The Two Times Clients Refer You

There are two times people will think to refer you – and, no, when you ask is not one of them. They are just after they have a positive experience with you and when a friend expresses a need for a solution you represent.

Clients will talk about you after a meeting or interaction, providing it's memorable. The good thing about this is that you don't have to do much to prompt it beyond giving them an experience worth talking about. People naturally discuss with friends what's been happening recently. If you take care to create a positive experience, you have done what you can. Ever get an unsolicited referral from client soon after meeting with them? That's this effect in action.

The bad thing is this effect does not last long. Maybe a day or two. A longer-lasting way to stimulate referrals is to have your clients associate you with some specific solution or experience. This is documented in Julie Littlechild's report  Anatomy of the Referral. When asked the question "what were the circumstances of the last referral (you gave to your advisor)?" 48% said “because a friend asked for a recommendation" and 57% said "because a friend described a financial challenge." The key, then, is to define what solution you represent so clearly that when a friend expresses a need to your client you naturally pop to mind.

Your referral marketing program should start with defining what solution or experience you represent. Define that in conjunction with clients and adopt their language for it. Using their language rather than our own industry specific technical descriptions helps them remember. It must be different than other advisors.  It must be a reason your clients come to you specifically and not just to a financial advisor generally. Have a plan to communicate that description often and in different ways. Keep reminding them what you excel at and what you deliver.

Consistently drive that message deep into the clients memory. Once it's there, you will find your clients referring you more consistently. Our clients are presented with opportunities to refer us all the time. The question is whether they will remember to recommend you when the opportunities arise.

IPI study: advisors think their service is better than their clients do

The Institute for Private Investors released a study that, I believe, discloses some shocking statistics. If you are concerned about attracting and retaining clients, the study is something you must reflect on. Although AdvisorOne somehow translated the results into the headline "Wealthy Investors Say They're Happier With Their Advisors" reading the study, Both Sides Now, set off alarm bells for me.

The lead statistics is that 63% of ultra high net worth investors are fully satisfied with their advisor relationship. I don't know what your high school experience was like, but anything below 65 was a failure when I was there.

Shockingly, 95% of advisers said their clients are fully satisfied. So, 32% of advisors think there clients are happier than they really are. Is it any wonder we are disappointed with the number of referrals we get?courtesy iStockphoto

Reinforcing that overall statistic, the study found, among other things, that 63% of investors agreed “my advisor produces results in concert with my

family’s goals and risk parameters,” with 17% disapproving of their advisors’ performance. An SEI study I recently wrote about on Advisors4Advisors highlighted the importance clients place on their advisors’ understanding their situation and needs.  This specific kind of failure will lead pretty directly to losing the relationship. Further, a significant portion of those investors do not believe their advisors are utilizing their full resources to the clients’ benefit or providing adequate access. If you are the advisor to one of those clients, your relationship is at risk.

Fortunately, the study also identifies the direction to a solution. “We are seeing a clear trend toward engaging in more of a partnership with the advisor, a natural evolution as investors learn more about due diligence in the aftermath of the financial crisis,” reports Charlotte Beyer, IPI founder and CEO. “Advisors have longer lasting relationships with investors who wish to be a partner in a dialogue.” This reinforces Julie Littlechild's finding it Anatomy of the Referral: when clients believe there feedback is sought and implemented, they are more engaged, satisfied, and loyal.

The message is clear – involve your clients in a dialogue and discover how they really feel about your service. If you can uncover client disappointment on how well you leverage your resources for them, on access to you, or on the results to deliver, you have the information you need to give them the experience they desire.

Results From Client Engagement Think Tank, Part 1

A few weeks ago, I facilitated an industry think tank on client engagement, hosted by Julie Littlechild, in conjunction with FPA Business Solutions 2011 in Boston.  Our objective was to dig into the conclusions of Littlechild's most recent survey Anatomy Of The Referral and to hear about those experiences from the advisors point of view (the study was based on a survey of investors).

The study revealed critical insights into the process of enhancing client loyalty and attracting referrals. It provided statistics behind many concepts that we had suspected. But, there are limitations on polling data. We wanted to dig down into the results with real-time active conversation.

The study revealed that what drives client engagement are having the right clients, the right conversations, and asking the right questions. Some of what we wanted to know included:

• Do practices that segmented its client base incorporate that market segmentation into its client on boarding process?
• How broad were planning conversations with clients, what kind of leadership to the advisors exhibit with clients, and was there a transition during those conversations to a discussion of referrals?
• How do advisors solicit feedback and do they involve their clients in the strategic direction of their practices?
• Do they attract referrals consistently and do they have a referral marketing strategy to get them?

The results of the conversation were unexpected. There was also consensus on some surprising things. What we gleaned from the meeting was a clear direction on issues that needed further consideration.

In this series of posts, I will discuss a few of these surprising results:

• The disconnects between target markets and client on boarding processes.
• The way we target prospects needs reconsideration and updating.
• Referrals continue to be the most important source of new clients, and no one has a strategy for attracting them.
• Looking forward, what might be included in the design of referral marketing strategy.

The rest of this series will examine each of these concepts in more detail. Click here for Part 2.

The Client Feedback Loop

Asking is good. Telling people about it is better.

Gathering client feedback increases loyalty. So when you gather feedback, make sure your clients know you are asking for it. You can even get some benefits from letting your prospects know.

When you do a client survey, all your clients will know about that. If you assemble a client advisory board, you can benefit from promoting that fact. Many advisors have told me that their clients and prospects are impressed when they hear about the advisory board.

Acting on feedback will push your clients closer to being engaged. The first step is to publish the results of the feedback you received. I am not recommending you actually distribute the full report of the survey – for many financial professionals that's probably against compliance regulations anyway. You can however, promote selected results. "When surveyed, our clients tell us that we consistently respond to their questions faster than they expect."

You might consider publishing a surprising result as well. "On our recent survey, you collectively gave our company newsletter a three on a scale of five. We will be looking into how we can improve it."

Include some of the results in your marketing. "We provide excellent customer service" will not differentiate you from any other advisor. Saying "when surveyed, our clients indicate that 85% of phone calls are returned within one business day" can.

Similarly, promote feedback from your client advisory board. Since only a few select clients can participate in the board at any one time, you may wish to have a communication plan in place to publicize the feedback. You can include a description of the issues discussed at the board in your company newsletters, e-mails, or posts to your website.

Indicate what you plan to do in response to the board's recommendations. Even more important, publicize the changes you make once they are in place. Changes to your office procedures, how you interact with clients, your marketing, or client events organized based on the request of the advisory board are all powerful ways to communicate that you are listening and willing to make changes to improve your clients’ experience.

The study Anatomy Of A Referral revealed that 74% of engaged clients report that they were asked for feedback, and 72% believed their feedback was important to the advisor. Communicate the feedback you received, what actions you took in response to them, and you can help get more of your clients to that coveted engaged status.



How Do Your Clients Describe You?

There has been a lot of ink devoted to the importance of a financial advisor’s value proposition. But there may be something more important than how well it is written and how well it differentiates you.

As discussed in the Art Of The Referral, client referrals actually happen when a client's friend asks for a referral or has a financial need. This is the moment of truth. When a friend, acquaintance, or business associate of a client expresses a need for your services, will you spring into your clients mind?

It is important that your value proposition describe what you do in a way that distinguishes you from other advisors and is meaningful and compelling to the people in your target market. It is just as important (maybe more important) how your client describes your unique value. At the moment of truth, will your client put together their friends need with the problems you are especially skilled at solving, and remember to refer them to you?

You know that I advocate engaging your best clients through an advisory board to discuss what they most value about your services. That's the best way to know how they describe you and to get their guidance in refining a value proposition. But there are other ways to find out how they describe your value. You can uncover it in a client survey, or by incorporating a question or two into your client meeting agendas.

Once you uncover how your clients describe your most important value to them, you may need to work with a few select clients adjusting it. While you want it to remain in their words, you may want to emphasize specific services or an investment style. Continue to work with your clients so that you project the right message, and any adjustments continue to ring true to them.

Finally, the polished value proposition needs to be communicated back to clients. You can publish it in a client newsletter.  You can incorporate it into a brief discussion of the clarified statement at the end of appointments:  “We have been working to focus on providing [type of services] to [type of clients].  If you have any suggestions on how we can do that better, we would appreciate your help.” 

Devote some attention to educating clients on how to describe your value, and referrals will come much more naturally.