Mortgage servicers who invest in one overlooked area, the customer experience, can recapture their investment as well as increase profits and raise customer satisfaction, according to the J.D. Power 2016 Primary Mortgage Servicer Satisfaction Study.
In fact, this study contradicts many in the mortgage service industry who believe customer experience investments are unnecessary and unprofitable, according to a report released by J.D. Power, which measures customer experience across a dozen different industries.
This perception comes from the knowledge that 48% of consumers don’t pick their mortgage servicer, according to the study.
"Servicers with a captive audience can often view taking measurable steps that improve the customer experience as an unnecessary investment," said Craig Martin, J.D. Power senior director of the mortgage practice.
"They aren't against improving satisfaction, but cost containment is their top priority,” Martin said. “The study clearly shows, however, that interacting with customers more efficiently, and more effectively, can reduce costs and increase profit for servicers regardless of the business model, while having the added bonus of improving satisfaction."
Here are the primary ROI benefits for servicers who improve the customer experience:
Complaint reduction: Enabling customers to find answers to their own questions before making a call and resolving issues on the first contact reduces the number of repeated customer contacts and escalations, which can draw the attention of regulators and other agencies.
Cost containment and reduction: Eliminating the need for any contact and increasing the use of self-service channels can reduce customers' reliance on the live phone channel.
Limiting portfolio loss: Delivering a satisfying experience dramatically improves the chances customers will consider the lender for future mortgage needs, which protects against undesired attrition and supports future revenue growth by reducing acquisition costs.
Developing new business opportunities: Delivering a highly satisfying experience can promote increased cross-sell of existing customers or lead to more new business with partners.
The study showed that 83% of customers experiencing a problem were likely to call their servicer. However, this also increased public scrutiny since 13% of those customers also posted a comment on social media.
It is clear that eliminating problems saves companies money by reducing call center costs and lowering the risk of receiving regulatory attention and its associated costs.
In addition, the study showed that having an easy-to-navigate website with useful information created a reduction in calls to live agents, from 42% to 30%. Many customers prefer to use self-service options.
About 40% of consumers said they searched the servicer’s website before calling. This shows a missed opportunity to solve issues in the customer’s preferred channel.
"Most servicers tend to focus on the complaints they receive, but the truly successful servicers get to the root causes of problems and take a more proactive approach," Martin said. "They realize better communication and self-service options can help their bottom line by reducing unnecessary calls."
The study also showed that when customer satisfaction was below 600 points on a 1,000-point scale, 63% of customers said they would switch mortgage servicers in order to find better customer service.
On the other hand, when customer satisfaction was above 900, 66% said they “definitely will” refinance with their current servicer.
Last year, J.D. Power’s report showed that despite the percentage of loans in delinquency dropping to less than 5% of all loans in June 2015, mortgage servicers are still paying an inordinate amount of attention to delinquent borrowers, severely impacting the servicers’ overall customer experience.
