So, what does making customer promises have to do with the great recession? Well… let me tell you ……
From October 2007 to October 2008:
- GM’s stock hit a 60 year low
- Unemployment started to rise quickly, reaching 9% by June 2009
- Subprime mortgage industry was in free fall
For me, it was a scary time to work in the mortgage business. Why? Well, November 2008 was the tipping point in the mortgage business leading to the recession.
At the time, I was working for one of the largest banks in America. This bank happened to be the number one mortgage originator. Everyone I knew in the business, including me, was nervous about our jobs, our company, and the future of the industry.
Bank stocks began to fall, people were getting laid off, and mortgage originations hit rock bottom. I will never forget the website that was launched solely to report on failing mortgage companies. Every day, we would all check this infamous imploding mortgage companies website (yes this was real!) to see which mortgage company closed that day. More than 100,000 people from the mortgage industry were laid off in 2007 and 2008. More than 50 mortgage companies closed. And thousands of homeowners began to default.
Over the following few years, mortgage rates began to drop, and mortgage regulations increased at breakneck speed. Recently, I finally had an opportunity to watch the movie, “The Big Short”. Wow! That brought back the memories of those days and the fear of not knowing how these changes would impact the mortgage industry. So, what changed? What did this teach me all these years later?
The Race to Customer Service
Before the regulations, the mortgage business primarily competed on rate. So, customers could shop around to find the lowest rate and fees. Savvy customers with great credit scores and high loan amounts could save thousands of dollars by creating a price war between two or three mortgage companies, who would do almost anything for their business.
Unfortunately, the less savvy borrowers working with slimy mortgage companies often paid the price through higher interest rates and higher closing costs. (I am very lucky to not have worked for one of those slimy companies).
What felt like overnight, government regulations completely changed this business model, taking mortgage companies from price competitors to customer loyalty and customer experience competitors. Mortgage interest rates were leveled across the board, basically, every lender was within .125% or .25% of each other. There was little room for negotiation of your home mortgage interest rate.
Suddenly, it was a race to see who could deliver the BEST customer experience and how to create customer loyalty. Books like The Ultimate Question 2.0, Raving Fans, and Customer Mania were on every mortgage company CEO’s desk. It was an all-out customer craze complete with buttons, mousepads, flow charts, graphs, and lots and lots of customer service surveys through email, phone, and in-person efforts.
Millions of dollars were spent on the customer experience projects, and yet customers remained disappointed in the process and their experience. Companies with almost unlimited resources, money, talent, and technology struggled to provide a great experience when it mattered most. How is that possible?
When you make a promise, you are more likely to deliver.
During this time, there was a lot of great work on trying to deliver a great experience like, improving technology and reducing in manual processes. Companies started to focus more on training, communication, surveys, dashboards, and creating taglines like “We strive for 5” and “Make It Happen.”
However, the big miss was with team members and their individual commitment to the organization to deliver on the experience that was expected.
Bottom line, there was lack of ownership, not buy-in but, actual individual ownership (every position, every level) on delivering a great experience. I think that’s because we did not ask our team members to make a promise. This must be a promise to the customer and a promise to the organization – and in those exact words.
The words and language we use matters and sticks with our customers for a lifetime. Words evoke emotions. And emotions lead to actions.
There are few words more powerful than the word ‘promise’. Think back to when you were a child, when you wanted the truth or for someone to keep their word, what did you do? Pinky promise! The use of the word ‘promise’ builds a level of commitment between you and another person that you can’t have using another word.
I know what you’re thinking… but, Lauralee – we took the time and invested in a BRAND promise. Yes, there’s been a focus on a brand promise but, words we use matter. Who is a brand promise about? The BRAND – the COMPANY! Here is the biggest difference: Customer promise focuses on the customer, the client, the student, or whoever your organization serves.
If you want to increased customer loyalty, you must switch hats. You must walk in your customer’s shoes and think from the customer’s perspective. You must stop selling and start making promises that matter – and that you keep.
Why have customer promises and not “values” or “brand promise”?
Well, customer promises:
- Creates a service level commitment to the customer
- Helps tell your organization’s story by leading with your customer and NOT yourself (as the brand)
- Aligns entire team on how to deliver a positive experience and build a meaningful relationship with every customer
- Ensures a consistent customer experience every single time
In short, a brand promise is about you – the company. But customer promises, well those lead with the customer and speak their words. Customer promises are rooted in empathy and a focus on your customer’s emotions, experiences, and challenges.
Here are our promises to you and your organization:
So, what will your customer or client promises be in the year ahead? If you need help developing your organization’s customer promises, download the Customer Promises Playbook that teaches you how to develop and launch your own customer promises.