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Do you compete with any "big boy" lenders? Have you had your quotes undercut by a large bank? Or is there someone in your marketplace or niche that lowers rates just the get the loan and keep it away from you? If so, this article will help. I want to show you a couple ways to take on the Goliaths of the mortgage world. And to do so I am going to get assistance from Mr. Goliath himself, Sam Walton, the founder of Wal-Mart. Actually Sam passed away a few years ago, but he did write an autobiography in which he tells us exactly how small merchants can battle and compete with Wal-Mart. And that advice is just as good for small mortgage companies to battle with our monsters.
Here is the advice Sam gave to merchants to compete with Wal-Mart, with my translation to mortgage in parenthesis: "Unless small merchants (small mortgage companies) are already doing a great job, they’ll probably have to rethink their merchandising and advertising and promotional programs (mortgage marketing and loan programs) once a discounter (bank) arrives on the scene (lowers rates). They need to avoid coming at us head-on (do not compete on price), and do their own thing better than we do ours (give better service). It doesn’t make any sense to try to underprice Wal-Mart (the bank) on something like toothpaste (origination fee). That’s not what the customer is looking to a small store (small mortgage company) for anyway.
Most independents are better off, I think, doing what I prided myself on doing for so many years as a storekeeper: getting out on the floor and meeting every one of the customers (stay in touch with past clie
nts and prospects). Let them know how much you appreciate them, and ring that cash register yourself (personalized service). That little personal touch is so important for an independent merchant (small mortgage company) because no matter how hard Wal-Mart (the bank) tries to duplicate it - and we try awfully hard - we really can’t do it. I think in the case of variety stores (mortgage companies that do all types of loans for anyone), they have to completely reposition themselves, something like the way Don Soderquist did when he was president of Ben Franklin. He saw that there just wasn’t any future in competing with Wal-Mart and Kmart (big banks) so he started converting a lot of their variety stores into craft stores (niche markets). They offered a much bigger assortment of craft merchandise than any Wal-Mart could, and they held classes in things like pottery and flower arranging (seminars for first-time homebuyers and financial planning seminars), services we could never think of providing. It worked. They stayed in business in the small towns and have become quite successful with many of those stores.
I don’t care how many Wal-Marts come to town, there are always niches that we can’t reach- not that we don’t try." Sam’s advice was taken from the book Sam Walton Made In America My Story, by Same Walton and John Huey. I am sure if you interview any bank president they would give us the same advice on how to compete with them. Do not do it on their terms. Niche yourself. Personal Service. Appreciate those that give you business. Pretty simple when you think about it. Happy Originating!
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