By Christopher Yeung
Since launching our marketing and business consulting division at i9 Consulting Group, we have been getting a lot of requests from Advisors on what strategies they should take to boost their revenues. While having a website and social media presence is vital for any Advisor in today’s investment environment, there is one strategy that should be added to that toolbox – The ‘raving fan.’ Every Advisor knows that referrals can be the best and most efficient way to generate revenue. But there is a distinct difference between a client that refers prospects to you versus a client that is a raving fan. A client who refers prospects to you is one that simply gives you a list of names that they believe might need your services. A raving fan on the other hand, is a client that sells your services to their contacts and converts them to your clients before you even contact them.
Consider that it costs on average seven times more to acquire a new client than to have an existing client reinvest with you. Now, think about the compounding effect if a client becomes a raving fan and sends prospects to you who are immediately ready to invest. It would be prudent to take a look at your own practice and determine the value of each client to realize the potential revenue stream you have in front of you. To figure this out, create a spreadsheet to track how many times a specific client has invested with you on an annual basis, their per issuer investment amount, and the revenue you earned from those transactions. Estimate how many prospects you think they can send you if they did become a raving fan, and estimate the potential revenue earned from those prospects. Just by going through this simple exercise, you can quickly find the potential value that each of your clients holds today.
Before you run out and convert your clients into raving fans, we need to first understand why prospects become clients. The top five reasons people buy, or in this case invest, is as follows in order of importance:
1) Confidence - people trust you to look after their money and have confidence in both your practice and your dealership (this is where having a website, social media presence, and client testimonials is important).
2) Service – as an advisor, you have exceeded their expectations and have created multiple ‘wow’ moments.
3) Quality – you have demonstrated that your service and value as an advisor is worth their attention for their portfolio.
4) Selection – your range of services and investment products satisfies their needs.
5) Price/Return on Investment (ROI) – your clients potential return on investment (and in some cases with advisors, the commission you are earning per transaction). If your prospect tells you Price/ROI is most important, then you have not done a proper job in representing the first four points.
Part of the raving fan process is to ensure that once a prospect becomes a client, they stay a long term client. It goes without saying that lost clients will not become raving fans. A great example of this is the mobile phone industry. It is not often that you will hear customers raving about any one mobile phone company. In fact, most mobile phone sales reps will tell you that their main clientele come from their competitors. This means that there is little loyalty when it comes to mobile phone companies, which is why most consumers choose their mobile phone service provider based on who can offer them the lowest price. Think about what would happen if these companies actually payed attention to their current customer base, rather than focusing all their attention on acquiring new customers.
Five important statistics to remember when thinking about your current client base: 1) 4% of clients leave due to natural attrition – they move away, passed on, etc. 2) 5% of clients are referred to a competitor by their friend. 3) 9% of clients leave due to competitive reasons such as price, product features, etc. 4) 14% of clients leave because of actual product or service dissatisfaction. 5) 68% of clients leave because of a perceived indifference – this is due to lack of communication and clients drawing their own conclusions about a situation that may or may not be true.  Point five is especially crucial in the investment industry where rumours often form about an investment product that may or may not be true. It is important that advisors maintain constant communication with clients to ensure they do not come to their own conclusions about one’s practice.
Finally, one of the most effective ways in creating a raving fan is delivering ‘wow’ moments, where the adage still holds true – under promise and over deliver. Clients today expect good service. No one ever goes into a restaurant hoping they receive mediocre or poor service. Just having good service therefore, will not transform your clients into a raving fan. However, receiving more than expected levels of service will make people talk about the experience they had.
Psychological studies indicate that the majority of our decisions are driven by emotion. Therefore, one way to deliver ‘wow’ moments is focusing on creating emotionally based experiences with the client. Examples include being genuine in understanding the client’s current investment situation, being passionate about your own investment philosophies, asking thought provoking questions, adding a personal touch to all your client communications, and making sure clients understand that their needs are ahead of yours.
Imagine having 20 – 30 business development managers working for you full time. What would that do for your advising practice? A raving fan is one that understands your philosophies and is constantly selling your services to their network of people. To develop a raving fan, Advisors need to look at how they are currently managing their current client base. Make changes to strategies whenever a problem arises and bolster strategies whenever a client experiences exceptional service. One report written by Bain and Company, one of the largest private equity management firms in the United States, found that boosting client retention by 5% can raise profits by 75%. What could you do if you were able to boost your profits by 75% this year?
Christopher Yeung is founder and certified business coach at Lateral Thought Consulting, a business advisory firm helping businesses focus on their profit, purpose, and people. Christopher is also partner at i9 Consulting Group, a unique consulting firm that offers a wide range of services for exempt market issuers including wholesaling and marketing development.
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