Mortgage lenders want to rise above your competition, but they may have bigger companies and bigger marketing budgets behind them. There’s still a way to win: Truly know your niche. You can position yourself as the go-to mortgage expert for your ideal client, and you don’t have to spend more time or more money to get there. You just have to work smarter.
In today’s hyper-competitive mortgage market with fluctuating rates, low inventories, and changing borrower expectations, it is vital that you truly understand your target audience. A thoughtful, tailored approach to marketing will allow you to lock in relationships with your ideal borrowers far more effectively than your competitors.
Understanding and effectively communicating with your most profitable niche markets is critical to your success. Entire books are written about how important it is to find your niche, but there are very few roadmaps that make it easy. But without an ideal target, most of your marketing dollars will go right down the drain.
This guide was designed to help loan originators think through the first and most critical step in their marketing strategy – figuring out your ideal prospects. The first part of the guide will explain the benefits and concepts surrounding finding your niche. The second part is a step-by-step questionnaire we call the “know your niche” worksheet. Just answer the questions and you will be ready to market very intelligently, without wasting money.
Part 1: Identify your ideal borrower
In an article entitled “How to Define Your Target Market” by Mandy Porta from Inc.com, Porta states, “To build a solid foundation for your business, you must first identify your typical customer and tailor your marketing pitch accordingly.”
“Given the current state of the economy, having a well-defined target market is more important than ever. No one can afford to target everyone. Small businesses can effectively compete with large companies by targeting a niche market.”
If you’re targeting “anyone who needs a mortgage loan”, your target is too general and you will be competing against larger companies with much larger marketing budgets. You simply can’t affordably attract every potential borrower. Instead, focus on your ideal borrower.
Don’t worry – by focusing your marketing efforts on your ideal borrower, you’re not excluding people who don’t fit your criteria. Those people will still come to you via referrals and other avenues, but your marketing program has to get specific. With a narrowly defined ideal customer, you’re intelligently targeting your marketing dollars and efforts on a specific segment that is more profitable for you or easier for you to serve.
Consider which niche markets you can serve best and you will quickly see great opportunities to focus your message with laser precision. Here are just a few examples of how this works.
Example 1: Veterans and military families
If this is your ideal borrower, you can pinpoint their average incomes, the neighborhoods they prefer, the news sources they read, where they go, and what types of mortgages serve them best. This niche market has several subsets that would allow you to get even more focused, like active service members, retired military, families or individuals. Identify your ideal borrower, and you suddenly have critical demographic intelligence that can help you tailor your marketing messages for maximum effectiveness.
Example 2: Millennial borrowers
If millennial borrowers are your ideal borrower, you can zero in on their incomes, the areas the prefer to live in, what they read, what they do with leisure time, and what types of mortgage loans are best for them. This niche market is far too broad on its own, but you can divide it further by considering gender, specific occupations and even which neighborhoods they are most interested in living.
By clearly defining your target audience, your marketing materials and value propositions can be much more specific, personalized, and meaningful to your prospective borrowers. With a very clear target, it’s much easier to determine the best values for your marketing dollars.
Yes, this is the hardest part of your marketing strategy. But we combined our expertise with the tips included in Porta’s article above to develop a worksheet that will make it much easier for you to get it right, quickly.
Part 2: Know Your Niche Worksheet
Your current customer base is important. Who are your best borrowers now? Which characteristics or interests do they have in common? Why do they come to you? Are there specific types that bring in more profitable or enjoyable business than others? Who are they? It’s very likely that other people just like these could also benefit from your services.
So, check out your competition. Who are your most successful competitors? Who are they targeting? Don’t go after the same market. You can find a niche that they are overlooking.
Know your benefits. List all the benefits of getting a mortgage through you instead of your competitors. Next to each feature, list the benefits the borrower receives (and the benefits of those benefits). Once you have your benefits listed, make a list of people who have a need that your benefit fulfills. When you have identified your ideal borrower population, dig deeper to find smaller subpopulation niches inside of the broader demographics.
Choose specific demographics. Figure out not only who has a need for your service, but also who is mostly likely to buy it. List the following details about your niche: age, location, gender, income level, education level, marital or family status, and occupation.
Consider the psychographics of your target. Psychographics are the more personal characteristics of a population. List their characteristics regarding: personality, attitude/values, interests/hobbies, behavior. What media does your ideal borrower turn to for information? Do they read the newspaper? Do they read their mail? Or do they search online or attend events? It’s critical to understand their behavior so you don’t waste marketing dollars on efforts that your niche market largely ignores.
Evaluate your decision. Once you’ve decided on a target market, be sure to consider these questions:
Are there enough people who fit my criteria? Get narrow, but not too narrow that your population is too small to keep your loan pipeline full.
Does my target market really benefit from my specific services and expertise? Do they see a need for it?
Do I understand what drives them to make homebuying decisions?
Can they afford to get a mortgage loan?
Can I reach them effectively? Are they easily accessible?
Once you’ve identified your ideal customer and understand them, you’re well on your way. It’s much easier to figure out the most effective approach to a target market if you know exactly who they are. Think of it this way: You can throw all your marketing dollars against a giant wall and see what sticks, wasting valuable money and time with every dollar. Or you can identify your ideal borrower and more intelligently invest your time and money with precision.
The more you market to and serve your ideal borrower, the more you will know about them and the more effective your marketing approach will get over time. Remember, the work doesn’t end after you’ve identified your target audience. It’s essential to stay current on market and industry trends, know your competition, and pay close attention to your target niche. Once you’re “in”, it will be very difficult for another mortgage lender to displace you as the “go-to” mortgage expert in your niche.