Destiny is not a matter of chance, it is a matter of choice; it is not a thing to be waited for, it is a thing to be achieved.
W J Bryan
With the festive season almost upon us you may be thinking it’s about time for some rest and relaxation. Think again. It’s time to be planning what you are doing in 2015 to make it your best year ever! With that in mind it’s not time to put your feet up, it’s time to be working on your Retention and Referral strategies for 2015.
Let’s start with retention. I’m sure you will all have heard it’s more costly to acquire new customers than retain existing ones. The cost of acquiring a new customer can be anything from 4 times to 10 times, and there are even some quotes of it being as high as 30 times! But more often than not it will be somewhere around 7 times. So, if it’s so costly to get new customers why do so many companies focus more energy on getting new customers than nurturing their existing ones?
You see it all the time. Take car or home insurance as an example. I find myself every year on the market comparison sites looking for the best deal, and typically every year I will save myself money by changing company. Increasing your renewal premium is a sure fire way to put an existing customer off staying with you. But so many people are apathetic and just stay with the same company, and companies make money out of this apathy. However does it do the company’s reputation any good? How much value does retaining the apathetic customer really add? And, more importantly, could doing a little extra add even more value to your business?
I am a great fan of Byrony Thomas (author and guru on all things marketing related) and she writes about the marketing-sales funnel, or customer journey as I prefer to refer to it, in her bestseller Watertight Marketing. She identifies where businesses lose money, and customers, throughout the funnel. Her first leak is on customer loyalty and forgotten customers. You may think you’ve won the business so it’s job done. Wrong. Customers aren’t obliged to stay with you – they can pack up and go at any time.
You’ve got to keep earning the right to be their adviser. You may not receive many complaints or even have a high attrition rate but you’d be wrong to assume that your customers are delighted with your service. Customer apathy means customers won’t tell you they are underwhelmed by your service; instead they will bumble along with an ‘it’s ok’ attitude while you provide a mediocre service at best. By looking at your post-sale servicing and customer touch points, you’ll be able to identify areas for improvement. There always is scope for improvement no matter how good your service is.
Unhappy customers will tell more people about bad experiences than good ones. It’s a known fact that we get some sort of kick out of venting our bad stories. Whether unhappy clients shares their story with 2 people or 10 is to be debated, but either way it won’t do your reputation any good. However, even a few good stories shared can make the world of difference to your business. It’s a recommendation to use you – a referral.
Good stories and recommendations are a way of potential customers getting evidence that you offer a valuable, high quality service. You can be trusted. Their friends trust you so you must be ok. Another one of Bryony’s leaks is no proof during the evaluation stage of the marketing-sales funnel. You are far more likely to convert business if potential customers have some form of proof that you will do a good job. It’s common-sense really – after all, you’d be unlikely to trust Rusty Motors Ltd when they just pop up around the corner and you’ve never heard of them!
So, why are referrals so good for your business? Well, referred customers are cheaper to win, easier and quicker to convert to clients and they typically spend more (or bring more money with them).
Many small businesses get referrals but it’s more through chance than any proactive referral strategy. Adviser firms we speak to will tell you time and again getting referrals is great and they get one or two a year. Imagine what your business could achieve if you establish your niche market (the one that’s really profitable), segment your client base to identify your existing clients that meet your niche and then proactively seek referrals from that audience.
All of the above and more: with more of your desired clients onboard, being serviced better with your #1 New Years’ resolution ‘love your clients’ retention strategy, there will be more happy clients to spread good news stories and more referrals.
· Identify your ideal client
· Find your ideal clients in your existing client bank
· Implement your new retention strategy incorporating your referral communications and touch points
· Spread your good news – e.g. client testimonials in communications, on your website and get tweeting and posting about what your clients say if social media forms part of your marketing strategy
Hopefully it’s obvious the linkage between retention and referrals – they go hand-in-hand; one will feed the other. So get your 2015 off to a cracking start and plan your R&R.
Throughout December we are running free business clinics where we will do a starter analysis of your business and quickly identify the areas you should be focusing on in 2015 to make it your best year ever. Clinics have limited places and are on a first-come, first-served basis – if you’re interested contact us at firstname.lastname@example.org
I was out to dinner with Kevin Ferriby, MD of and Informed Financial Planning in Hessle and to work up an appetite, we headed into Hull’s “Old Town” for a beer. (Hull’s Old Town hostelries are fantastic).
Kevin related a story about a recent brewery trip he had been on. The guide for the tour asked if anyone had been on a brewery trip before, to which Kev enthusiastically replied…”This is my sixth!” (not on the same day of course).
“Oh, so you must be something of an expert on the process then” said the guide.
“Well actually”, replied Kev, “I don’t really care about the process, I just want to find out what your beer tastes like!”
What’s the relevance of this story to advisers I hear you ask.
Well, I know you are proud of your process, the software you use, your risk profiling methodology, your investment solution and want to explain it to each client in great detail. I understand that. It’s probably the result of years of trying to perfect each part of the advice process. But the fact is, most of your clients aren’t interested… they just want to know what outcomes your process is going to deliver for them.
I know you wish they shared your passion and enthusiasm for your process, but in reality, they don’t. Get over it. Talk about outcomes/results/benefits, not process.
A conversation with an adviser recently about how to help clients see the value of Cashflow Modelling software prompted me to ask Mark Ferris, one of our Associate Consultants and himself a user of this software in his own advisory business, to explain how he gets clients to buy in to the (seemingly laborious) process of analysing their income and expenditure. Here’s what he had to say…
“When I talk to advisers about the benefits of using cash flow forecasting software, the most common objection they have is ‘my clients will never take the time to complete and return the expenditure questionnaire’ or I have the software but don’t use it very often because the clients won’t complete one.
My first response is normally how many clients haven’t returned a questionnaire, to which the answer is often, ‘I haven’t sent any out yet, I just know that they won’t complete it’. Therefore, the problem is often with the adviser’s mind-set, not the clients.
I also ask them how do you currently get the information, because after all, detailed knowledge of their expenditure is vital to making appropriate recommendations for a client?
If you’ve done a great fact find and shown the client what you are going to do for them and demonstrated how powerful the software is they will understand why it is important that this information is completed and returned.
What works for me is to emphasise why this information is so important. I tell them once I have the completed questionnaire I’m going to accurately forecast the future cost of their ideal lifestyle and be able to tell them if they have enough money or if they will run out. Secondly, I give them a date to return the questionnaire by (usually about 7-10 days), as this will focus their minds. This can then be followed up by a quick telephone call after a few days to remind them you are expecting it. This works in 90% of cases for me.
One possible barrier to getting the questionnaire returned may be the charge you are making for the financial plan. If it’s too big you may put the client off before they have experienced the benefits of the process. You need to be paid well and be profitable, but the client needs to see how you can help them before making a big commitment. This is an area we regularly help advisers to overcome.
Another reason you might not receive the questionnaire back is that the client isn’t committed to the process. It’s better to find out now before you’ve wasted any more of your valuable time. As Paul Etheridge would say, ‘once a messer, always a messer!’
You have to think, do I really want this client in my life? If the answer to that question is yes, because they look like your ideal kind of client that you can deal with very profitably, but they’re just very busy, then you have two options…..
1. Offer to send out one of your admin staff to help your client get the information together (if you’re a single person business then you will have to do it). Clients will appreciate the extra mile you are prepared to go to help them and if you send one of your staff, your time isn’t affected and you are on your way to a good relationship with a new ideal client.
2. Estimate the figures for them (initially at least to help them see the benefit of doing it more accurately) – after doing the fact find/discovery meeting, you already know a lot about them. You’ll know where they live, what their mortgage is, how may children they have, where and how often they go on holiday, what their interests and hobbies are etc.
You can estimate their expenditure numbers for each item based upon what you already know about them and your experience of other similar clients.
When using the software at the next meeting, upon reaching the expenditure section, you can tell the client that because they didn’t return the questionnaire, you have had to estimate the numbers. Then simply ask them to go through each item and amend those that they don’t think are accurate. This will enable you to have a good discussion about what they spend their money on and the clients will become even more engaged in the process, because you are spending even more time talking about them and what’s important to them.
The expenditure questionnaire is crucial because it is the foundation to building a comprehensive financial plan for the client that enables them to see the consequences of their current and future lifestyle.”
What are your tips for getting clients to return their expenditure questionnaire?