Referrals from satisfied customers are an important source of new business for brokers in the mortgage industry. Customer referrals account for approximately 70% of all new business for a significant number of leading brokers in New Zealand – and are arguably the single most important source of new business.

It is easy to see why. That personal recommendation from a friend, colleague or acquaintance helps to build trust and does a lot of the hard selling before the client walks through the door – with little or no cost to the broker. And the referral is usually made when the potential client has a need, effectively providing brokers with a customer who is looking for his or her services now.

Most brokers interviewed by TMM rated customer referrals as “highly important”, “hugely important” or “absolutely critical”. Ajay Kumar from Global Financial Services Limited in Auckland is one of several brokers who generate 70% of their new business from customer referrals. He rates these referrals as “most important” because they are low cost, but produce the best results.

Brokers also said that they rely on customer referrals to an increasing degree, as their business reputation and customer base grow over time. Bruce Patten from Loan Market in Auckland says: “Without word of mouth referral we wouldn’t have a business.” Early on in his broker career referrals from real estate agents accounted for 70% of new business, “however, as time has gone on it is word of mouth referrals that account for 70% now.”

Mark Puller from Roost Mortgage Brokers in Arrowtown has also become less reliant on referrals from estate agents and other industry professionals. “The vast majority of referrals are now from my existing client base,” he says.

Auckland-based David Windler from The Mortgage Supply Company agrees: “The longer you are in the job [as a mortgage broker] the more referrals you get. The trust has already been handed on – you don’t need to convince them to deal with you.”

“Word of mouth referrals have become my most successful source of referrals. This was not always the case,” says Jason Hurdle from Beyond Mortgages Limited. Customer referrals now make up 40% of his new business.

So how do you increase customer referrals and grow your business? Here are five keys things to do to ensure that your business flourishes.

1. Provide an exceptional service
The most effective way to get your customers to talk about your business, and to refer your services to their friends, is to provide an exceptional service. It is fairly obvious that people will only recommend a good service, but they are also far more likely to remember, and recommend, someone who provided a service that exceeded their expectations or provided additional value.

“Word of mouth referrals are the best referrals you can get,” says Wellington-based Hurdle. “They only come about by you going that extra mile for a client. People refer you because of that value you add, not because of a cash referral fee.”

To provide an exceptional service you will need a thorough understanding of the mortgage industry, have up-to-date market information at your fingertips – and to put all that to good use, in the best interests of your clients. In addition, a focus on customer service can also help to bring in much-wanted referrals.

“I have a Customer Care Manager as a part of my team to ensure that we give our clients the best possible service and follow up. We also have a referral program for our clients because we see this as extremely important,” says Glen Mcleod from Edge Mortgages. For Mcleod, 20% of his new business comes from customer referrals and 40% is from existing customers.

2. Build trust
Show your customers that they can trust your professionalism and your advice. People will refer business your way far more readily if they believe you know what you are doing and can be trusted.

It is also worth remembering that trust takes time to build, but can be easily lost with one rash promise that you fail to follow through on. And, it goes without saying that word of mouth works both ways. Shake that trust – and word will get out. “Never give an assurance that is not possible to fulfil,” says Kumar.

3. Use promotional giveaways
Build up a range of personalised promotional giveaways, such as notepads, pens, or magnetised shopping lists for the fridge. The idea is to personalise or brand something that will be used (or seen) often and to give these to your clients as a token thank you in appreciation for their business. Select items that will work well as a subtle reminder of who you are and what you do.

A branded USB drive, pen holder, business card holder, or novelty coffee mug could help to keep you top of mind, and on the top of your clients’ referral lists. Try to come up with new and innovative ideas to help you stand out, such as a magazine subscription that comes with a personalised “courtesy of” sticker to remind the recipient who it is from.

4. Keep in touch
Find meaningful ways to keep in touch with your customers and build on your relationship. Simple examples, like a monthly newsletter with useful information, or a birthday card, can help to build rapport and trust, and keep your name foremost in your customer's mind.

“It’s important to recognise your top clients and top referrers and keep in touch with them on a regular basis,” says Krish Krishna from Mortgage Suite Limited. This helps to encourage both repeat business and referrals.

Social media also provides new avenues to keep in touch – with Facebook pages and YouTube channels as two popular examples. Invite your customers to follow you on social media but be careful to keep the number of promotional posts to a minimum while a lot of useful information and posts that encourage people to engage and interact with you.

5. Virtual referrals
A growing number of people use the internet to source the services they need, or to find out more about a company before they do business with them – which means you also want to maximise your virtual (or online) referrals too.

You could, for example, post recommendations from customers on your website, ask people to place a recommendation on LinkedIn, or ask them to review your business on your business' Facebook page. These serve as virtual online recommendations and encourage people to choose your business.

Advertising your mortgage business and encouraging people to post reviews on TradeMe would be another example. For Jeff Royle, from Auckland-based iLender, TradeMe is his best source of referrals. “I've invested a huge amount of time and effort [in TradeMe], and it is certainly paying off.” When asked how effective it is, he says: “It’s hard to give a percentage, but it's significant.”

Word of mouth referrals from customers is definitely one of the most effective forms of advertising, but it is the type of advertising that is earned, not bought. If you follow these tips, you should reap the rewards of your work.

However, it also makes good business sense to focus on other sources of business. As Kris Pedersen from Kris Pedersen Mortgages points out: “Existing customers referring on new business is definitely our largest source of business, but we also get quite a bit from a number of strategic relationships with have with accountants, solicitors and other property affiliated businesses.” It clearly balances your business risk to maintain other referral sources as well.


This article was first published in The Mortgage Magazine.