Friday, 5 June 2009

Confirming your client proposition and generating opportunities

In today’s climate, clients demand the best service more than ever before. When times are tough, clients are more choosy about where they spend their money and for businesses to gain a competitive advantage, clients must be satisfied, loyal and most importantly engaged with your business.

Clients who are engaged with your business are enthusiastic about what you do, they recommend you to others, they provide you with testimonials, they become part of your marketing collateral and ultimately they increase your profits.

A strong service proposition increases a clients engagement in your firm. As client engagement increases, this builds trust, increases loyalty and client retention, leads to more referrals, increased revenue and profitability. Your most loyal and engaged customers become brand enthusiasts. Some commentators call this ‘Customer Advocacy’, taking the view that clients are less likely these days to simply accept whatever services you provide, indeed according to a white paper published by The OMC group about Customer Advocacy in Financial Services, today’s customer is now “value-extracting” meaning that clients will look for the value in a proposition and how it meets their personal requirements. This is the very reason why firms need to develop a strategy to align their service, marketing and branding efforts with the needs of their clients.

To develop client engagement or customer advocacy with your business you need to understand what drives it for your clients. Is it that you provide a well delivered, excellent service? Is it the frequency of contact you have with your clients? Is it that you care enough to ask for client opinions? Is it that you take an open and responsive approach? Is it that the client has confidence and trust in the service and advice you offer? Is it the perception of the quality of your communications with your clients?

Finding out what inspires your client’s loyalty and engagement with your firm is the first step to creating a successful service proposition. The only way to really understand what your clients want is to ask them for their views. Doing this enables you to benchmark your service proposition and set a solid foundation on which to build your client proposition and marketing strategy.

So don’t just assume you know what your clients opinions and perceptions are, ask them. Reach out to your clients and inspire them to talk about you. You may or may not be surprised by their responses, but you will certainly benefit from them.

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Friday, 15 May 2009

Have you switched to fees yet?

Axa Winterthur have published an interesting survey this week on how IFA's are adapting their service models to help them cope with the current economic downturn. Despite the apparent desire and push to move to a fee based model for many IFA firms over recent years, the survey reveals that 6 out of 10 IFA's are currently running a commission based business but they expect to increase the fee-based portion over the next 12 months.

So yet again we see a drive towards and a desire for fee-based business models but it seems that progress is slow. So why the delay? Experience tells me that many firms want to get there but practically they just don't know how. Help and guidance is needed if firms are to get their businesses ready for a post RDR world. So how do you get there?

The important focus must be on being able to demonstrate the value of your proposition to your clients. There is a huge misconception by consumers that advice is free and if this is to change then IFA's need to really show their clients what they are paying for. This means that firms need to take steps to firstly understand the demographics of their client base, conducting an unbiased segmentation of their clients, and secondly to ask their clients what they think about the existing services they offer. Only then can a firm understand how to change their business model and proposition to justify a shift to fee-based advice.

In my opinion there will still be a place for transactional businesses post RDR, but there is much uncertainty and speculation over the business and distribution model for such firms. Those businesses who decide to move to a fee based, truly independent proposition have huge opportunities in front of them, but only if they can get their service proposition right for each segment of their client base.

A strong service proposition, together with effective marketing based on an understanding of the needs and financial behaviour of a particular client segment means that firms can truly maximise those opportunities and build a strong business fit to weather any economic storm.

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