Private lenders can master the art of earning repeat business by leveraging customer data.

In a world of infinite choices at your customers’ fingertips, capturing their repeat business might seem far-fetched. You’ll be surprised to know you already have what it takes to make this happen…

Data.

In today’s real estate industry, private loans are sometimes perceived as commodities rather than as relationship-based products. In that environment, leveraging data you already have to earn repeat customers is more valuable than ever. You—and only you—know your customers best. You know what they need, what they loathe, and what pain points need to be solved.

Simply put, your data can be the compass that guides (and even course-corrects, if needed) your customer experience. As a customer yourself, it should be no secret to you that the customer experience is critical when determining whether you will continue giving your business to someone.

So, let’s look at five ways you can use your data to improve the customer experience and earn repeat business.

Understand the True Meaning of CX.

On the surface, “customer experience” (CX) might easily be confused with “customer service” (CS). Be warned—they are very different things.

In the simplest terms, CX is a holistic experience, while customer service is a specific interaction.

CX is the result of every interaction a customer has with your business. In the private lending space, there is a long journey of touchpoints that impact the total experience. When a customer first reaches out, how is their experience? Is your website user-friendly? If a customer calls your company, does someone who is professional and helpful greet them, or do they go to voicemail? Does your company follow through and communicate clearly throughout the loan process?

From a customer’s initial contact, through origination, funding, and beyond, CX is everything that impacts your customer’s perception and their decision to keep coming back—or not. Keep in mind that the customer experience journey also includes any interactions your customer has with servicers or third-party providers that work on your behalf until the loan is paid off.

CS, on the other hand, is associated with a specific event or issue that prompts a customer to reach out for help or support during their journey. CX is associated with the ongoing relationship. CS drives CX, and both are vital to the long-term success of your business.

Embrace the Power of 5%.

In today’s market, real estate investors have more financing options than ever before, so you need to make a meaningful impression with customers if you want to retain their business. According to an analysis in Harvard Business Review, increasing customer retention rates by 5% increases profits by 25%-95%. Let that sink in for a minute. This means when a company is successful at not only acquiring new customers but also satisfying existing customers, the ROI is powerful. The numbers speak for themselves.

Thinking about your business as a relationship-driven operation—one that prioritizes the customer experience—will deliver business results that impact the bottom line. But if you’re thinking about your business only in a transactional context, focusing on metrics like cost per loan and number of units funded, you can expect that mindset to translate directly to your customers’ experience. Customers will naturally feel like a number. The next time they need a loan they can simply turn elsewhere. If you focus on customers as customers, and not transactions, the possibility for having a relationship exists.

The American Express Customer Service Barometer found that 86% of customers are willing to pay more for a better experience. So, embrace and focus your energy on the power of 5%. Don’t let a negative experience with you be the reason your customer pays a premium elsewhere. Look at service not as a cost, but as an opportunity to earn your customers’ business over and over again.

Identify the Basics of Measuring.

How can you measure CX in a meaningful way? Here are some of the most common scores to become familiar with:

Net Promoter Score (NPS). Measures overall satisfaction and long-term loyalty and determines which customers are brand ambassadors versus which customers could impede growth.

Customer Satisfaction Score (CSAT). Measures the short-term happiness of customers. It’s a versatile metric that allows you to ask a variety of questions about improving specific areas, processes, interactions, or touchpoints.

Customer Effort Score (CES). Measures how much effort a customer must exert to get an issue resolved. Reducing the amount of effort a customer has to make to get a problem solved is a higher indicator of customer loyalty than delight.

Research conducted by Bain & Company showed that 80% of participating companies believed their customer experience was great. Yet only 8% of customers agreed with that statement. This is a classic case that demonstrates how companies are quick to pat themselves on the back without surveying actual customers.

Regardless of which methodology you use, making it a priority to measure your customers’ experience is a giant step in the right direction.

Build Your Own CX Strategy.

To improve CX, you need to start with a strategy. To create a strategy, you need customer feedback.

A CX strategy, as defined by Forrester, is “a plan that guides the activities and resource allocation required to deliver experiences that meet or exceed customer expectations in accordance with the goals of the organization.”

To understand customer expectations, start collecting and analyzing customer feedback. According to Hotjar, customer feedback is the No. 1 driver of successful CX strategies. The best methods for understanding individual customers is through “old school” customer surveys and calls. Use whatever intel is available to inform your plan, including:

Know your customers. Segment unique personas from your customer data set, understand who they are and what makes them tick, and design the optimal customer experiences for each.

Discover why you lose customers. A gap analysis between internal capabilities and customer expectations allows you to identify (and resolve) why loans fall out or you lose repeat business.

Improve the loan process experience. From application to funding and beyond, use the data to identify and remediate competency, data, and process gaps.

Don’t Reinvent the Wheel.

You can learn from the companies that have successfully embarked on the CX journey. Pioneers in private lender customer experience have much insight to offer. As you prepare to put CX at the forefront of your strategic goals, here’s an overview of how to become a CX champion:

Start small. Start with “old school” calls and surveys. Consider dedicating one employee to resolving customer issues. With the right plan in place, resourcefulness will do the job perfectly.

NPS insight. Start measuring NPS after a loan closes. Using the feedback you gather, you can glean whether a lot of customer pain points occur after funding, often related to servicing issues or construction draws. With this insight, you will be able to prioritize the major issue areas and begin making improvements. With improvements in place, watch and track whether they result in an improved NPS score—and an increase in repeat business.

Keep going. Although positive metrics can be exciting, don’t let them distract you from the progress that needs to be made. As you drill into the scores, identify variances across sales channel type, level of real estate experience, and prior experience with your company.

Tailor the journey. Variances can lead to further questions. Consider surveying customers at different points in their journey. Then track NPS for those groups and use the differences to inform customer segments. And, although NPS is a measure of long-term loyalty, it doesn’t tell the whole story. Be sure to include CSAT questions, which are more versatile and allow you to identify specific areas, processes, and touchpoints in the customer journey that have room for improvement.

Shift your focus. As your CX function evolves, don’t be afraid (or disheartened) to shift your focus. New information will prompt you to pivot, but that’s the beauty of digging in. For example, your focus may shift to (1) improving your understanding of the unique customer journey across segments and/or (2) adapting your process to meet the delta in customer expectations.

It’s easy to get mired in the data (especially in a quant-heavy space like lending), so be sure to separate anecdotes from qualitative insights and home in on the information that is actionable and will reduce friction for the customer.

At the end of the day, data may only be one piece of the CX jigsaw puzzle—but it’s a big, critical piece. To truly achieve a superior CX strategy and reap the benefits of relationship-based repeat business requires a customer-centric culture, alignment with the company’s business goals, and a knack for always seeking ways to improve. With the right focus on CX, your company is on its way to new heights.