With all mortgage players effectively using technology to improve the customer experience, lenders need to develop an emotional connection to drive growth.
Among home-loan customers, just 12 percent of those who are highly satisfied
would be willing to pay higher rates and fees on future mortgages.
But the share who would pay more soars to 68 percent among those mortgage customers who are considered to be emotionally connected.
Those findings were detailed in
Making the Emotional Connection: How Financial Companies Are Harnessing Customer Emotions to Generate Growth from Motista.
The San Francisco-based firm
said it derived its findings from data covering 20,000 mortgage lending customers.
“Rather than being a science that is sterile and statistical, the predictive analytics based on customer emotions reveal the best strategies for deep human connection that drives customer value, based on an understanding of often-unspoken social aspirations and emotional needs,” Motista said.
The report explained that emotional connections are created when
customers link their deepest motivations, values and aspirations to a brand. This might include lenders that help them achieve social acceptance, attain freedom and independence, or simplify life in a complex world.
But even though such emotional needs are the strongest drivers of customer value, they not addressed in typical market and insight research.
The report indicated that customer engagement with mortgage lenders is typically low. So making an emotional connection can make
an especially big difference.
Motista highlighted Quicken Loans Inc. as a brand that customers feel a high emotional connection.
“Emotionally connected mortgage customers are primed to be long-term borrowers and maximize lifetime value by using the same lender again and recommending it repeatedly,” the report said.
According to Motista, emotionally engaged customers are seven times more likely than highly satisfied customers to choose the same lender again when financing a home purchase or refinancing an existing mortgage. In addition, they are six times more likely to consider a higher rate and higher fees on a future transaction, and twice as likely to recommend the lender to a friend or family member.
Motista, which
builds builds predictive models for its clients, noted that emotional connections are not reduced as a result of holding an adjustable-rate mortgage or interest-only loan even though those products can be more lucrative for lenders.
But how a customer completes the application process does affect emotional connection. For instance, while applying directly to a lender through a website or at an office leads to a higher emotional connection, applying through an independent mortgage broker lowers the connection.
Also, despite the overall lack of trust with financial institutions since the financial crisis — with just half of customers considering their financial institutions trustworthy — 90 percent of emotionally connected customers consider their lenders trustworthy.
