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.