Posts Tagged ‘Client Loyalty’
Wednesday, October 17th, 2012
by Stephen Wershing, Client Driven Practice
This will be the first of a series of posts on sessions from this year’s FPA Experience, held last week in San Antonio, TX.
Julie Littlechild, author of several studies on client attitudes and referral behaviors including Anatomy of the Referral, presented “Cracking The Referral Code” including new data soon to be released in this year’s update of Anatomy. In this program Littlechild explains that to seriously drive referrals we need to get away from the “cult of satisfaction” and to look more deeply at what drives client loyalty.
In her studies, she sorts clients into one of four categories from Disgruntled to Engaged. It is important to understand the drivers that lead clients into each of the groups because, while overall satisfaction ratings are not widely distributed, all referrals come from the Engaged group. There is a lot of behavior that client satisfaction simply cannot explain. Advisors fail to attract referrals because they have several mistaken assumptions about client satisfaction:
· Satisfaction is loyalty
· If I focus on satisfaction referrals will follow
· Clients refer because they want to help my business grow
Focusing on satisfaction is a dead end because it is too broad. Engaged clients, hence referral sources, require a closer connection. They require a partnership with the advisor. And partnership arises from several aspects of the relationship including:
· Shared values
· Going beyond the portfolio
· Involving family
· Giving clients a voice
The feeling of partnership can be enhanced by focusing on clients that have shared values. While this is obvious it is often overlooked. It is a big component of “fit.” While Littlechild found that 89% of advisors say fit is important, only 23% have actually incorporated it into their client acceptance processes.
Giving the client a voice is very important as well. Littlechild’s most current data show that 64% of clients believe that an opportunity to provide feedback is critical.
She finds that we can capture much more of the “low hanging fruit” of referrals by paying closer attention to those activities that build partnership with clients. The payoff, of course, can be substantial. The study revealed that 67% of clients would make a referral if they heard a friend describe a challenge they believe their advisor could address, even if that friend did not explicitly ask to be referred.
Look more deeply at your relationship with clients. Go beyond satisfaction and you can start generating the referrals you hope for.
I will discuss fit in my next post, reporting on Tom Reimer’s presentation on that topic.
Copyright © Client Driven Practice
Tags: Anatomy, Attitudes, Client Acceptance, Client Loyalty, Client Satisfaction, Closer Connection, Cult, Driven Practice, Fpa, Involving Family, Julie Littlechild, Mistaken Assumptions, Partnership, Referral Code, Referral Sources, Referrals, San Antonio Tx, Satisfaction Ratings, Sessions, Sorts
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Wednesday, May 16th, 2012
Recently, I hosted a luncheon roundtable for top performing advisors. Among the topics was what determines the value of an advisor’s business. First I got the obvious responses — assets, income and recurring revenue. Other answers included the extent to which you’ve built a strong team and have above average client loyalty and retention.
There’s another variable that didn’t come up that doesn’t necessarily drive value in the short term so is often overlooked, but is absolutely critical in the mid and long term. That variable: The number of qualified prospects with whom you’re communicating on a regular basis. These prospects aren’t generating revenue today, but are one of the key predictors of revenue down the road, in the same way that the talent in a baseball or hockey team’s minor league system is directly connected to its future success.
Doing more with less
The Tampa Bay Rays are arguably baseball’s most remarkable success story.
Here’s their payroll for the past three seasons, compared to two teams in their division that you may have heard of, the New York Yankees and Boston Red Sox.
Despite that yawning gap in payroll, in 2008 Tampa Bay won the American League East division title and has made the playoffs in each of the past two seasons, ahead of Boston. As for this year, last Friday in the five-team American League East, Tampa Bay was second behind the upstart Baltimore Orioles, the Yankees fourth and the Red Sox in last place.
How to explain Tampa Bay’s success? In part it’s attributable to its manager, Joe Maddon, twice named American League Manager of the year – leadership truly does matter, in sports as in business. But the other explanation is a strategic decision by Tampa Bay’s ownership and General Manager Andrew Friedman (named Sporting News 2008 Executive of the year.) Instead of getting into payroll wars that they couldn’t win, their focus shifted to “doing more with less” by building a pipeline of inexpensive minor league talent. This strategy has enabled Tampa Bay to compete with teams that outspend them three and four to one.
Predicting future success for advisors
There are some clear parallels between Tampa Bay and financial advisors.
A few advisors have achieved growth by emulating the New York Yankees and Boston Red Sox and writing cheques to buy books of business. For most advisors, that’s not an option, and they have to emulate Tampa Bay’s approach of building from within.
And the best predictor of the number of new clients you’ll bring on board in the next 12 to 18 months, quite simply, is the number of qualified prospects you’re currently communicating with.
A big part of this is due to longer decision making cycles by investors. This wasn’t always the case – in the 1980s and 1990s, prospective clients often made up their minds fairly quickly after initial conversations.
While there are some cases where that’s still the case, more and more prospective clients are taking longer to decide to work with an advisor, in large measure because often building trust is something that takes time and can’t be rushed. That’s especially true when you connect with prospective clients through broad based marketing activity, but it’s increasingly the case even when someone is referred to you by an introduction from an existing client.
That isn’t always true of course — you may get lucky and get introduced to a prospective client tomorrow who ends up deciding quickly to work with you. That’s the exception, however – more and more, if you aren’t already talking to someone, the chances of them becoming a client in the next nine to twelve months are remote.
There are at least three implications to this for your new business development activity:
First, you are going to have to be more patient in communicating with prospective clients than was the case historically.
Second, the number of qualified prospects in your pipeline is a key measure of your future success – and just like any other key variable, you need to set goals for the number of prospects in your pipeline, put activity in place to achieve those objectives and track your progress against those goals.
Finally, you need a way to build trust and to stay in front of prospective clients. Calling to say “Just checking to see if you’re ready to buy yet” may be better than no call at all, but certainly won’t maximize the chances of those prospects becoming clients.
On Thursday, I’ll write about how to follow up with prospective clients in your pipeline without being a pest.
Tags: Andrew Friedman, Baltimore Orioles, Boston Red Sox, Client Loyalty, East Tampa, Gap, Hockey Team, Last Friday, Luncheon, Minor League System, New York Yankees, Payroll, Pip, Prospects, Remarkable Success Story, Roundtable, Sporting News, Tampa Bay Rays, Three Seasons, Two Seasons
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Wednesday, May 9th, 2012
A lot has been written about how to increase client loyalty, and certainly I’ve made my own contributions to that body of work.
Despite the volume of ideas on this topic, many advisors still have better relationships as a key goal, particularly in light of the extent to which the market turmoil of the past few years has tested client goodwill.
That’s why it’s worth considering a simple approach to deepening client relationships. That approach, quite simply, is to highlight in an appropriate fashion some of the things you do in terms of community involvement and activity.
Increasing your likeability quotient:
When I talk to clients who are really happy with their advisors, it’s remarkable how often I hear something along the lines of “I simply like her (or him.)” In fact, one of my most read articles last year related to how to increase your “likeability quotient.”
Some of the qualities that make advisors likeable will be no surprise: An upbeat optimistic outlook, asking questions to engage clients in conversation and demonstrating that you’re listening closely.
But others are less evident. American civil rights leader Jesse Jackson has been quoted as saying “You have to bring more to the table than your own appetite.” And communicating that quality to clients, that you bring more to the table than your own appetite is one of things that helps make advisors likeable and deepens client relationships.
“Bring more to the table than your appetite:”
That’s why I’ve come to the view that many advisors would benefit from incorporating a signature charity into client communication. Quite simply, people like to work with people they like. By having clients feel that your motivations extend beyond your own material well-being, you often become more likeable in the process.
Having a signature charity doesn’t have to entail writing big cheques, or for that matter writing cheques at all. One advisor has profiled volunteer efforts by him and his family at a food bank and has gotten a great response from clients.
It doesn’t mean you have to select high-profile charities; to the contrary. I’ve had advisors tell me about terrific feedback to their efforts to support small, grassroots organizations. Here are four guidelines to making a signature charity work for you:
Find a cause you can truly commit to:
First and most important, the signature charity has to be something that you are truly passionate about. To achieve the desired effect, your commitment has to be genuine and one that you would sustain for an extended period, even if you get zero benefits in terms of client goodwill.
Note that many advisors already provide extensive support to great causes, but have simply not incorporated this into client communication.
Take the view that any marketing benefit is secondary:
You need to truly take the view that any marketing benefits are secondary to the positive impact that you make through your efforts. Recognize that fairly or not, in today’s skeptical world some people will see any communication about your good works as self-promotion. In a perverse way, the more you try to draw attention to yourself and get credit for your good works, the less the goodwill that creates.
That’s why communication about your signature charity should be low key, especially initially. In fact, a case can be made that you should only start telling clients about your efforts after you’ve spent at least a year or two in active support. It adds to your credibility to say: “For the past several years, my family and I have been supporting ….. “
Smaller is better:
When it comes to the cause you select as your signature charity, beyond the rule of thumb that it is one you are personally passionate about, the other consideration is it being something that clients can relate to in terms of the impact it makes. Everyone recognizes that there are tons of great causes that do terrific work. That said the ones that seem to get the best response from clients are small in scale and grassroots in nature, where the impact is tangible and immediate.
Any cause that you’re passionate about can be a candidate for a signature charity. One advisor gave back by spending four years raising money to help build a local hiking trail. That said, the most common signature charities seem to revolve around children; here are some examples:
- Programs targeted to children in lower income areas: I’ve talked to advisors who help sponsor breakfast clubs at schools and after school and summer programs.
- Charities that help children with cancer or other childhood diseases achieve their dreams or participate at summer camps.
- Causes related to helping children in the developing world. Examples are Plan Because I Am a Girland Amani Childrens’ Home in Tanzania (an organization I’ve supported since 2008 as my own signature charity with clients.)
Get your clients involved:
Let’s suppose that for the past few years you’ve supported a cause that you’re passionate about, that is small in scale with a tangible, immediate impact and that is making a real difference.
To make this your signature charity, one final step is required; and that’s to let clients know about this.
Some ways to do this:
- Ensure you have a prominent photo in your office that profiles the charity
- Incorporate news about the charity into client newsletters and other forms of client communication. For example, consider letting clients know that instead of gifts and cards at Christmas, you have made a contribution on behalf of all of your clients.
- Invite clients to get involved. The advisor who volunteers at a food bank has an annual evening where he encourages any clients who are interested to bring out their kids and join him and his family. Other advisors have invited clients to buy tickets to fundraisers for their signature charity.
The law of unintended consequences at work:
Let me close with a word of caution: If you embark on this with the motivation of impressing clients and perhaps attracting new ones, you will almost certainly fail. In my experience, the advisors who’ve had the best success are those whose passion for the cause they support is evident. The more passionate you are the stronger clients tend to feel about this.
One final benefit to having a signature charity has nothing to do with clients and everything to do with how you and your staff feel about the work you do. In conversation with advisors who’ve made ongoing commitment to a signature charity a core part of their life, I’m struck by how often they talk about the impact this has on their own motivation and sense of satisfaction.
And in the category of unexpected consequences, I spoke to one advisor who invited select clients to a fundraising lunch for girls in developing countries; where parents often struggle to fund their daughters’ basic education. This advisor got a great response at the time, but was astonished by what happened afterwards.
When she met with these clients in the months that followed, often they wanted to take the first five or ten minutes to talk about the lunch and work the charity was doing, and what had happened since. Even though these clients had written cheques to attend the lunch, the advisor felt that her relationships with many of these clients had been fundamentally deepened.
Tags: American Civil Rights, Appetite, Better Relationships, Charity, Cheques, Civil Rights Leader, Client Communication, Client Loyalty, Client Relationships, Community Involvement, Extent, Goodwill, Jesse Jackson, Key Goal, Likeable, Market Turmoil, Motivations, Optimistic Outlook, Quotient, Signature, Volunteer
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Wednesday, January 25th, 2012
Here’s a simple idea to help you build a great business:
- Every time you need to make a decision about your business, ask yourself “How will this impact client satisfaction?
- Every time you spend money for your practice, ask yourself “How will this impact client satisfaction?
- Every time you make a staffing change, ask yourself “How will this impact client satisfaction?
- After a client meeting or interaction, ask yourself, “What did I do in today’s meeting to improve client satisfaction for this client?” and “What should I do in our next meeting to improve client satisfaction?”
- Every time you are presented with a client complaint, ask yourself the question “Did I seize the opportunity to turn this client complaint into an opportunity to improve client satisfaction?”
- At the end of the day before you go home, ask yourself, “What did I do today to improve client satisfaction?”
Fred Reichheld is a thought-leader in the areas of client loyalty and satisfaction. In his book, The Ultimate Question (“How likely is it that you would recommend us to a friend or colleague?) states that if you can increase your Net Promoter Score ((Percentage Promoters (9 or 10 scores) – Percentage Detractors (0 – 6 scores)) by 12%, you can double the growth rate of your business.
If you refer to our blog entitled What’s the Compound Growth Rate of Your Business and What’s That Costing You? and use the embedded spreadsheet, you can calculate that a $50 million business at a compound growth rate of 10% will grow to approximately $130 million AUM over the next 10 years. At a 20% compound growth rate, it will grow to $310 million AUM. If you were to sell your business at the end of 10 years, the difference in total pre-tax income is just over $6 million.
By focusing on your processes for improving client satisfaction instead of results, like revenue or assets under management, you will achieve greater results. Focus on the process and let the results take care of themselves.
What’s the first step in achieving and maintaining sustainable growth of 20%? Increase client satisfaction.
About Bob Simpson
Synchronicity Performance Consulting has been coaching financial advisors since 1998.
Bob Simpson, president and founder of Synchronicity has been involved, directly or indirectly in the financial services industry since 1981. He has been a very successful financial advisor with Nesbitt Thomson Inc., a major Canadian financial institution. Between 1981 and 1989, he built a business with more than $120 million in assets under management and was one of the first Canadian advisors to build a team.
Tags: 10 Years, 50 Million, 6 Million, Ask Question, Assets Under Management, Aum, Client Loyalty, Client Satisfaction, Colleague, Compound Growth Rate, Detractors, Focus, Fred Reichheld, Interaction, Magic, Net Promoter Score, Promoters, Satisfaction Client, Spreadsheet, Thought Leader
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Wednesday, December 21st, 2011
During the last month stock market have dropped and gyrated; some days by a whopping 5%, and in the case of many clients, wiped out this years gains. While this is bad for portfolios, it doesn’t have to be bad for your client relationships.
Will the market bounce right back, or continue going down? Is this the beginning of the next bear? Who knows. In terms of the growth of your practice, it may not matter. You do not have to be slowed down by the direction of the market. The fact is the best and most successful advisors add clients in down markets.
I don’t mean to suggest that it will be pleasant. Is going through a down market easy? No. Can it be rewarding? Absolutely. Everyone looks like a genius in an up market. The professionals standout when things are rocky. How do you build and strengthen client relationships when the markets are bad? Here are some suggestions.
- Review your client portfolios and make sure you are prepared for a market downturn. Confirm that positions and allocations have not gotten out of whack because of market gains over the past couple years. Evaluating how those portfolios might respond if markets or interest rates changed suddenly or significantly, and make any adjustments you think appropriate.
- Be ready to describe to your clients how you have prepared for the possibility of a market change. If the markets begin moving against you, have a communications plan that includes mass e-mails or letters and the conversations you will have individually in client appointments.
- If the markets continue their slide, send out a communication to all clients. Let them know you are watching what’s going on, and are prepared to make any changes that are appropriate when the time comes. One of the more interesting things I have learned from working with client groups is that they have little understanding of all the work you do on their behalf when they are not in front of you. Let them know. You don’t necessarily have to see them more frequently when times are bad but they need to understand that you are always diligently looking out for their best interests.
- Bring your clients together. If you have put off or neglected an advisory board, or have been considering starting one, now is the time to get it on the schedule. Engage your clients to tell you what they worry about. It may not be what you think. Get there guidance on the best ways of keeping in touch with the markets turned bad again. Whatever their concerns, get them to tell you what kind of communication with most effectively addresses their worries. Would it be letters, individual reviews, or group meetings? Should you be discussing their portfolios, or showing them the impact of a downturn on their financial plans?
- Act on their advice. When you implement your communication strategy, refer to your advisory board. Let all clients know that there is a group of clients you are actively engaged with to help you understand what kind of response would most effectively address what’s on their minds.
Many of the advisors I worked with in 2001 and 2008 were drained and exhausted by those difficult markets. The ones who kept in touch with their clients most effectively were rewarded for all that additional work with larger practices. Engaging your clients when things are bad will make your existing client relationships stronger and attract new ones.
Tags: Allocations, Bad Relationships, Bounce, Client Appointments, Client Groups, Client Loyalty, Client Portfolios, Client Relationships, Communication, Communications Plan, Conversations, Direction, Genius, Interest Rates, Interesting Things, Little Understanding, Market Downturn, Market Stock, Standout, Stock Market, Whack
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Wednesday, October 12th, 2011
The past 10 years has been called the “relationship decade.” In industry after industry, the focus has shifted from selling products to meeting clients’ needs, and away from transactional sales to ongoing relationships. It’s hard to argue that everyone’s not better off as a result; not just customers but also advisors and the firms they work for.
Today’s conventional wisdom says that when it comes to client loyalty and profitable businesses, deep relationships are what counts. But a September Harvard Business Review article raises some important questions about whether this is the case.
Five categories of salespeople
Three years ago, the Sales Executive Council launched a global study of top performing business to business salespeople. They looked at 6000 reps in 100 companies across multiple industries. Since the findings relate to business selling situations, they will not apply exactly to financial advisors, but at a minimum will raise some thought provoking questions.
The first finding was that every salesperson has one predominant persona:
1. Hard Worker: She shows up early, stays late and goes the extra mile.
2. Lone Wolf: He’s the rule breaker who does things his way or not at all. (Compliance hates this guy.)
3. Reactive Problem Solver: Extremely detail oriented, she focuses on post sales follow up and can be relied on to ensure service issues are addressed promptly.
4. Relationship Builder: He focuses on building strong personal and professional relationships and is well liked by customers.
5. Challenger: Tending to the assertive side, she uses a deep understanding of customer businesses to push client thinking.
The formula for outperformance
The study found that average salespeople are evenly distributed across these five categories.
However, top performers were a different story; of star producers, four in ten used a Challenger approach, pushing client thinking beyond conventional bounds. And the more complex the environment, the better those salespeople in Challenger category did. In complex, solution selling environments, over half of star salespeople fell into the Challenger category, compared to 4% who were Relationship Builders.
Three things make Challenger salespeople different:
1. They focus on new insights and teaching customers
Challenger reps make it a top priority to bring new perspectives to every sales meeting. They look for concrete ideas that will leave customers better off, often raising issues that customers had never thought of.
2. They tailor their message to the people they’re talking to
Being able to adapt your message to individual customers has always been the mark of outstanding salespeople, but it’s never been more important than today.
Average salespeople take a similar approach with everyone and thus only tend to be effective with those customers who fit their approach. By contrast, exceptional salespeople are remarkably versatile at tailoring their message to the individuals they’re talking to.
3. They take control of the sale
Challenger salespeople are comfortable with tension and don’t give in to every customer demand. Where appropriate they push customer thinking; not just on what they need but also on price.
If the last ten years was the relationship decade, today we’ve entered the value era. We were already down that path before the global financial crisis; if anything today’s economic slowdown has accelerated this trend.
Just to be clear, it’s not that relationships aren’t critical. Arguably, they’re more important than ever. What’s changed is what drives those relationships. More and more it’s not just about being responsive and well-liked or making the client feel valued; instead it comes down to delivering discernable, crystal clear, tangible outcomes.
In sophisticated and complex situations, the most successful salespeople will be those who consistently drive concrete value for clients. A key way to do that is taking the Challenger approach; making it a priority to bring important new insights and ideas into every conversation.
As I said at the outset, findings from the business to business world aren’t going to translate to financial advisors perfectly, but the direction in B to B sales will inevitably cross over into your world. This is especially the case among clients whose decision making is more driven by reason than emotion. These clients often have the largest accounts and also tend to be in their forties to sixties, rather than their seventies or eighties.
Click below to read the full article from the Harvard Business Review website. Note that you may have to register at no cost for the HRB.org website.
To take a 10 question self-assessment of your own selling style, click below.
Tags: Challenger, Client Loyalty, Conventional Wisdom, Different Story, Executive Council, Extra Mile, Financial Advisors, Global Study, Harvard Business Review, Lone Wolf, Multiple Industries, Personal Relationships, Professional Relationships, Profitable Businesses, Relationship Builder, Sales Executive, Salespeople, Salesperson, Thought Provoking Questions, Top Performers
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