Equity National, East Providence, R.I.

Written with Jim O’Donnell, President, Equity National

By maintaining a high level of service over five years and increasing customer loyalty and satisfaction scores from 3.1 to 4.8, a 55% improvement, Equity set themselves apart from the competition during the most recent recession.

Quick Read

Equity National is a leading title settlement company that managed to outperform the hard hit mortgage banking industry between 2005 and 2010. Their array of services includes appraisals, title searches and settlement functions for residential loan transactions. These complex services involve meeting the needs of financial institutions including the secondary market, loan officers, realtors, and borrowers.

Equity National deliberately invested in their business during the rise of the real estate bubble in the early 2000’s. In 2002, Equity National’s president Jim O’Donnell, Esq. launched their Six Sigma initiative. While industry research regularly published 25% defect rates for loan settlement accuracy, Jim felt they could do far better than the industry and perceived an opportunity.

Over the next three years, Equity National’s Six Sigma initiatives reduced defect rates from 25% to less than 10%, but hit a plateau between 8% and 10%. During this time they were conducting semi-annual customer surveys, but Jim identified that the results only gave a snapshot in time and were too late to understand recent customer experiences or monitor performance. In 2005, they implemented real-time surveying to obtain feedback within 24 hours of the closing event.

Initially, Equity averaged 3.1 out of 5 for customer satisfaction and internal Six Sigma measurements showed an 8% to 10% defect rate. Over the next five years the defect rate dropped to under 6% while customer satisfaction increased to 4.8, a 55% improvement over the original 3.1 score!

Jim and his managers used the information gathered from surveys to pinpoint improvement areas with the highest impact on customer satisfaction. Team goals were set and employee bonuses tied to customer feedback results with some employees receiving as much as 10% additional compensation for positive results.

The continuous improvement within the operations and customer satisfaction drove growth in three of the last five years and outperformed the industry in each of the past 5 years.

The Challenge

Jim faced a problem and opportunity in 2005 when customers began demanding previously unheard of cycle time and pricing requirements. The industry continued to be inefficient and ineffective at settling loans on time and accurately. By 2005 Equity had embraced the Six Sigma quality control philosophy beating the industry’s published 25% defect rates with averages between 8% and 10%, but ultimately hit a plateau. To distance themselves from competitors and set a higher bar for the industry, Jim knew he needed to shoot for zero defects. The mortgage banking industry was cyclical and a correction would hit at some point in the near future, and they needed to position themselves to capture market share when competitors were caught in a downturn.

“Still, I had a goal of growing sales during a recession,” Jim recalled. “We needed to outperform all competitors. All of our people needed to be involved, front line workers had to be empowered to make decisions, and we needed to reduce settlement cycle time while ensuring a hassle free experience.”

The Campaign

Jim noticed Six Sigma quality control systems highlighted candidates for internal process improvement, but they weren’t sure they were working on the most impactful areas affecting a hassle free and exceptional customer experience.

Equity decided to work with Survey Advantage, a full service customer feedback service provider, to design a process to capture loan officer and borrower feedback in a timely manner. By capturing feedback from both parties they are in a better position to improve in the areas that are most important to the customer. Surveying both parties within 24 hours of the loan closing gives real-time feedback and yields over 30% response rates on a continuous basis. Asking 5 questions is all it takes to keep customers engaged and receive meaningful feedback. An instant email is sent to both Equity’s Client Relations team and management when a dissatisfied loan officer or borrower submits a survey triggering immediate follow-up with the customer. Reacting and responding quickly to problems has proven to turn irate customers into advocates and highlights redesign or improvement candidates in a timely manner. The on-line dashboard is available anytime with the ability to filter by date range, team, or process helping monitor performance to quickly identify processes slipping out of tune. All information is at their fingertips.

The Results

Equity teams compare internally driven reports with incoming customer feedback reports to prioritize goals to work on the right improvements. As an example, Jim shared that teams set a “ready to close” cycle time of 5 days meaning that Equity would be ready to settle a loan within 5 days of receiving the order. At one point their “ready to close” cycle time was averaging over 8 days or 63% later than target. Six Sigma reports highlighted this as the highest priority need, yet after looking at customer feedback they determined that loans rarely closed in less than 30 days due to the bank’s loan approval process, a process beyond Equity’s control. Based on customer feedback the team focused on a more important issue, creating cross-functional client service teams who could answer any question their customer contacts had relating to their account or a loan. The result was that a customer contact could call anyone on the team and get an answer immediately. While Six Sigma reports are great at identifying improvement candidates, customer feedback reports pinpoint those areas that are most important to the customer.

Jim shared another benefit of real-time feedback, reacting to customer complaints during major events. Equity has been hit with two major events over the past three years that could have had major negative consequences. First, interest rates have fluctuated twice over the past three years. When interest rates drop, volume skyrockets and it becomes challenging to keep up with demand. The other event was Equity moving from an off-the-shelf production software system to an internally developed production system. Just imagine the effort in training and retraining personnel while serving customers. During these stressful times the newly formed client service teams maintained customer satisfaction and loyalty by leveraging the relationships they had established. It wasn’t easy, but by partnering with the customer they met deadlines and maintained revenue growth.

By maintaining a high level of service over five years and increasing customer loyalty and satisfaction scores from 3.1 to 4.8, a 55% improvement, Equity set themselves apart from the competition during the most recent recession.

Lessons Learned

Jim explains “By not surveying real-time, a business is delayed in their understanding of performance leaving them oblivious to the customer experience, good or bad. Unless a business sells on price alone, they need to monitor customer perception and maintain a solid reputation. Mortgage banking businesses should seriously consider taking the plunge and survey the right way, real-time. We believe we are in the customer service business and just happen to focus in the mortgage banking industry. It is a different mindset.”

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