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Referral marketing for alternative lending
BY MICHELLE SARGEANT
Last year was monumental in altering the way many advisers serve their clients and how they can future proof their businesses. Between delayed turnaround times and changing bank policies, there is a growing number of New Zealanders who are being let down by traditional lenders and are finding themselves needing a specialist solution. More specifically, we’ve found around 23% of people looking for a loan need alternative lending(1).
It’s a big misconception that people who need alternative loans have challenging financial histories. In reality, some of these customers may have qualified for a prime loan in the past but due to a tweak in a lender’s policy, they now find that they are no longer eligible.
However, while the need for specialist solutions is growing, our research shows that almost 40% of customers getting turned down for a mortgage don’t know that there are alternatives to banks.
What does this mean for your business?
At any point in time, certain types of customers that you typically look after could be declined for a loan or may have a need for a solution from a non-bank lender.
By expanding your awareness of alternative lending and accepting that one size does not in fact fit all, comes an enormous opportunity to grow and the potential to help more kiwis achieve their financial goals.
A great place to look is where there is the most significant opportunity. As research shows, alternative lending is proving to be an area of need that is currently underserved and growing.
Having the ability to meet these borrowers needs by being accredited for both traditional and alternative loan solutions could be a way to position your business for sustainable growth. Not only will this be your best defence against ongoing market changes, but it will give you the satisfaction of helping more families through real life hurdles.
Additionally, research has shown that New Zealanders are feeling nervous about their financial prospects with consumer confidence continuing to fall over 2020 (2) .
We think this highlights what we have always believed – which is just how important the role of a financial adviser is to our industry and the paramount role they play in reassuring these customers that there may still be options for them through non-bank and specialist lenders.
Are you positioned to attract this growing segment of the market?
Recent research has found that customers who took out a loan in the last six months were most likely to have spoken to an adviser when looking for a loan. However just as importantly, they also turned to their networks for recommendations about who may be able to assist.
Our findings also show that 60% of new business comes from referrals 1 - this being either from existing customers referring friends and family or, recommendations from professional networks such as accountants or financial planners.
_Texas Tech University & Advisor Impact. “Anatomy of the Referral: Economics of Loyalty.” December 2010.
What this suggests is that delivering a great service, while an essential ingredient to reaching customers in the first place, is not enough on its own. Referrals are the lifeblood of your business and should not be something you should leave to chance.
Eighty-three per cent of satisfied people are willing to refer products and services, but only 29% actually do. There are many reasons why this could be the case, but it mainly comes down to people being busy and simply forgetting to.
By systematically encouraging your customers to tell their friends, family and other people about you, or speaking to your professional networks about the sorts of customers you can help, you will have more opportunities to engage with new clients.
Your real-life guide to referral marketing
With this in mind and feedback from advisers expressing that there is a strong need for content and practical tools specifically targeting the non-conforming market, we are thrilled to be launching the Pepper Money Referral Marketing toolkit; a guide that can be used to help advisers position their business to attract referrals from customers who may need alternative lending solutions.
Commenting on the release, Pepper Money’s National Sales Manager, Michelle Sargeant says “We are passionate about supporting financial advisers with education to better support their customers. By sharing all this information with advisers, we not only hope to meet their need to sustain or grow their business but also to meet their customers’ need for alternative lending solutions as traditional lenders are saying no more often.”
“There is a real opportunity in referral marketing activity, particularly in the alternative lending space. Customers are looking for someone who understands them and are willing to take a look at their unique situation. When provided with a workable solution, they often become an advisers biggest advocate.”
In addition to the referral guide, Pepper Money will also provide advisers with a practical set of marketing tools to assist in maximising alternative lending referral opportunities. This includes:
• A series of case studies they can customise with their branding and leave with their referral partners as a reminder of the type of customers they can assist
• A customer satisfaction survey template that helps advisers gather actionable feedback from their existing customers; and
• Prepared content on alternative lending to help advisers create their own landing page or emails
The guide will be available to Pepper Money accredited advisers via the Pepper Money Adviser Portal later this month. Simply head to adviser. peppermoney.co.nz or speak to a Pepper Money BDM.
Looking ahead, Pepper Money plans to continue helping mortgage advisers identify the types of customers that they can work with, along with presenting different ways to grow their business and providing tools that can help aid in the process. ✚
1: Source:Pepper Money Pulse Survey, June 2019
2: Source: RFi NZ Mortgage Council Survey, October 2020
