As the competition for the mortgage borrower’s business continues, a growing number of lenders are looking to online testimonials to help bring in sales. According to the August Insights Report from mortgage advisory firm STRATMOR Group, testimonials don’t always lead to the coveted borrower referral.
Data from STRATMOR’s MortgageSAT Borrower Satisfaction Program of more than 150,000 borrowers over the last 18 months shows that 83 percent of borrowers said they were likely to recommend a lender. Of that 83 percent, 70 percent said they were likely to comment on social media. If testimonials had a one-to-one correlation to referrals, then one of every two loans should produce a referral, when in fact, according to STRATMOR data, only roughly 14 percent, or one out of every seven borrowers, generates an actual referral.
“The data clearly indicates that there is not a one-to-one relationship between collecting an online testimonial – positive comments on social media – and receiving a referral,” says MortgageSAT Director Mike Seminari. “In fact, our data shows that less than two percent of borrowers say they discovered their lender (or loan officer) by means of an online testimonial search. Instead, 95 percent of borrowers who searched for testimonials online already knew who they were searching for, whether because of a referral or an existing relationship with the lender or loan officer.”
Referrals can come from a variety of sources: real estate agents, financial planners, friends, relatives, co-workers, builders, or other acquaintances. All of these referral sources share a common thread–they are all, on at least some level, trusted advisors. “The home-buying process is such a substantial financial event, and because most borrowers are confused about the ins and outs of the process, it’s natural for them to lean on the wisdom of others,” says Seminari. “With so many lender and product choices and no easy way to sift through them, tapping a trusted friend, colleague or professional advisor can help to quickly narrow the field and make the decision more manageable.”
Seminari suggests that instead of focusing on testimonials, lenders instead work to create “raving fans” – borrowers who are so pleased with their mortgage loan experience that they sing the lender’s praises to anyone who will listen. “Companies are built, and revenues are grown upon a base of ‘raving fans,'” says Seminari. “Word-of-mouth referrals are most often made by these delighted customers, which suggests that they are the true impetus to the loan process and sit at the top of the sales funnel. Testimonials have their greatest influence on a potential buyer after that buyer has been referred by a raving fan and is ready to read what others are saying about the lender online.”
In a second article in the report, STRATMOR Senior Partner Nicole Yung provides data from the recently completed Digital Innovations Survey from the 2019 Technology Insight Study. For the third year in a row, ‘increased borrower satisfaction” topped the list of lenders’ perceived benefits of digital technology. In recent years the mortgage industry has taken steps to modernize its technology offers in a way that empowers borrowers, and according to the article, more than 70 percent of lenders report some level of live digital capabilities. The upward trend in capabilities from 2017 to 2019 is most noteworthy in the increase in lenders offering a dynamic application, from 29 percent in 2017 to 74 percent in 2019.