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AUGUST 2015 STRATMOR PeerViews Borrower Satisfaction
AUGUST 2015
STRATMOR PeerViewsBorrower Satisfaction
Contents
BackgroundKey Findings and ConclusionsDetailed Findings
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STRATMOR PeerViews - Proprietary and ConfidentialNOT FOR EXTERNAL DISTRIBUTION
8/28/2015
Background
The Borrower Satisfaction survey was the fifth survey conducted under STRATMOR’s new PeerViews small-survey program.
PeerViews is a fast turnaround small-survey program that gives senior mortgage executives a unique way to obtain specific qualitative mortgage industry information about: What senior executives at other companies think about issues and significant
new industry developments. What actions they are considering, planning or have taken.
The PeerViews Borrower Satisfaction survey was launched on July 14, 2015 and remained open until August 7, 2015. Invitations were sent to 1,556 individuals representing 975 unique lenders. Responses were received from 55 unique lenders (a 5.6% response rate)
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Summary of Key Findings
8/28/2015
Lenders believe that measuring borrower satisfaction shortly After Closing is much more important than measuring satisfaction at any other point in time, e.g., After Pay-Off or After a Customer Service Contact 67% of respondents gave measurement After Closing a “Highest Importance” rating, with an additional
24% giving it a “Very Important” rating. Generally, lenders rated satisfaction measurements associated with servicing, in general, and customer
service contacts, as substantially less important than After Closing. Lenders attached relatively low importance to measuring satisfaction after a Pay-Off. STRATMOR believes that these ratings may be somewhat short-sighted. While satisfaction shortly After
Closing may generate near-term referrals, ongoing referrals and customer retentions may depend more upon the borrower’s experience with servicing.
Consistent with the importance given to measuring satisfaction at Closing, 90% of respondents report that they are currently doing so, with another 8% reporting plans to do so.
Relatively few lenders, e.g., ≤ 20%, are currently measuring satisfaction at other points in time; however, 50% to 60% say they are either planning or willing to give consideration to doing so,
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Summary of Key Findings (cont’d)
8/28/2015
Many lenders use multiple processes or methods to measure satisfaction At Closing. A relatively high proportion of lenders (53%) measure satisfaction by sending the borrower an email
after closing. The next most frequent method (38%) is to invite borrowers to take an online survey. For both methods, lenders utilize a third-party vendor about 50% of the time; other methods, e.g., a
telephone survey or a survey completed at the Closing table, are typically conducted using in-house personnel.
STRATMOR believes that the trend is towards using an online survey administered by an independent third-party acting on the lender’s behalf.
Based on current practices, lenders primarily use borrower satisfaction scores to: Monitor LO/Branch performance (80%); Identify Systemic Problems with origination processes (71%) and Rapidly Respond to dissatisfied borrowers (67%).
Current use of borrower satisfaction scores is relatively low as regards: Incentive Compensation (22%), Soliciting Referrals (38%) and Score-Carding (40%), but interest in these areas is high.
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Summary of Key Findings (cont’d)
8/28/2015
Almost 85% of lenders rate “Building a More Customer-Focused Corporate Culture” as “Highest” or “Very High” in importance as regards their uses and objectives for measuring borrower satisfaction: Academic research shows that, in virtually all industries, companies focused on improving customers
satisfaction generate higher growth and profitability; thus Lenders that are successful at building such a culture should generate happy borrowers and superior
financial results, i.e., a “win-win” result. STRATMOR cautions that creating a customer focused culture cannot be accomplished without a
serious program that measures satisfaction and holds all employees involved accountable, i.e., measure and manage.
Using borrower satisfaction scores in incentive compensation was rated significantly lower than any other use: This result appears to be inconsistent with the highest importance given by lenders to Building a More
Customer Focused Corporate Culture. While financial incentives are not the only way to motivate employees to focus on satisfying customers,
we believe they should be part of the program.
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Summary of Key Findings (cont’d)
8/28/2015
Cost estimates by respondents suggest that measuring borrower satisfaction costs $3 to $4 “all-in” per completed survey.
Almost 90% of respondents believe that measuring satisfaction is worth the added costs involved. However: It does not appear that lenders seriously track either benefits or costs.
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How would you describe the ownership of the company?
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32 of the 55 lender respondents (58%) were either affiliated with a Bank (25 lenders or 45%) or a Credit Union (7 lenders or 13%).
The remaining 42% of respondents consisted of either Independents (21 lenders or 38%) or Builder/Realtor affiliated lenders (2 lenders or 4%).
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In which channel(s) does your company do business?
8/28/2015
93% of respondents are active in the Retail channel
28 respondents are active in only one channel of business, 27 of which are retail-only lenders.
If a respondent is in multiple channels, Consumer Direct is the second most likely channel, followed by Correspondent with the broker channel in last position.
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What was your origination volume across all channels for 2014?
The majority of respondents (47%) originated less than $500 million in 2014 across all channels.
Another 42% of lenders originated between $500 million and $5 billion.
Only 11% of respondents originated over $5 billion in volume in 2014.
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How important do you believe it is to measure borrower satisfaction at each of the following points in time or stages in the lending process?
8/28/2015
Measuring borrower satisfaction after closing was of “highest importance” to 67% of respondents and “very important” to an additional 24%.
Measuring borrower satisfaction “Upon Cancellation” or “Following a Customer Service Contact” were “very important” or of “highest importance” to roughly 55% of respondents, far less than measuring satisfaction after closing.
Measuring satisfaction periodically for a sample of borrowers or after pay-off were relatively unimportant.
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Not Important
Somewhat Important
Moderately Important
Very Important
Highest Importance
When the origination of an approved loan is cancelled 4% 18% 24% 40% 15%At or shortly after the closing of each new loan 0% 0% 11% 22% 67%Following a customer service contact with a borrower 2% 15% 27% 42% 15%Periodically for a sample of loans that are being serviced 9% 16% 35% 33% 7%Shortly after the pay‐off of an existing loan 15% 18% 40% 22% 5%Other ‐ please specify 0% 0% 0% 4% 2%
Total
% of Total
What is the current status of borrower satisfaction measurement at your company?
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Consistent with its importance, 90% of respondents measure borrower satisfaction After Closing, with an additional 8% saying that they “plan to.”
Relatively fewrespondents, i.e., 20% or less, measure borrower satisfaction at other points in time; however:
54% - 62% of such respondents either plan to measure or would consider measuring borrower satisfaction at other points in time. STRATMOR believes that
measuring satisfaction at pay-off, especially for non-retained borrowers, could be very useful to understanding customer retention..
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Currently Measure
Plan to Measure
Would Consider Measuring
Have No Interest
When the origination of an approved loan is cancelled 20% 10% 52% 18%At or shortly after the closing of each new loan 90% 8% 2% 0%Following a customer service contact with a borrower 20% 10% 50% 20%Periodically for a sample of loans that are being serviced 22% 14% 42% 22%Shortly after the pay‐off of an existing loan 8% 12% 46% 34%Other ‐ please specify 6% 4% 0% 90%
% of Total
Total
Which of the following best describes the process/method by which your company measures borrower satisfaction as regards their loan origination experience?
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Lenders who measure borrower satisfaction After Closing apparently use multiple methods.
Basic survey methods, e.g., a telephone survey (20%), a survey completed at Closing (31%) or a post-Closing mail-in survey (31%), are typically handled in-house and are the least used methods.
The most used methods, an email after closing (53%) and/or an online survey (38%) involve an outside vendor about half of the time. STRATMOR believes that the
trend is towards an online survey administered by a third-party vendor.
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Which of the following best describes how your company currently uses, plans or would consider using borrower satisfaction surveys/scores as regards the loan origination experience?
8/28/2015
Rapid Response: Rapid response to dissatisfied borrowers expressing regret (with an objective of precluding negative comments being posted to social media and/or regulatory authorities).
• Monitor for LO / Branch: Monitor borrower satisfaction scores as associated with LOs and/or branches and provide feedback as necessary
• Monitor for Back Office: Monitor borrower satisfaction scores as associated with back office personnel and/or units and provide feedback as necessary
• Scorecards: For use in score-carding branch, LOs and back office personnel performance
• Incentive Compensation: For use in incentive compensation plans
• Generating / Soliciting Referrals: Identify highly satisfied borrowers for purposes of generating referrals
• Identify Systemic Problems: Identify systemic problems with our origination processes
• Advertising & Promotion: For use in our advertising and promotion, e.g. publicize on social media, our web-site, etc.
• Corporate Culture: Build a more customer-focused corporate culture
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80% of respondents use borrower satisfaction results to monitor Originators and Branches
71% use the results to Identify Systemic Problems within the Origination Process
49% of the respondents would consider using borrower satisfaction as part of Incentive Compensation
How important to your company are the following uses or objectives for measuring borrower satisfaction as regards the loan origination experience?
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The importance of various objectives for measuring satisfaction fell into three tiers: 51% to 58% of respondents gave a
“Highest Importance” (Green background) rating to: Rapid response to dissatisfied borrowers; Building a more customer-focused corporate culture; Monitoring satisfaction at the LO/Branch level to provide appropriate feedback; and to Identify systemic problems with origination processed.
The next tier (Yellow background), with a “Highest Importance” rating of 16% to 31% included: Monitoring scores associated with back office personnel; use in score-carding; identify highly satisfied borrowers as sources of referrals; and for use in advertising and promotion.
At the bottom of importance ---somewhat surprisingly in STRATMOR’s opinion --- was the use of satisfaction in incentive compensation plans which was rated “Highest Importance” by just 9% of respondents. At the same time, 65% of respondents said that they plan to or would consider using satisfaction in incentive compensation.
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Not Important
Somewhat Important
Moderately Important
Very Important
Highest Importance
Rapid response to dissatisfied borrowers expressing regret (with an objective of precluding negative comments being posted to social media and/or regulatory
0% 2% 9% 20% 49%
Build a more customer‐focused corporate culture 0% 4% 9% 22% 42%
Monitor borrower satisfaction scores as associated with LOs and/or branches and provide feedback as necessary
0% 0% 0% 40% 40%
Identify systemic problems with our origination processes
0% 0% 7% 29% 40%
Monitor borrower satisfaction scores as associated with back office personnel and/or units and provide feedback as necessary
0% 0% 16% 42% 22%
For use in score‐carding branch, LOs and back office personnel performance
7% 7% 11% 38% 18%
Identify highly satisfied borrowers for purposes of generating referrals
4% 9% 22% 22% 18%
For use in our advertising and promotion, e.g. publicize on social media, our web‐site, etc.
7% 11% 18% 24% 13%
For use in incentive compensation plans 11% 20% 22% 18% 7%
Other ‐ please specify 2% 0% 0% 0% 0%
Total
% of Total
What is your estimated all-in cost per completed survey?
8/28/2015
84% of respondents estimate the cost per completed survey to be under $5.
53% estimate the cost to be under $2 per survey
Only one company estimated the cost at over $10 per survey.
These estimates suggest an average all-in cost of $3 to $4 per completed survey (including the costs of administering, analyzing and reporting results). STRATMOR’s experience
with clients in its MortgageSAT borrower satisfaction program suggests that these estimates are low.
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Which of the following statements best captures your views as regards the cost-effectiveness of measuring borrower satisfaction?
8/28/2015
21 respondents (47%) believe that the benefits of measuring borrower satisfaction more than covers the added costs
Another 40% cannot quantify the full impact but believe that measuring satisfaction to foster a culture focused borrower satisfaction leads to more growth and profits. Which is just another way
of saying that measuring satisfaction is cost effective; thus:
Almost 90% of respondents believe that measuring satisfaction is worth the added costs involved.
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Noteworthy Additional Participant CommentsRegarding Borrower Satisfaction
Although complete satisfaction isn’t easily attained, member satisfaction is the driving force behind our success.
In addition to being a good business practice we need to be doing this to head off potential complaints to regulators
The killer question to ask is “How easy are we to do business with?” Why’ –especially for third party referrals.
Would like to find a simple system to measure satisfaction. Would like to know what tools people are using to measure satisfaction. Our current rate of Member Service survey's returned YTD is 80%. I'd like to see
what other Mortgage Lenders return rate is.
8/28/2015
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Contact Us
Dr. Matt LindManaging DirectorSTRATMOR Group
Office: [email protected]
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Nicole YungManaging DirectorSTRATMOR Group
Office: 770-632-4445 [email protected]
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