Julie Littlechild Dispels the Cult of Satisfaction

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.

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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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The Two Times Clients Refer You

Sunday, December 4th, 2011

There are two times peo­ple will think to refer you – and, no, when you ask is not one of them. They are just after they have a pos­i­tive expe­ri­ence with you and when a friend expresses a need for a solu­tion you represent.

Clients will talk about you after a meet­ing or inter­ac­tion, pro­vid­ing it’s mem­o­rable. The good thing about this is that you don’t have to do much to prompt it beyond giv­ing them an expe­ri­ence worth talk­ing about. Peo­ple nat­u­rally dis­cuss with friends what’s been hap­pen­ing recently. If you take care to cre­ate a pos­i­tive expe­ri­ence, you have done what you can. Ever get an unso­licited refer­ral from client soon after meet­ing with them? That’s this effect in action.

The bad thing is this effect does not last long. Maybe a day or two. A longer-lasting way to stim­u­late refer­rals is to have your clients asso­ciate you with some spe­cific solu­tion or expe­ri­ence. This is doc­u­mented in Julie Lit­tlechild’s report  Anatomy of the Refer­ral. When asked the ques­tion “what were the cir­cum­stances of the last refer­ral (you gave to your advi­sor)?” 48% said “because a friend asked for a rec­om­men­da­tion” and 57% said “because a friend described a finan­cial chal­lenge.” The key, then, is to define what solu­tion you rep­re­sent so clearly that when a friend expresses a need to your client you nat­u­rally pop to mind.

Your refer­ral mar­ket­ing pro­gram should start with defin­ing what solu­tion or expe­ri­ence you rep­re­sent. Define that in con­junc­tion with clients and adopt their lan­guage for it. Using their lan­guage rather than our own indus­try spe­cific tech­ni­cal descrip­tions helps them remem­ber. It must be dif­fer­ent than other advi­sors.  It must be a rea­son your clients come to you specif­i­cally and not just to a finan­cial advi­sor gen­er­ally. Have a plan to com­mu­ni­cate that descrip­tion often and in dif­fer­ent ways. Keep remind­ing them what you excel at and what you deliver.

Con­sis­tently drive that mes­sage deep into the clients mem­ory. Once it’s there, you will find your clients refer­ring you more con­sis­tently. Our clients are pre­sented with oppor­tu­ni­ties to refer us all the time. The ques­tion is whether they will remem­ber to rec­om­mend you when the oppor­tu­ni­ties arise.

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Tags: Anatomy, Circumstances, Cli, Conjunction, Different Ways, Excel, Experience Worth, Financial Challenge, Interaction, Julie Littlechild, Marketing Program, Memory, Must Be A Reason, People, Pop, Referral Marketing, Referrals, Specific Solution, Technical Descriptions
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Referrals 2.0 — A new perspective on who to target and how to attract them

Wednesday, October 19th, 2011

Refer­rals 2.0
A new per­spec­tive on who to tar­get and how to attract them

by Stephen Wer­sh­ing, CFP®

A finan­cial adviser‘ think tank con­vened ear­lier this year may have uncov­ered a rev­o­lu­tion­ary new per­spec­tive on who we tar­get as prospects and how we attract them.

I was asked to facil­i­tate the think tank, orga­nized by Julie Lit­tlechild of Advi­sor Impact and held in con­junc­tion with FPA Busi­ness Solu­tions 2011 in Boston in early March. Rep­re­sented were large and small prac­tices from dif­fer­ent areas of the coun­try. The objec­tive was to have a real-time dis­cus­sion, dig­ging into some con­clu­sions pub­lished in Littlechild’s study The Eco­nom­ics of Loy­alty: Anatomy of the Refer­ral. We dis­cussed client seg­men­ta­tion, client on-boarding prac­tices, tar­get mar­ket­ing and refer­ral strate­gies. We dis­cov­ered some very inter­est­ing things, two of which I will review here: the dis­con­nect between an adviser’s stated tar­get mar­ket and client on-boarding deci­sions, and the absence of refer­ral mar­ket­ing strate­gies despite the recog­ni­tion of the impor­tance of referrals.

Tar­get Mar­ket Vs. Actual New Clients

We asked advis­ers what cri­te­ria they use to iden­tify prospects and heard the pre­dictable response-demographics, includ­ing pro­fes­sion and investable assets. We then asked the advis­ers how they eval­u­ate prospec­tive clients to deter­mine who ulti­mately becomes a client. The two sub­jects seem almost entirely unre­lated. When we asked advis­ers what they con­sider when mak­ing a deci­sion to work with a prospect or not, the cri­te­ria were mostly psy­cho­log­i­cal or relationship-based: They were del­e­ga­tors, they believed in the process, they coop­er­ated in the data gath­er­ing or they were respon­sive to requests.

We then asked about the cir­cum­stances of acquir­ing clients. A large major­ity of the time, a trig­ger­ing event caused the prospect to have an imme­di­ate need for finan­cial advice, such as a change in employ­ment, the loss of a loved one, a change in mar­i­tal sta­tus or a sud­den wind­fall. There­fore, one con­clu­sion from this think tank ses­sion was that tar­get­ing demo­graph­ics may be the wrong direc­tion. It seems advis­ers are not using demo­graph­ics as a screen­ing fac­tor for prospec­tive clients any­way. Rather, you might tar­get spe­cific client cir­cum­stances in which to spe­cial­ize. This solves another prob­lem with adviser marketing-most mar­ket­ing efforts talk more about the adviser than about the clients they hope to serve. Too much mar­ket­ing says, “Here’s what we do.” Not enough mar­ket­ing says, “Peo­ple with this chal­lenge come to us.”

What’s Miss­ing: A Refer­ral Strategy

This leads to another major con­clu­sion of our think tank. The advis­ers who par­tic­i­pated (like most advis­ers I speak to) agree that refer­rals are the lifeblood of their busi­ness, and yet none have a plan to sys­tem­at­i­cally attract them. While this is an obvi­ous and sig­nif­i­cant short­com­ing of most advis­ers’ busi­ness plans, it is not unique to our indus­try. In The Refer­ral Engine, mar­ket­ing expert John Jantsch reports that in his sur­vey of more than 1,000 small-business own­ers, 63.4 per­cent report that refer­rals account for more than 50 per­cent of new busi­ness, and 79.9 per­cent of those busi­ness own­ers have no for­mal refer­ral strategies.

Among the small pro­por­tion of finan­cial advis­ers who claim to have for­mal refer­ral strate­gies, those strate­gies are sel­dom more sophis­ti­cated than to sim­ply “ask more.” Unfor­tu­nately, we know that ask­ing for refer­rals is one of the least effec­tive ways to get them. While a lot is writ­ten about the impor­tance of ask­ing for refer­rals and how to do it bet­ter, that is not a tes­ta­ment to the effec­tive­ness of ask­ing; it’s merely proof of Maslow’s asser­tion that if all you have is a ham­mer the entire world looks like a nail. If the only rec­og­nized refer­ral strat­egy is ask­ing for them, ask­ing will be “proven” the best.

Littlechild’s study rein­forces that ask­ing is not the most effec­tive strat­egy. Only 2 per­cent of investors who recently referred their finan­cial adviser did so because their adviser asked for a refer­ral. If refer­rals are almost always gen­er­ated some other way, why not cre­ate a strat­egy to facil­i­tate the way they nat­u­rally occur?

Be a Problem-Solver

We asked think tank par­tic­i­pants how they attract new clients; what’s included in their mar­ket­ing plans? The advis­ers at the table who were most suc­cess­ful at attract­ing new busi­ness told us about their strate­gies of com­mu­ni­cat­ing the kinds of prob­lems they solve for peo­ple. One adviser pub­lishes case stud­ies in the firm’s mar­ket­ing brochures. A cou­ple of advis­ers teach their staffs how to com­mu­ni­cate what they do so clients hear a con­sis­tent mes­sage from dif­fer­ent people.

This, too, rein­forces find­ings of Littlechild’s study. Going back to the ques­tion of why clients refer, 57 per­cent most recently referred their adviser because a friend expressed a par­tic­u­lar finan­cial chal­lenge. In 48 per­cent of those cases, the client was specif­i­cally asked for a refer­ral to a finan­cial adviser. I sus­pect there is some trig­ger­ing event here as well, per­haps moti­vated by a bad expe­ri­ence with another finan­cial pro­fes­sional. This seems to point toward the idea that the most pro­duc­tive refer­ral mar­ket­ing strat­egy is not to max­i­mize the effi­ciency or effec­tive­ness of asking-which is gen­er­ally an unnat­ural sit­u­a­tion for adviser and client-but to pre­pare the client for the oppor­tu­nity to refer.

Much has been writ­ten about the effec­tive­ness of niche mar­ket­ing. Our think tank rein­forced the value of explain­ing par­tic­u­lar prob­lems you are skilled at solv­ing or client cir­cum­stances you are adept at han­dling. If you can own that par­tic­u­lar spot in your clients’ minds, then they will think of you when a friend describes that chal­lenge or sce­nario. Cre­ate a com­mu­ni­ca­tion strat­egy around those par­tic­u­lar skills and you will stim­u­late refer­rals in a way much more in tune with how they would nat­u­rally occur.

So, how do you describe your unique value to clients? Dis­cov­er­ing your strengths may not be as obvi­ous an exer­cise as it would seem. The Eco­nom­ics of Loy­alty: Anatomy of the Refer­ral sheds some light on this. Sys­tem­at­i­cally solic­it­ing feed­back is a dri­ver of client engage­ment. Sur­vey your clients or orga­nize a client advi­sory board, and your clients will help you under­stand what they see as your unique value in the relationship.

Ask by Not Asking

When I facil­i­tate client advi­sory boards, I usu­ally first aim to dis­cover what the clients believe are the most impor­tant con­tri­bu­tions the adviser makes to the rela­tion­ship; what is unique about the adviser. I then rec­om­mend the adviser com­mu­ni­cate the out­come of this con­ver­sa­tion to the entire client base. It may be posted on the adviser’s web­site or pub­lished in his or her newslet­ter. How­ever, the most impor­tant ele­ment of the com­mu­ni­ca­tion strat­egy takes place dur­ing indi­vid­ual client meetings.

Partly in response to the think tank dis­cus­sion, I have mod­i­fied what I sug­gest advis­ers com­mu­ni­cate to clients. At the end of the client meet­ing, you might include some­thing like, “We have been work­ing with our client advi­sory board to dis­cover the most valu­able things we do for you (a state­ment that can help drive client loy­alty all by itself). What we have learned is that we are par­tic­u­larly good at [finan­cial chal­lenge or tar­get client cir­cum­stance]. If you have any ideas on how we might con­nect with peo­ple in that sit­u­a­tion, your advice would be a great help.”

Or per­haps even bet­ter, “You are some­one who [faces that chal­lenge, or is in that cir­cum­stance] and we are focus­ing on work­ing with peo­ple in the same sit­u­a­tion. If you were in my shoes, what would be the first few things you would do to find other peo­ple in that situation?”

I am con­vinced that ask­ing for refer­rals is a bad strat­egy. We need to get away from the “who do you know” ques­tion. Of course, we still need to have con­ver­sa­tions that lead to refer­rals, so one alter­na­tive approach is to ask by not ask­ing, as illus­trated ear­lier. Don’t ask for a refer­ral, ask for advice. In the process, you will be rein­forc­ing your unique value and gen­tly instruct­ing clients on who you want them to refer.

Our think tank exposed sur­pris­ing dis­con­nects in client tar­get­ing prac­tices and rein­forced that key ele­ments of adviser mar­ket­ing plans are miss­ing. We learned we can com­bine aspects of both issues and cre­ate what could be a pow­er­ful way to attract new clients. We hope to con­duct more ses­sions over the com­ing year, build on these dis­cov­er­ies and learn more about cre­at­ing pro­duc­tive rela­tion­ships between clients and advisers.

Stephen Wer­sh­ing, CFP®, is pres­i­dent of The Client Dri­ven Prac­tice (www​.the​client​driven​prac​tice​.com). He con­sults finan­cial prac­ti­tion­ers on many prac­tice man­age­ment issues, includ­ing strate­gic dif­fer­en­ti­a­tion, client advi­sory boards and imple­ment­ing technology.

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Tags: Anatomy, Demographics, Financial Advice, Financial Adviser, Interesting Things, Investable Assets, Julie Littlechild, Loss Of A Loved One, Loyalty, Marketing Strategies, New Perspective, Predictable Response, Prospective Clients, Prospects, Referral Marketing, Referral Strategies, Referrals, Segmentation Client, Target Market, Target Marketing
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The Immense Value of Client Feedback in Getting Referrals

Wednesday, July 13th, 2011

Last Fri­day, advi­sor coach Stephen Wer­sh­ing was inter­viewed by exec­u­tive coach Bruce Peters.

He dis­cussed the how to build a refer­ral mar­ket­ing pro­gram, and the impor­tance and immense value of client feed­back.

Lis­ten to the pod­casts (click the red play buttons):

Part 1

seg­ment 1

Part 2

seg­ment 2

In the first seg­ment Stephen Wer­sh­ing dis­cusses his work with AdvisorImpact’s Julie Lit­tlechild, who con­ducted a sur­vey of thou­sands of clients of advi­sors about their feel­ings con­cern­ing work­ing with a finan­cial advi­sor. Here are a few of the find­ings of that research:

1. Its impor­tant to have con­ver­sa­tions with clients that go beyond the scope of their portfolio
   • Those who had con­ver­sa­tions about finan­cial plan­ning, as opposed to just invest­ment plan­ning were much more satisfied.
   • Clients who were asked for feed­back gen­er­ally felt more impor­tant and felt more sat­is­fac­tion because they played a role in the advi­sor mak­ing changes to the prac­tice, and they felt more engaged, a sig­nif­i­cantly more dra­matic dri­ver of satisfaction.
   • Those were the peo­ple far more likely to refer new clients.
   • Just ask­ing for feed­back, and then doing some­thing about it, it makes them more com­mit­ted to you, and then imple­ment­ing it, that was a sig­nif­i­cant fac­tor in how engaged they felt. It enhances the client’s per­spec­tive on the value they received from your pro­fes­sional service.
   • increases refer­ral traf­fic dra­mat­i­cally — mak­ing a client a part of your ‘advi­sory team’ cre­ates an excit­ing pre­text for con­ver­sa­tion with their asso­ciates and friends about how they were engaged
   • Stephen pro­vides more detail about this in the interview.
2. In the sec­ond seg­ment, Stephen dis­cusses the anatomy of the refer­ral, and the idea that there are many ways to attract refer­rals, and that ask­ing for them is the least effec­tive way.
   • When we refer, its a way for us to net­work, we do it for social cur­rency, its a way for us to expand our influ­ence, but the bot­tom line is that  we do it for OUR rea­sons, we don’t do it for their (the advisor’s reason).
   • When we are con­fronted by a friend’s chal­lenge, our instinct is to help them by refer­ring, or if we are asked “Who do you use?” we want to be in a posi­tion to use that to ben­e­fit our­selves by shar­ing our ben­e­fits with our friend.
   • When we are asked by some­one to sell the risk, as opposed to offer­ing the ben­e­fit, we become less will­ing, because the risk is ours - for exam­ple, if you send a friend to your mechanic, and the mechanic screws up, you risk being screwed up by that too.
   • If as an advi­sor, all you do is ask for refer­rals, what you are doing is forc­ing the client to ‘sell’ all the risk by putting the onus on them to per­form a task which risks dimin­ish­ing their per­cep­tion of you, and it puts a focus for them on the risk of send­ing their asso­ciates to you.
   • On the other hand, if you give the client the ben­e­fit of the expe­ri­ence of being engaged in the process, by ask­ing them for their advice, and then work­ing to vis­i­bly or ver­i­fi­ably imple­ment their sug­ges­tions for improve­ments to the way you do things, and you thank them and credit them for it, both pri­vately and in the pres­ence of your client advi­sory board, its their own sense of engage­ment that com­pels them to want to speak freely about their suc­cess with you as their advi­sor. Their enthu­si­asm about their expe­ri­ence with you fuels the drive to expand their influ­ence by refer­ring you.
   • The dis­cus­sion con­tin­ues in more detail dur­ing the interview.

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Tags: 1 Segment, 2 Segment, Advisory Team, Anatomy, Bottom Line, Client Feedback, Conversations With Clients, Executive Coach, Financial Planning, Immense Value, Investment Planning, Julie Littlechild, Last Friday, Marketing Program, Pretext, Professional Service, Referral Marketing, Referral Program, Referral Traffic, Referrals, Service Increases
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Automatic Referrals for Financial Advisors

Wednesday, March 16th, 2011

Auto­matic Refer­rals for Finan­cial Advisors

Lever­ag­ing a Client Advi­sory Board in a Refer­ral Mar­ket­ing Program

Most finan­cial advi­sors report that refer­rals are their most impor­tant source of new clients. Yet, amaz­ingly, rel­a­tively few have a for­mal refer­ral mar­ket­ing program.

Ask­ing for Refer­rals Doesn’t Work

Of the firms that actively solicit refer­rals, most of them do it in a way that is both inef­fec­tive and actu­ally com­pro­mises the client rela­tion­ships they have.  The new report Anatomy of a Refer­ral by Julie Lit­tlechild proves that all the hack­neyed, obso­lete refer­ral train­ing pro­grams of the past are as inef­fec­tive as they are uncom­fort­able for the advi­sor and for the client.  It also shows how and when refer­rals actu­ally hap­pen, and points toward a strat­egy that can work to attract con­sis­tent refer­rals – even with­out ask­ing directly for them!

A Refer­ral Mar­ket­ing Pro­gram that Works

Refer­ral mar­ket­ing works best when an advi­sor uncov­ers what the best tar­get prospects and clients want most, and works hard to pro­vide it. The most pow­er­ful com­po­nent in the pro­gram is the client advi­sory board.

An advi­sory board is a col­lec­tion of some of an advi­sory firms best clients, brought together to advise the advi­sor on the strate­gic direc­tion of the prac­tice. It is the most effec­tive way of stim­u­lat­ing high level and rich con­ver­sa­tions about how to lever­age the great­est value the advi­sor offers to clients. When the rec­om­men­da­tions of the advi­sory board are com­mu­ni­cated and then imple­mented in an advi­sors prac­tice, the quan­tity and qual­ity of refer­rals can increase dramatically.

This report will briefly review why this is true, and give you some basic tips on how to lever­age a client advi­sory board as the foun­da­tion of a pow­er­ful refer­ral mar­ket­ing pro­gram. Embrace these con­cepts, and start attract­ing refer­rals more than you ever could before.

Down­load your free White Paper

To learn more about how a Client Advi­sory Board can deepen your client rela­tion­ships, get you more share of wal­let, more clients and more refer­rals, con­tact us.

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Tags: Advisory Board, Advisory Firms, Anatomy, Asking For Referrals, Client Relationships, Conversations, Financial Advisors, Julie Littlechild, Marketing Program, Marketing Report, Referral Marketing, Target Prospects
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