Posts Tagged ‘Anatomy’
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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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.
Copyright © Stephen Wershing
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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Wednesday, October 19th, 2011
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.theclientdrivenpractice.com). He consults financial practitioners on many practice management issues, including strategic differentiation, client advisory boards and implementing technology.
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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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):
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:
- 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.
- 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.
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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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.
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.
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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