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Ho Ho Ho and High Trust Relationships

As 2013 winds down, and we prepare to venture into a new year, it’s a good time to reflect on the past twelve months and consider what resolutions you’ll make for the coming year. I haven’t yet settled on any resolutions myself, but I have had cause over the past year to remember a resolution I made over 15 years ago, when I first started in the mortgage industry. That resolution was to commit myself to offering a high trust relationship to each of my clients.

Every business relationship falls somewhere between trust-value and price-value; that is, for any transaction, the client or customer demands, and the seller or broker provides, value through price or value through trust—and one often comes at the expense of the other. To compete on price requires a business model based on efficiency, volume, and commoditizing the clientele. Trust-based business models focus on honesty, transparency, and integrity to build fewer, but higher-quality, relationships with clients.

I committed several years ago to nurture only high-trust relationships with my clients in the mortgage industry. This came, naturally, at the expense of competing on price. As with all high-trust businesses, I could rarely compete with big banks or retailers on the mortgage products I offered. Across industries, trust-value businesses typically compete at a 10-15% price disadvantage versus price-value businesses. For those clients or customers who put a premium on trust, that price discrepancy is well worth the added value.

Compare, for example, Ace Hardware and Home Depot. Ace Hardware locations are all franchises and have neither the volume nor efficiency of Home Depot. They cannot operate on Home Depot’s razor-thin margins. Instead, Ace owners try to maintain well-trained, knowledgeable workforces that are generally friendlier, more accessible, and individually spend more time with each customer versus Home Depot’s workforce. Though Ace’s prices are generally 10-15% higher than Home Depot’s, they stay in business because enough people value the high-trust sales environment enough to pay higher prices.

I faced this dilemma over the past year, as historically low rates had both new and old clients coming to Garvens Mortgage Group in droves. Although I brought on new employees and increased capacity to address this increased demand, we simply could not expand quickly enough to satiate this demand without sacrificing the quality of the high-trust relationships we strive to form with every client. And so we made a conscious decision to let the big banks and retail lenders compete on volume and price, knowing the highest valued commodity we could offer and successfully compete on is trust.

Often, offering a client our trust means that’s the only thing we can offer them; often, a client’s financial situation prohibits them from comfortably affording the very loan product they came to us to acquire. Whereas most price-value companies would sell them that loan product by any means necessary, trust-value companies will only sell them a loan product if it’s in the client’s best interest.

When a client comes to me or to Garvens Mortgage Group, we spend a long time talking about finances before we even begin considering mortgage products. We don’t focus on the product, but on what that product means. Price-value companies might advertise monthly savings for a client. We focus instead on what those savings mean for the client. With us, it’s never about a lower rate or $500 a month; it’s about paying off debt, saving for college, or braces for the kids. It’s not about the money but what that money means—and often what a given amount of money means is worth far more than the face value of the money itself.

So as we conclude 2013, it’s time to start thinking about your resolutions for 2014. Whatever they are, make them meaningful. Make them things you’ve dreamed about, and make sure you pursue them relentlessly, even if they seem impossible. And once you’ve settled on them, there are a few simple things you can do to ensure success. First, write down your goals. Organize them, prioritize them, and consider the best way to achieve them. Then, find someone—your spouse, a friend, a relative, someone—to hold you accountable. And finally, establish suspense dates and milestones for your resolutions. When you reach these milestones, don’t hesitate to relax a little and celebrate these small successes. This will help make the difficult resolutions more tolerable throughout the year. 2015 is still a year away, but it will be here before you know it.

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About Jay Garvens

Standing at the intersection of our local real estate market and the nationwide financial industry, Jay Garvens gives you the complete picture of every story affecting today's mortgage market! From personal finances to the political decisions moving markets, tune in for a weekend dose of straight talk from Colorado's most candid mortgage industry commentator! Honest, unbiased, and always unpredictable, Jay explores every facet of today's mortgage industry with an approach that's refreshingly blunt and enormously entertaining!

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