REQUIRED READING: The words ‘mortgage servicing’ and ‘customer service’ were, for too many years, rarely used together. In today's environment, however, that situation is changing quickly – especially in regard to welcoming new customers.
Servicers should pay special attention to how they introduce new customers to their company and brand. This is particularly important with certain customer segments, such as first-time home buyers and customers who obtained a mortgage through a bank with which they already had a relationship.
Consider the traditional welcome letter or package from a new servicer. In many cases, the welcome letter serves more as a legal document that is confusing and unwelcoming to customers. Servicers could use this initial opportunity to connect with the customer and include information on what to expect in the following communications from the new servicer, self-service solutions and answers to frequently asked questions.
By making the initial communications welcoming and easy to understand, servicers can potentially reduce call volumes from confused and frustrated customers while, at the same time, making the customer's first exposure to the servicer and its brand a positive experience.
Once introductions have been made, servicers need to be certain that all subsequent communications to customers have a clear and consistent message. Redundant correspondences should be identified and streamlined to avoid customer confusion. Missing or incomplete contact information, including hours of operation, must also be addressed to avoid a negative customer experience.
Servicers should establish an overarching governance process in which business areas are provided a checklist to reference when reviewing and approving customer correspondences. This checklist should provide control steps for ensuring proper spelling and grammar, checking for missing or erroneous contact information, providing hours of operation for customers to contact the servicer, and verifying the standard corporate branding is applied.
Servicers should also consider establishing a committee comprising marketing and customer-facing personnel that analyzes any new correspondences to make sure the information is easy to understand and the message is consistent with other communications.
Then there is the question of consumer complaints, which have historically been viewed as bad news – costly and inconvenient. However, if used strategically, complaint handling can provide an avenue for competitive differentiation.
Customers who speak up when they have a complaint provide a servicer the opportunity to apologize, turn possible vigilantes into advocates and transform a complaint into a customer success story.
Regulators of the mortgage servicing industry have begun to approach their oversight from a customer-experience perspective and view consumer complaints as a window into potentially larger issues in a servicer's operations.
The regulatory agency that has received the most attention and perhaps the most reach and power – when it comes to customer complaints – is the Consumer Financial Protection Bureau (CFPB). Although the CFPB began operations just last year, one of the agency's top priorities is to monitor the customer complaint-handling process.
One of the main parts of the CFPB's "Supervision and Examination Manual" focuses on common elements of an effective consumer compliance management system. Consumer complaint response is one of those elements, and it has the following objectives:
- record and categorize consumer complaints and inquiries, regardless of where submitted;
- promptly address and resolve complaints and inquiries, whether regarding the entity or its third-party service providers;
- appropriately escalate complaints that raise legal issues involving potential consumer harm from unfair treatment or discrimination, or other regulatory compliance issues;
- make adjustments to business practices, as appropriate, based on complaint data and individual cases;
- perform retrospective corrective action as a result of consumer complaints to correct the effects of the supervised entity's actions, when appropriate; and
- identify where weaknesses in the compliance management system exist, based on the nature or number of substantive complaints from consumers.
Mortgage servicing organizations that are looking to achieve a differentiated customer experience through effective complaint handling should incorporate the following considerations into their complaint-handling process:
Build a solid foundation of resources for complaint resolution. Servicers can start by educating their employees on complaint-handling policies and procedures, and creating a policy to satisfy unhappy customers quickly. They can also create a feedback loop for complaint follow-up and communicate the findings across the organization. Finally, they should begin to anticipate complaints and create effective channels to respond in a timely manner.
Develop a new complaint-handling culture in the organization. Successful companies reap the full benefits of effective complaint handling by making sure customers know their feedback is welcome. Servicers can accomplish this by maintaining a strong culture of welcoming complaints and requiring that all employees understand how and why complaints can be positives for the organization. In addition, servicers will need to remove obstacles that prevent customers from complaining and then thank their customers for lodging complaints.
Seize opportunities presented by customer complaints. Leading companies document all customer complaints and leverage feedback from multiple points of contact to identify dissatisfaction issues. By following this practice, servicers can transform customer complaints into process improvements by understanding the wants and needs of their customers, and by learning how to prevent future dissatisfaction.
Transform customer vigilantes into company advocates. Once they identify disgruntled customers, leading companies proactively connect with them to address their problems and win back their loyalty or, at a minimum, defuse the customer's negative opinions and potential actions. Leading companies also track and prioritize clusters of similar complaints because they could indicate a problem that could affect multiple customers, as well as the company, on a much larger scale.
By making the effort to understand the root cause of incidents involving vengeful or angry customers, a servicer can reduce or eliminate the problem that is causing the customer dissatisfaction and protect the company from future costly customer compensation and damage to its reputation.
Be empathetic to unhappy customers. To help customer-service representatives interact with customers appropriately – and with an awareness of customer feelings – servicers should study the most likely and common complaint issues and provide employees with training to help them understand what triggers dissatisfaction.
Servicers will also need to recognize when apologies or explanations about the cause of a problem are not sufficient to satisfy a complaining customer. Some circumstances may call for compensation.
Anticipate and prepare for new regulatory pressures. As regulations continue to evolve for the mortgage servicing industry, servicers should consider creating a single-team approach that increases transparency to external regulators and improves accountability within the organization.
Also, using a common workflow tool to receive, track, monitor and resolve complaints across all product lines will allow servicers to easily identify trends and switch focus as regulations become defined. Finally, creating a single resource for policies and procedures, and determining that it accurately reflects current operations across all communication channels with customers, will give servicers a common starting point when new regulations are issued.
As the mortgage industry enters a new era – one in which the customers carry significantly more weight in developing a business approach – mortgage servicers will need to turn their focus to the customer experience. Servicers will need to examine, improve and monitor every aspect of their operation as it relates to the customer.
Across the organization, servicing companies must evaluate the people, processes and technology necessary for a superior customer experience. This starts with delivering a welcoming message to the customer and continuing to communicate that message consistently throughout the life of the loan.
It also means proactively addressing and resolving customer problems when they arise. As the industry continues to work through the issues that have led to recent negative customer experiences, servicers can utilize the associated customer complaints as a starting point to address and improve the customer experience. These complaints can also provide unique insight into where process improvements can be made in servicers' operations, potentially resulting in customer satisfaction increases and customer-friendly cost reductions.
Servicers that can deliver a better customer experience during this difficult time for the industry, particularly through utilizing customer complaints as a competitive advantage, may be poised to attract new business when the housing market recovers. Leading companies in other industries have demonstrated how it is possible to build profitable business models while also significantly exceeding customers' expectations. It is time for mortgage servicers to embrace this approach.
Roberto Hernandez (roberto.g.hernandez@us.pwc.com) is senior manager and Alfred Kang (alfred.a.kang@us.pwc.com) is senior associate in the consumer finance practice of PricewaterhouseCoopers.
