Ask the right questions, track the information and link it to targeted activities.
With the final article in this three-part series on client feedback, it's time to get tactical. Specifically, how can you use client feedback to unlock client value in your business? To start, however, we need to define our terms. What do we mean by client feedback, and what does it really mean to "unlock client value"?
Defining Client Feedback
Having an effective client feedback program means
having a disciplined process to gather, track and then use data on a
client-by-client basis. It is not the same as doing a satisfaction
survey, as that is traditionally defined. An effective client feedback
program is about ensuring that you have relevant feedback from all of
your key clients in order to ensure that you are meeting or managing
expectations and, that you are capitalizing on any potential referral
and revenue opportunities. All clients are surveyed, most respondents
are named and the data is specifically linked to targeted activities
with specific clients. On the other hand, a simple satisfaction survey
is tantamount to asking "How do you like me so far?" and then thinking
you can change your business with the results.
One of the big problems with any survey is the
concept of averages. There is an old saying that suggests that if you
stand with one foot in a bucket of ice and one in a bucket of boiling
water you would, on average, be comfortable. Effective client feedback
programs not only provide you with a snapshot of your business-the
averages-but uncover client-by-client opportunities and needs. So while
offering your clients the option to remain anonymous is important, our
research shows that about 80% of clients will provide their names,
which allows you to follow-up on both service issues and additional
opportunities. And they will give you permission to do so.
Unlocking Client Value
Unlocking client value is the process of gathering
feedback from your clients and then turning that information into
insights and actions to ensure that you are meeting the expectations of
your best clients, managing expectations of those clients who demand
too much, targeting clients who are likely to give you referrals and
following up on identified opportunities to increase share of wallet or
cross-sell other services.
We unlock client value when three conditions are
met. First we must be meeting (or exceeding) service expectations, to
create and encourage client loyalty. Next we must have optimized client
relationships by expanding the depth of the relationship (share of
wallet and cross-selling) and the scope of the relationships
(referrals). Finally, we should have a way ideally to replicate this
process among the clients of our centers of influence as well as our
own clients.
But how do we do that? How do we take feedback from
clients and turn that into increased loyalty and revenue? We have
identified three unique tactics that have had a demonstrated impact on
the bottom line among our clients.
Increase Referrals From CPAs
You can use client feedback to increase referrals
from your centers of influence, particularly CPAs, if we start with the
assumption that getting referrals from centers of influence starts with
giving referrals. It's a two-way street, and sometimes you need to take
the first step.
For example, in our client surveys we ask if an
advisor's clients are working with and/or are satisfied with a CPA. We
routinely uncover a handful of clients who are neutral or dissatisfied
with the relationship, and that information gives an advisor the
perfect opportunity to provide referrals to someone in their own
network. It's a benefit for their clients and a benefit for their CPA
partners.
It doesn't take many referrals to build the referral
relationship. In the last several years we have surveyed tens of
thousands of clients as part of our Client Audit program. Based on a
sample of 16,000 of the most recent surveys, we found that 8% of
clients were not fully satisfied with their accounting relationship and
15% were not fully satisfied with their relationships with lawyers.
That may translate to five to 15 referrals that you can make to a
center of influence, sending a very positive message that you are
committed to the relationship.
But there is an even bigger opportunity that we discovered based on our
work conducting client feedback programs among CPAs. If you gather
feedback from your clients, that's a good thing. If a CPA gathers
feedback from his or her clients, that's also a good thing. If you
partner on the process, the benefits are exponentially bigger. This is
a situation in which two plus two equals five.
If you partner with a CPA and you each run an
independent and confidential client feedback program, the surveys
themselves would differ based on your unique objectives and clients.
Imagine, however, that you overlapped in one key area: cross-selling
opportunities. You would ask your clients if they are interested in
learning more about services that are important to your business, such
as estate or retirement planning. You would also ask if they were
interested in learning more about services that were important to the
CPA, such as valuation or corporate tax planning. Similarly, the CPA
would ask her clients about key opportunities for her business, but
might also ask about estate or retirement planning. At the end of the
day, you would both be in a position to make meaningful, targeted,
needs-based referrals to one another-and there would be a lot of them.
We recently ran a small pilot that resulted in
feedback from about 500 clients of CPAs. We asked how many were
interested in a variety of financial services opportunities, and you
can see the results in Figure 1.
Will every referral actually need that service?
Probably not. Does this provide you with a large number of strong and
targeted leads from a CPA? Definitely.
Increase Referrals From Clients
Without a doubt, most advisors say that client
referrals are their best source of new business. However, ask most
advisors if they feel they are maximizing the referral opportunity and
you get a resounding "no." In fact, research conducted by Advisor
Impact suggests that as few as 4% or 5% of clients are actually
providing successful referrals to the average advisor. But here is the
real disconnect: While a handful of clients are referring, about 90% of
the clients we have surveyed say they somewhat or completely agree that
they are comfortable providing referrals.
What does this tell us? The opportunistic among us
will note that a very high percentage of clients are willing, and ask
how can we make it easy and enticing for client to provide referrals.
The process starts by asking clients, as part of the
client feedback process, if they are comfortable or willing to provide
referrals. That simple question will result in a list of individual
clients who have the propensity to refer. In a 300-client household
survey, you might end up with 100 names on your referral target list.
Next, we suggest you cull that list, identifying those clients who you
want to replicate and dropping the total by perhaps 40% or 50%.
List in hand, your objective is to open up the
referral discussion with those clients. We suggest that you address the
subject, face-to-face, at the review meeting that immediately follows
your client feedback program. You can pull out a completed survey,
thank clients again for taking part and tell them more about the
results and how they will be used.
Then focus in on referrals. When a client indicates
that he or she is comfortable referring their friends and family, it's
worth another thank-you. There are few more powerful ways for them to
demonstrate their confidence and trust. If they have indicated they are
comfortable providing referrals, ask if you can take some time to tell
them more about the kind of clients that you feel you can help.
Remember that, generally speaking, clients provide referrals in order
to help their friends rather than to help grow your business. So,
describe the kinds of problems you can solve or the type of people you
can help. You will find that clients can more easily identify a
business-owner friend who is selling a business or someone going
through a divorce than friends who need or want a new financial advisor.
Streamline Service Delivery
Of course, unlocking client value is not only about
identifying new revenue opportunities-it is also about ensuring that
you are delivering on your service promise efficiently and profitably.
We often make assumptions about what our clients value, need and expect
from the service we deliver, and we're often wrong. It is interesting
to note, for example, that while many advisors believe that the one
best way to improve loyalty is to increase the frequency of contact,
our client data suggests that more clients are satisfied with the
frequency of contact than are satisfied that the plan they have in
place will allow them to reach their goals for retirement.
Client feedback is about understanding expectations,
both on average and, more importantly, on a client-by-client basis.
What can you learn from the process? How often clients expect to meet
to review their plan, if clients are comfortable with some reviews
taking place by phone or if they are comfortable speaking to other team
members about their plans.
This kind of direct feedback from your clients allows you to do three things:
1. Ensure that you are on track with the client
service experience that you are offering. You will be able to evaluate
your service offering (both the number of reviews that clients expect
and their perceived value of the other communications that you send,
such as newsletters) against client expectations. It is critical to do
this on a segmented basis in order to compare the expectations of top
clients to all others. Many advisors find it easier to make changes to
their service commitments following a client feedback program, so that
the changes are clearly and specifically linked to input from clients.
2. Identify clients whose expectations are not in
line with the value they bring to the relationship so that you can
actively manage expectations. You may identify some smaller clients who
expect too much contact and who, as a result, are unprofitable.
Identify these clients and address the issue head-on; they may not be
the right clients for your business, but it is best to find out before
you find yourself delivering less than their expectations.
3. Remind clients about the level of service that
they receive and can expect, in order to reinforce the value that you
deliver year in and year out. As an industry we do great work for our
clients on a daily basis, and sometimes we forget to toot our own
horns. A well-structured survey serves to underscore the value that you
deliver in a comfortable and subtle way.
So client feedback can be a critical business
management tool, when the process is done right. Doing it right
includes asking the right questions, tracking the information and then
linking that information to clearly defined and targeted activities
among existing clients. But we shouldn't forget a simple truth. Even
without those tangible benefits, asking clients what they think, want
and need is just the right thing to do.
Julie Littlechild is the president of Advisor Impact and Rebecca Pomering is a principal with Moss Adams LLP.