-to-deploy strategy in the case of a financial emergency could be the difference between your team succeeding or failing during a recession or housing crisis.
Get a Practical and Powerful CRM
One of the best ways to prepare is to leverage your existing data resources and squeeze every cent of profit from your lead list. A practical and powerful CRM can help you accomplish this goal. In this piece, we will explore some CRM-centric steps that real estate professionals can use to prepare for the next downturn.
A CRM Can Boost Your Team’s Efficiency
According to Nucleus Research, the average ROI for every dollar spent on a CRM is $8.71. That is a phenomenal return. Increasing your cost savings and improving your efficiency is key to surviving lean times in the real estate markets, and CRMs can help boost output by 15% or more.
Reducing Client Attrition
An eroding client base is likely during hard times. For example, the 2008-2009 downturn saw millions of previously eligible homeowners get wiped out financially. Many borrowers had to default and suffered from poor credit ratings for years after. Others lost their jobs and were no longer in a financial position to afford to purchase real estate. When the total pool of available RE clients goes down, your existing client list becomes more valuable than ever.
To retain as many clients as possible, it is imperative that you can categorize, access, and contact those clients at a moment’s notice. A good CRM can help you organize your contact list, give everyone in your organization the ability to manage contacts and send messages to them via text or email.
In addition, By leveraging automation through workflows and followups, a good CRM will help you and your team stay on task and keep clients up to date with minimal effort. Find a tool that helps prioritize and score leads, gives you flexible communication tools (like email campaigns, autoresponders, and SMS), and pipeline management features.
Leveraging Existing Data Resources
We live in the Information Age and your data is among your company’s most valuable resources. A CRM can help you prioritize RE leads with a higher chance of converting and closing and improve your bottom line. You can also use the data you gather and input to understand your customers better- during a downturn, customer engagement is incredibly powerful and being able to target your customers in their ideal acquisition window will help get the responses you need when times are tough.
Taking Advantage of Cross-Sell Opportunities
The right CRM will give you the ability to maximize your cross-sell opportunities. For example, let’s say you have a commercial client that is requesting credit to purchase a multifamily unit. You can use your software to track info that relates to their purchase as well as any potential purchases in which your clients may have an interest. If in conversations with their loan officer they mention they want to purchase a retail property six months down the line, you can program your CRM to auto contact that client with relevant information six months ahead.
This action seeds your company for future growth while responding to the borrower’s needs. One firm found that 72 percent of companies with less than 50 new sales opportunities per month were unable to reach their revenue goals. If you are not taking advantage of digital solutions to increase your cross-sell ability you are leaving profit on the table.
Increasing Pipeline Productivity
Just as important as your lead list is how you manage your pipeline of incoming borrowers and clients moving through the lending process. Your pipeline is your lifeline, and it can help you weather bad economic times with less damage. When times are good in the mortgage business, the percentage of deals left by the wayside is much higher.
If a loan officer is working more sales than they can handle some LO’s will prioritize some deals over others. Easier, more lucrative deals will take the driver’s seat while harder deals fall by the wayside. This attitude may fly during boom times, but it can kill your business during a downturn.
If you are a broker or oversee loan officers, you can access their client and lead lists via the CRM. As long as you require them to keep detailed notes on each buyer, you can follow the progress of loans, see contact history, and get a fuller understanding of what is happening with that transaction.
Taking these steps will ensure that you are squeezing every dollar out of your pipeline and can help your company to survive until market conditions improve. If you are unable to take advantage of pipeline opportunities, your business will suffer.
Improve Accuracy in Down Market Forecasts
Instability and uncertainty work hand in hand during a recession. Understanding the depth of the slump and creating accurate financial predictions can go a long way to helping you make it through a downturn. These financial projections can also help you get into the best position possible to take advantage once the economic situation improves. Mortgage lenders that were ready to take advantage of the steady rise in home prices following the Great Recession saw record profits in just a few years after the bottom.
Creating sales forecasts using a CRM will give you hard metrics relating to growth. These data points are available in real-time to provide you with the power to track sales over time and adjust your strategies accordingly. While past performance is no guarantee, understanding where you were is critical to getting where you want to go.
There are many ways to survive during a downturn. However, your goal should be to flourish rather than just get by. Utilizing a configurable CRM that includes powerful sales and marketing automation features will keep your business growing when times are good and properly prepare you when the downturn arrives. Will your business be ready with your current technology stack?