Finding new borrowers can be time-consuming and expensive. A general rule of thumb is that the costs of wooing new customers are six to seven times more than the costs of retaining existing ones, according to social marketing firm Flowtown.

4 Steps to Retain Borrowers

In today’s competitive lending market, you risk losing borrowers to more assertive lenders who promise lower interest rates, higher credit lines and faster closing dates. High customer turnover also can make you look bad to senior bank executives. So, protect your portfolio by taking these four easy steps:

1. Approach borrowers first

Don’t wait for customers to ask you about refinancing options or more borrowing opportunities. Interest rates are at all-time lows. And there’s ample credit supply for customers with strong credit scores. If they haven’t done so already, proactive borrowers are likely to seek greener pastures.

Don’t let a competitor beat you to the punch. Review your customers’ financial statements. Look for those with high growth, strong credit and high interest rates. These are your best prospects for refinancing or add-ons. The borrower might not even bother looking into what your competitors are offering — if you contact them first, maintain a long-term relationship and make a fair offer.

2. Be approachable and responsive

Keep in touch with your customers regularly. Visit them. Take them out to lunch. Ask for a plant tour. Above all, return their calls and process paperwork promptly. Among the top frustrations borrowers experience when refinancing or applying for credit line increases is the excessive time it takes for lenders to process the paperwork.

One borrower switched banks because the application with its existing lender was delayed for a month over a missing 2011 tax return. A simple phone call could have remedied the omission and possibly retained the customer. Instead, the application sat in a junior lender’s inbox — and another bank got the borrower’s business.

Seek honest feedback from your customers. Be sure to talk to all the decision makers in the business. Sometimes the CFO will be your best contact rather than the owner. Survey what they like and dislike about your bank.

3. Become a referral source

Sometimes it’s not what you know but whom you know that counts. The best way for any professional services provider to beget customer loyalty is to become a referral source for value-added services. Strive to be the go-to person in your business community. Encourage borrowers to come to you for legal, accounting or even advertising referrals. Also forward borrowers relevant trade journal articles or e-mails.

Networking evolves lenders from pesky outsiders to members of the customer’s “team.” This keeps you in the loop when they face key changes and makes you irreplaceable. Plus, happy, loyal borrowers are more likely to return the favor and refer business back to you.

4. Make borrowers feel special

Don’t make the mistake of treating new and old applicants the same, requiring them to jump through identical hoops. A long-standing business relationship and a handshake should mean something in today’s business world. If a borrower has a proven track record of timely debt service and a strong credit score, streamline the refinance and application processes as much as possible.