Now’s the time to think about keeping your mortgage customers. No really…
With the Budget done and dusted, attention has turned to the General Election to see if Mr Osborne’s tinkering will have any influence on the direction of our votes.
Whilst the Chancellor’s horse-trading with the price of cigarettes and booze may catch the headlines for a day or two, it’s the underlying figures that make the biggest difference.
What’s remarkable about the big, important numbers is just how small they are.
In February 2015 inflation fell to 0% – the lowest since records began in 1988. Experts predict a further drop in the spring, pushing the UK into ‘deflation’. Short-term that seems to be good news, although the prognosis often depends on your political or economic viewpoint.
Another big fat zero – or near enough to it – is The Bank of England Base Rate, which has been scraping along the bottom at 0.5% for six years.
Subsequently, mortgages are at an all-time low. Right now, if you’ve got a big enough deposit, you can get a 10-year fixed rate deal around the 2.9% mark!
With numbers this low, mortgage retention strategies hardly seem like a priority but now is actually an ideal time to give it some consideration.
For one, rates can only go one way. Your average British homeowner has become so accustomed to low rates that any increase will get many of them running to the nearest comparison site or IFA.
It also takes time to refine your approach. Better to test and learn in the calmer waters of a flat-ish market than wait until rates are shooting up and customers are jumping ship. Establishing benchmarks in benign economic conditions will also help improve the longer-term sustainability of your strategy.
Still not convinced? Well if nothing else, take a look at your customer data and remind yourself who’s on your books.
Assuming your budgets and resources are finite, focus on the first step, building or refining a customer profile:
- Who are your customers? Who are the most valuable? (i.e. the ones you want to keep)
- What are their characteristics?
- Are you able to identify their churn behaviour?
This last point is perhaps the main reason why you should give yourself plenty of time to develop a plan. Certain behaviours indicate the potential to churn. If a customer requests redemption information, do you have a customer service feedback loop in place? If they visit your website’s mortgage product pages to check out current deals, do you have a Data Marketing Platform that can track and report on their behaviour?
Getting these measures in place won’t happen over night, so start thinking about it now. Because as rates rise and the mortgage market rediscovers its mojo, you’ll need to do everything you can to keep your best customers.