Amidst today’s dark clouds, an opportunity may be opening for financial institutions and homeowners looking to refinance mortgages and access cash.
The Federal Reserve Bank has cut interest rates to near rock bottom, and mortgage rates have followed suit. The COVID-19 pandemic has put many households under financial stress and in search of smart financing solutions. And home values remain high, with inventories still tight. It all adds up to a perfect storm of circumstances that could lead to a mortgage refinance (and cash-out refi) boom.
To help you take advantage of this trend — while increasing customer and member engagement and retention — we’ve gathered six refinance marketing strategies to implement now.
Understand the Audience for Refinance Marketing
Before we dig into specific strategies, it’s important to understand where your customers are coming from. Financial institution customers and members today have more options and more ways to gather information than ever before — from digital to direct mail to in-branch communication channels. And they’ve come to expect a seamless user experience from nearly every industry, including banking. More on these points later, but suffice to say that any refinance marketing campaign must accommodate those expectations.
In addition, the refi borrower audience differs from first-time homebuyers. In general, refi prospects can be more challenging to engage and convert. They require less handholding during the mortgage application process and are more likely to shop around for competitive interest rates than first-time homebuyers.
For financial institutions, this presents both a challenge and an opportunity to target refinance prospects by helping them identify a need — and then keeping them engaged throughout the sales cycle. The six strategies below can help you take advantage of the times.
1. Identify your optimal audience.
Analyze and segment your data to differentiate your refi prospects from people more likely to be simply homebuyers. This will make it easier to deliver more relevant home refinance marketing copy to your target audience and boost the chances that they’ll respond to your offers. You can then send pre-approved, invitation to apply or offer of credit refinance messages.
Further refine your refi marketing list, and potentially create sub-segments for versioning your communications, by establishing relevant parameters. For instance, you might define a refi prospect segment based on a minimum home value and credit score, and a maximum mortgage balance. After all, you want to target people who are most likely to qualify for a refinance.
You might also look at how much a person’s interest rate or monthly payment might decrease with a refinance, how much they might be eligible to borrow with a cash-out refi and how payments on a cash-out refi might compare to borrowing the same amount on a credit card.
2. Personalize communications.
With the information you’ve compiled during segmentation, you’ve also given yourself a tool to create highly personalized refinance marketing letters.
Imagine: You can now send a direct mail piece that shows each individual a customized estimate of what their new mortgage payment would be, based on their home value, their mortgage balance and a specific refi interest rate. Seeing monthly and/or over-time savings can be a strong incentive for a person to follow through with a refi application.
Similarly, you can calculate estimated equity to show individuals how much they might be eligible to cash out and what their new monthly payment would be. And you can show them how this compares to their monthly payment putting that same amount of money on a credit card with an average interest rate.
3. Invest in content marketing.
Beyond your refinance marketing letters and similar communications, you can provide value-added content to engage and retain refinance prospects. In this way, you deliver helpful information, while also building brand awareness and positioning your financial institution as a reliable resource regardless of where prospects are in the sales cycle.
In fact, the right financial content can lead a consumer to identify a need they may not have realized could be solved with a mortgage refinance. For instance, if someone needs a new roof, is planning a remodel or wants to consolidate debt, they may think first of a credit card or a home equity line of credit rather than a cash-out refi. You can deliver content that quietly (that is, not in a sales-focused way) promotes a refi as a preferred option.
Or, if their budget is tight and they’re looking for a way to free up funds for, say, retirement or education savings, then a refinance could be a way for them to do that by reducing their monthly mortgage payment. Other angles you can take in home refinance marketing copy include shifting to a shorter loan period to pay off the mortgage by a milestone date or gaining budget stability by converting an ARM to a fixed rate.
You can also nurture refinance prospects by sharing helpful, informative content about refinancing itself. That could include tips to improve a credit score for a better interest rate, understanding factors to help determine if a refi makes sense, even home maintenance checklists that could improve a home’s value. Even if a prospect isn’t yet ready to refinance, they’ll remember your brand when they’re ready to make a move.
4. Leverage email marketing.
To maximize your refinance marketing campaigns, take advantage of your email lists. Email remains one of the most cost-effective and proven methods to reach the right audience with relevant messaging and strong calls to action.
It’s also easier than ever to add increasingly personalized details to your emails, which can lead to higher engagement. For instance, you can use dynamic content modules to emphasize different information for different segments or individuals. Current technology also lets you include interactive tools — such as payment calculators or interest rate finders — within the email, without requiring people to click to your website. That results in a more efficient user experience.
You can also include the same type of hyper-personalized information in your emails that you put in your direct mail. That includes an individual’s home value, mortgage balance and estimated monthly refi payments.
Even without this level of personalization, you can still use email to provide regular interest rate updates or conduct trickle campaigns that help educate customers and members about mortgage refinancing. And, you can use the responses to your email campaigns to help further screen and refine your refi marketing campaign audience.
5. Maximize every one of your marketing channels.
As we noted earlier (and as every marketer already knows), consumers are increasingly turning to multiple channels to search for information. At the same time, some people have preferred channels where they focus their time and attention. To help ensure you don’t miss any refi prospects and to help them both engage with your brand and find the information they need, make sure to use every marketing channel that’s pertinent to your brand and your audience.
Because of channel proliferation, it’s more essential than ever to provide a seamless customer experience across all channels and remove friction points. So keep your messaging consistent and make sure people can easily work with you across channels.
For instance, if someone starts a refi application on their smartphone, then closes it without finishing, they should be able to go to their laptop later and start up where they left off, rather than starting over. You also need to make sure that all of your digital elements render properly whether someone views the piece or page on a smartphone, tablet, laptop or desktop computer.
6. Try retargeting ads.
Retargeting can be a sound tactic to lure back people who have previously visited your website without converting. Since it costs less to convert an existing customer or member (like a current mortgage holder who may be interested in refinancing) than it does to acquire a new one, retargeting can be a cost-effective way to re-engage prospects and keep your brand top-of-mind.
CRM retargeting takes this tactic a step further by using your offline data (like a physical mailing address) to identify refi marketing prospects. These prospects are then delivered personalized online ads, regardless of whether they’ve been to your website or visited your local branch. To boost engagement and increase leads, for example, a refi marketing campaign idea might be to use CRM retargeting to deliver invitation-to-apply web ads to a select audience.
Refinance Marketing Strategies Keep You Ahead of the Competition
Interest rates and the refinance market will likely continue to fluctuate. However, the financial institutions poised to stay ahead of the competition and win refi business will be those who can effectively leverage data, content and a broad array of marketing channels to deliver engaging, relevant information to the right audience at the right time through the right channels.
Could your refi marketing campaigns use an extra boost? We can help. CCG’s financial marketing experts have four decades of experience helping our clients build, maintain and grow profitable customer relationships. Our financial marketing solutions include customer data, analytics and research, as well as value-added financial content development and digital services. Request a free consultation or call us at 303.986.3000 today.