Many years ago I was heading the marketing of the home loans portfolio of a fairly large second tier bank in Australia. Unfortunately, home loan sales were in a state of constant decline. Our monthly sales had dropped from around $75 million to around $60-odd million a month. Initially we ran a TV advertising with an attractive home loan rate and that boosted it up to around $80M. In those days I was not driven by achieving sales targets, but rather by achieving record sales. I knew we could do much better.
And finally we achieved record monthly sales of around $125 M per month. How did we do that? Read on to find out.
It started with my manager at the time making a provocative statement: “We don’t really know how customers shop for a home loan,” she had said. Obviously, we had all bought a home and a home loan, and hence we were basing our marketing on our personal experiences. However, my manager’s statement made me realise that we truly needed a quantitative understanding of the shopping process from a consumer perspective.
We engaged the services of a market research company that had expertise in understanding consumer behavior.
The home loan shopping process we discovered was the following:
Awareness – This was really about top of mind awareness of the key home loan providers.
Consideration set – This was about brands that customers would consider buying from. Typically, they would consider their own main financial institution, which is where they did their banking, followed by one or two major banks, one second tier bank like what we were, and maybe a smaller home loan specialist.
Shortlist – From this consideration set, they typically selected 2-3 financial institutions to conduct initial research and phone enquiries.
Interview – This was then whittled down to two financial institutions where they visited the bank in person for an interview or further enquiry.
Selection – Based on this conversation, they made a final selection.
So how did our bank perform across the shopping process?
Awareness – We performed very well here and we also had a good reputation of offering friendly service.
Consideration set – We were not on many consideration sets. This was a key issue.
Shortlist – As we were not on a high number of consideration sets, we did not make it on too many shortlists.
Interview – Our staff were great at converting interviews into sales, so this was our core strength. Once a potential customer came in for an inquiry, our conversion rate was a sure shot success in most instances.
Effectively, we now knew we needed to find a way to get into the consideration set.
We then embarked on another set of research which was qualitative in nature. Since the primary goal here was to get on the consideration set of the larger home loan consumer market, we tested all sorts of offers, including hot interest rates, win a car, win a house, gift vouchers with every home loan, etc.
I still remember being behind the one-way mirror observing focus group participants as each offer was displayed and the group was asked whether they would consider our brand or not. When the offer of the chance to win a home on the Sunshine Coast in Queensland, Australia, came up, a middle-aged man stood up and said, “You would have to be a prawn not to consider a bank with that offer.” Everyone else nodded their heads vigorously in agreement. We knew we were on a winner.
We organized a contra deal with one of the top builders for a beautiful house on the Sunshine Coast and then ran a major advertising campaign with the theme “Buy a home, win another”.
We also employed another strategy. We had a one year ‘lead rate’ home loan that we advertised. However, when a customer came in, we offered them a home loan that truly met their needs. This made it a personalized and engaging experience for them, thus increasing our conversion rate and making something that was good even better.
Now guess what happened. Our bank, which was until then just a known brand but not a preferred choice of the larger consumer base, suddenly became a market favourite. The sales and customer support teams were in absolute overdrive and converted a large number of customers who came into the interview into sales, thus helping us achieve record results.
Considering this, the questions you need to ask yourself about your brand need to start with – Do you understand know how your customers shop in your category?
Top this question with the following:
Tough questions but this is what you need to do to achieve record sales.
Article by Christopher Roberts
Managing Director, Engaged Strategy