Do you give your clients a Motel 6 or a Ritz Carlton experience?
Here's a dilemma that may sound academic, but is
worth contemplating: Does value that is not perceived exist? As we have
been coaching you through our numerous columns on the seven-step Value
Ladder process, you have to know your value before you can price
it-you have to articulate your value in order to deliver it-and your
clients must fully understand your value before they can appreciate it
... and eagerly pay for it!
In essence, value is the level of benefit that your
client assesses he or she receives(ed) as a result of your deliverable
to them. But what is the advantage of delivering high levels of value
to your clients if they ultimately don't appreciate it?
There is no advantage, of course. Certainly not to you, and probably not to them as well.
You may already have discovered that a "value
disconnect" exists between you and your client. But you can easily
change your client's perception and understanding of what you do, how
you do it, and why you do it-it's all about open communication and
having a system that allows for the free flow of conversation and the
eventual assessment of the interaction that takes place between you and
your client(s). An organized and methodical communication system is key
to long-term partnerships. Then, armed with the initial information you
gather from client dialogues, you can assess whether your perceptions
of value are aligned with those of your clients.
In order to help you do this effectively, we'll show
you how to assess the value you believe you provide, and that which you
have received in return. We believe that only mutually profitable
partnerships endure.
The Real Value Audit-Closing the Gap
What is a Real Value Audit? It is a process, a
methodical examination and review, that you can use for one-on-one
meetings, yearly or more frequently, dedicated solely to discussing how
you and your clients are providing each other with value. A Real Value
Audit is a two-way street. It is a "critical pause" in a relationship,
during which you assess the value you believe you have given and
received, and then you assess whether your perceptions are aligned with
those of your client.
Advisors often assume or just take for granted that
clients appreciate the value they are delivering. Not surprisingly,
many clients don't even know what has been done by their advisor on
their behalf. This gap in perception begins to chip away at the
relationship until both parties fail to see value, and it eventually
may break down altogether.
Conversely, clients may not know that you appreciate the value they deliver to you.
Consider referrals. Most advisors sincerely
thank clients for referrals. However, how many advisors actually
quantify the value that a successful referral means to their
practice? Would a client not feel appreciated if, at the end of
the year, an advisor said, "Ms. Capuano, you sent me five
referrals. Three have since become clients. Their accounts
total $750,000. As I charge a 1.5% fee on assets, in the first
year alone I have received $11,250 from your referred accounts.
This has been of direct value to my practice and me personally."
The Real Value Audit flows naturally from several core beliefs that we teach:
1. Value is an overused concept, precisely because it is so important.
2. You must be convinced that your clients are convinced that you add value.
Too many advisors fail to take the time to find out
what it is that clients value about their mutual relationships.
Equally, too few advisors take the time to articulate the real value a
client can provide them.
To ensure that you stay on track with clients and close the gaps
causing these "disconnects," we encourage you to consider conducting a
Real Value Audit of your client relationships (or partnerships).
Benefits Of Using The Real Value Audit
By using the Real Value Audit, most clients will react well to knowing:
1. They are important enough to you that you track, reflect on and evaluate the value you provide them;
2. You do not take them for granted;
3. You truly appreciate the value they provide;
4. You are thorough and detailed;
5. Your relationship with them is important and
long-term oriented, and you will devote time specifically to discuss
and review the two-way value exchange on an annual
basis;
6. You are relentless in your pursuit of serving them better;
7. You are confident, open and honest.
Clients will also have the opportunity to
share with you aspects of your value to them that you may not have
considered or appreciated. You are allowing your client to "open up"
and have a candid and respectful two-way dialogue with you. Ask
questions. Then just let the tape run, so to speak-or literally.
It's useful to use a digital recorder. Resist any modesty-driven
reflex to stop them from extolling your value. Details can be
revealing. Also, resist the urge to defend yourself when the
client challenges or doubts your value. You will have
a chance to summarize what you have heard. If appropriate, you
can respond, but we recommend that you reserve the Audit for
"fact-finding" only.
Hidden benefit:
What you learn from one client may be of significant value to another
client, thus helping you better serve all of your clients. On the flip
side, you may also discover that one or more clients simply do not
value much of what you have delivered. Real Value Audits are essential
tools for confirming whether your priorities are aligned, and whether
your relationship is calibrated to the right level. And whether or not
you should even continue the association with an individual who does
not acknowledge or appreciate your value. (Life is too short, yes?)
Consider sending the key points or highlights in a summary Real Value
auditor's report to all of those who participated. Surely, your
clients will want to know what other clients said about your value to
them.
Client Review Vs. Client Real Value Audit
Real Value Audit is significantly different from an annual review. Here's how:
It's important for us to reflect for a moment now on Step Four of our
Value Ladder, which helps advisors to develop a "process" in response
to the question, "How do you do what you do?" or, "How would you work
with me going forward?" As you already know, developing a branded,
unique process is critical for every advisor. We believe that a unique
process is a counterweight to the inherent uncertainty of investing.
What do we mean?
Simply this: While you cannot promise investment
results, you can promise a consistent and unique level of service.
Clients react well to knowing how you will work with them to achieve
their goals. The challenge with many client processes, in our opinion,
is that they are boring, they are predictable and they use the tired
phrases "review" or "review progress" or "monitor" to describe
performance evaluation meetings. You can almost see the client's eyes
glaze over when they sit down in front of a bunch of charts and figures
to review portfolio performance on a quarterly, semi-annual or annual
basis. If your client reviews always revolve around reviewing the
performance of their portfolio and how it reflects their investment
policy statement, you are missing a serious opportunity to deepen your
partnerships.
Through our training and in our retreats, we
encourage committed, dedicated and serious advisors to incorporate Real
Value Audit meetings solely around assessing real value with clients at
least once a year as part of their client services process. Plus, it
should also be a separate meeting, not a discussion tacked on to a
regular client review, and certainly not during a product or investment
solution discussion.
By doing a thorough, two-way Real Value Audit with
your clients, you'll discover your clients' answers to important
questions, and whether or not they believe you are their real
value-added financial concierge. As my partner Leo Pusateri asks
advisors in his presentations:
"Are your clients looking for a Motel 6 or a Ritz Carlton experience?"
Something to think about.
Giles Kavanagh is partner and chief
operating officer of Pusateri Consulting and Training (PCT) in
Williamsville, N.Y., a global sales training firm that empowers
financial organizations and individuals to discover and articulate
their unique value. For more information on the Real Value Audit,
please visit their Web site, www.pusatericonsulting.com.