Amid a declining housing market and volatile economy, mortgage and banking marketers may find themselves in a difficult position.
While the future may seem bleak and uncertain, marketers have a unique opportunity to make a lasting impact on existing and new customers if they take advantage of this slowed pace to optimize the customer experience of their marketing efforts in their respective markets.
Crashing into opportunity
As 2022 comes to an end, predictions for mortgage and banking trends have been nothing short of ominous. According to Freddie Mac, 30-year fixed mortgage interest rates are expected to drop from an average of 6.8% in late 2022 to 6.25 in Q4 2023. While this shift heads in the direction lenders would like to see, these rates remain striking considering that 2021 mortgage rates were approximately 3%. According to IntraFi’s quarterly survey, bank executives revealed that federal funding rates won’t peak until the first half of 2023 in response to worsening inflation. A housing market crash, as well as economic depression, remain real possibilities for 2023.
Declining market conditions in the mortgage and banking verticals may leave marketers feeling stumped. The reduced engagement with current audiences poses a critical question for marketers — is there really a lack of engagement from consumers, or should marketers adjust who they are targeting when, and with what message?
Mortgage rates at 20-year highs and extreme surges in cost of living offer an oversimplified explanation for this dip in engagement. Fannie Mae reports that over the last eight years, one-third of recent homebuyers obtained only one mortgage quote, even though getting multiple quotes is widely agreed to be a sensible way to save money in a struggling housing market. Imagine the potential outcome of engaging meaningfully with this specific subset of consumers at the right time in their shopping journey.
Perhaps fewer shoppers are seeking mortgage and banking products and services. It is understandable why Americans might be hesitant to make changes in their mortgage or banking plans, so marketers could take this time to refine their focus on enhancing the customer experience. Lenders can do this by addressing the concerns of consumers in their outreach, providing excellent customer service that is convenient and engaging, and generally going the extra mile to ensure services are accessible and digitally integrated, such as mobile banking.
Smarter CX with data
Mortgage marketers can start their 2023 off strong by evaluating the behavioral data of homebuyers who are in-market, and ensuring they are communicating with the customers with the strongest appetite for information at the right time with the right message. With many consumers looking to get their ducks in a row financially during economic hardship, mortgage and banking marketers can get their houses in order by sourcing accurate and updated data on their current and former customers, as well as getting the right leads on prospective customers.
Good data starts with developing a holistic perspective on customers and collecting insights that point marketers to the right audience at the right time. Understanding what else the customer is interested in, such as their purchasing habits, lifestyle, and patterns of Internet use, can inform timing and context in which marketers can best reach customers at various stages of the purchasing decision process. The market signals you create can be taken to a new level when you couple your insights with these identity attributes.
Shifting gears and reflecting reality
Mortgage and banking marketers should also be shifting what they are marketing. Potential customers are very likely to be seeking plans that would help them save and be more financially strategic in response to the conditions they face. Marketers must recognize that the solutions and services they offer should address consumers’ pain points.
Marketers can also focus their attention on timing. If marketers are finding the right windows for when these small groups are seeking services, the silver lining is the specificity and precision of data that these seemingly limited groups can provide. While there is never a bad time to address pain points faced by your customer base, 2023 marks a critical point to demonstrate that your services and products aim to solve problems affecting people right now.
For example, traditional refinancing might be unattractive, because consumers are more likely to seek solutions that ensure they have money right now, and not in ten years. They need to put food on the table, and a roof over their head today. Perhaps they’re planning for a family or spending a significant amount of money caring for young children. Staying on top of bills today is at the forefront of many individuals’ minds, so long-term solutions are not going to attract many new customers in the current economy.
It is strongly advised that marketers do what they can now to protect their businesses for the current and future environments to soften the blow of a collapsing mortgage market and wilting economy. Marketers face shrinking budgets too, due to this decline of shoppers. With smaller budgets, marketers can skip the pricey, extravagant campaigns and instead double down on the people they know are in the market and communicate with them about the products they are looking for.
Don’t forget to read the room
Marketers may believe that data, context, and timing are the essential features of successful outreach, but they should also enrich this information’s usefulness by doing their homework to fully understand the customer journey from start to finish. Furthermore, customers are much more likely to engage with the marketing messages that are delivered to them if they feel like you have their back.
It is no secret that everyone on both sides of the equation is a consumer, too. The instability in the economy, job woes, and sticker shock are problems faced by nearly all Americans. If marketers can position their approach to reach the right people at the right time, that provides a powerful way to differentiate your company as the one to show understanding of people’s circumstances.
Research consistently suggests that a key demographic that marketers should focus on is age. The way you effectively engage a first-time Gen Z or Millennial homeowner should be different from how you approach a Baby Boomer.
Baby Boomers are motivated by “personal freedom,” while Millennials are motivated by “work-life balance,” and Gen Z is truly a digital-first population. These generations will be attracted to different attributes of mortgage and loan products, have different shopping behaviors, and it is important to remember that these generations are in dramatically different financial positions. Millennials have significantly more student loan debt, lower credit scores, and other risk factors that will affect their success as borrowers, unlike their older counterparts from previous generations, and Generation Z are almost five times more likely to get their financial advice from social media than people aged 41 or over.
When marketers leverage the information they have with empathy and sensitivity specific to their potential customers, their businesses have a better chance of reaping the many benefits of relationship-based marketing. It is impossible for marketers to form personal connections with every single person they are marketing to, but it is possible to build relevance and trust with potential customers using a more personalized approach.
Adding value to existing relationships
When there are fewer active shoppers and resources available to expand the pool, it is extremely important to improve existing relationships and position your outreach to continue adding value to consumers.
This might not even require you to collect new data, per se. It could be as simple as merging data to create a more personalized profile. The better you know your customers, through identity resolution and behavioral data insights, the greater the opportunities for marketers to improve those relationships and ultimately the customer experience. Customers will be more loyal to a company or brand that demonstrates that they know their consumers.
Marketers that implement an identity resolution solution have a greater advantage with good data, timing, and strategy. The focus on first-party data enrichment with heightened privacy and security compliance is especially prevalent in considered purchase industries like mortgage lending, where data-driven, personalized marketing plays a critical role in customer acquisition and retention.
Being the company that understands whether a consumer they are reaching out to has recently made an online account with a lender, or has done some research on refinancing their mortgage can save time, money, and position you as someone your customers can trust.
Natalie Mullen is the market leader of mortgage and banking at Verisk Marketing Solutions.