Preventing Client Disloyalty

I recently read with great interest an article published in the Harvard Business Review called “Stop Trying to Delight Your Customers”. The article addresses a recent research study of 75000 people conducted by the Customer Contact Council a division of the Corporate Executive Board which showed that a major contributor to client disloyalty across a range of industries was poor service. Whereas client loyalty was more based on brand and product.

So, a key factor in not losing clients is to improve the management of the service process. How can than this be done?

The article suggests that your service center reps need to address the emotional side of customer interactions.

The research shows Twenty-four percent of the repeat calls in our study stemmed from emotional disconnects between customers and reps?situations in which, for instance, the customer didnt trust the reps information or didnt like the answer given and had the impression that the rep was just hiding behind general company policy. With some basic instruction, reps can eliminate many interpersonal issues and thereby reduce repeat calls.

One UK-based mortgage company teaches its reps how to listen for clues to a customers personality type. They quickly assess whether they are talking to a controller, a thinker, a feeler, or an entertainer, and tailor their responses accordingly, offering the customer the balance of detail and speed appropriate for the personality type diagnosed. This strategy has reduced repeat calls by a remarkable 40%.

I believe this research gives executives a lot to think about. What is your strategy for understanding the emotions of your clients?

A Behavioral Driven Performance Model

While it is a trend to create a diverse team in a workplace, I have found that companies are still using a standard performance model across the board to measure their behaviorally diverse teams performance.

Several months ago I started evaluating consulting company’s performance evaluations. With much dismay I have found that most are using a similar model to the one I was critiqued on, 20+ years ago as an accountant.

A recent development in the DNA line is a behavioral driven performance model. There are two aspects to addressing workplace performance The DNA Way. First: is the natural behavior of an individual. This establishes the natural strengths, struggles and development keys of this an employee. The second element is the Workplace Engagement 360 Report. The 360 Report is generated on an evaluation process where the employee first critiques them self on 75 workplace engagement items, the results are then compared to the perception that others have on his or her engagement, through a confidential data collection process.

Ask yourself this: Would you like your performance measured on your own strengths, struggles and development keys or someone elses?

Managers need to realize that some of their employees will be better at sales, networking or better at analytics than others. Understanding your employees natural behavior first, and then comparing it to their yearly progress with a Workplace Engagement 360 Report is the fair, honest and simple way of measuring your teams success and enhancing your business performance.

Behavioral Segmentation of Your Clients

Traditionally many advisors segment their clients based on tangible factors such as the type of service they will provide to clients (eg executives, family business, life planning etc) and assets under management minimums. There is business sense in this as it focuses the business to some degree. However, segmenting your clients based on their DNA Behavioral style will further increase your marketing and service delivery performance.

Behavioral segmentation will enable you to direct your communication and marketing to specific types of clients based on who they are. For instance, a Stability Need person needs to have communication which reflects safety and security. A Lifestyle Desire client needs to hear about how your solution will grow the fun side of life for them. When you segment your clients the emotional engagement with them will increase which leads to a longer term relationship with a greater share of the wallet.

Recently I was helping one of our Wealth Mentors with his client segmentation. He had all of his clients complete their Communication DNA profile. This enabled us to divide the client base into 4 quadrants of DNA style. Interestingly, because he is a Lifestyle Desire advisor this was the largest segment category. The Wealth Mentor knows having clients of a similar style to his makes relating to them easier.

However, the other key part about segmenting clients is addressing their values and life interests. The more that the clients values and life interests are similar to the Wealth Mentors the greater the chance of a sustained connection. The values are foundational as they will be at the core of every discussion and will be important when key decisions are being made. Having similar life interests eg sports or arts gives you something in common to relate to. In the case of our Wealth Mentor, he wanted clients who shared similar spiritual beliefs and also his interest in tennis. In his practice, other advisors wanted clients who were interested in environmental issues and football. What they found was that their relationships were much stronger with clients in these zones.

Once there are common values and interests, then whether you keep the relationship with the client will depend on natural DNA behavior. This gets back to segmentation based on behavioral style.

To learn more and to get started with implementing DNA Behavior Solutions to segment your clients, click here.


The Shift from Practice Management to Improved Performance

Over the past twelve years we have been working with financial advisors focusing primarily on practice management. During this period, we have worked with some major influencers, through both formal and informal relationships.

One major influencer was Michael Gerber, author of The E-myth Revisited and CEO of E-Myth Worldwide.? As Certified E-Myth Consultants, we were taught:

  • Most people who start a business are not really entrepreneurs, but technicians suffering from an Entrepreneurial seizure
  • The importance of working on your business, not in your business,
  • The sole purpose of building a business must be to sell the business, otherwise you will never have a business to sell
  • Businesses that are built with a strong foundation of systems, like McDonalds, will produce exceptional results

When we look at most coaching practices, like E-Myth and those who focus on the financial advisor market, most are practice management focused.? This was a natural evolution and the path we chose in 1998.? Financial services and wealth management are relatively new industries and approaches and systems have been under development, especially over the past five years through recent technological developments, especially CRM providers.

Over the past ten years, technology has simplified practice management.? Ten years ago, segmentation involved producing paper reports of client assets, scanning them into a spreadsheet (which was pretty advanced) and sorting them into categories.? Today this information is much more available and segmentation is a simple process.

CRM is the logical home of business systems and processes.? Today, programs like Redtail, Junxure and eMoney can provide advisor access to critical information about their businesses and have created systems or automated processes that allow advisors to complete these and other tasks with the push of a button.? Firms, like McDonalds, have technological systems in place for making the perfect french fries and staff members are trained on using the technological solutions.? Systems and processes get amazing results when automated.? CRM is the best solution for automating business systems, especially in service firms.

Advisors should focus their attention on having their teams learn to use their new technology effectively.? Redtail recently introduced Redtail University, where advisors and their teams can attend full-day sessions to learn how to use the programs and run the systems effectively.? Genworth Financial Wealth Management has been running two and one-half day practice management boot camps since 2000.? We think these types of organizations are the natural new home for practice management.

Advisors should now turn their attention to the new key drivers of advisor success ? Personal Performance, Relationship Performance, Team Performance, Client Performance, Business Development Performance and Business Plan Performance.

Central to this new Performance approach is Understanding People Before Numbers.? We believe this is the missing link that has resulted in underperformance in each of the performance categories above.

Before you can build a high performance practice or business, you need to understand your natural talents, identify your core life motivations and establish goals and a vision that are connected to who you are.

Performance is about making committed decisions ? decisions about your life and your business that allow you to effectively deal with lifes interruptions.? It is about setting a path forward that you can set out on every single day with confidence and enthusiasm.? Before you can achieve this, you need to understand your natural talents, core life motivations, set your goals and have a clear vision of where you want to be in the future.

To have a happy and successful business, you need to interact with team members and clients who share your values and understand their natural talents and core life motivations so you can help them make more committed decisions and achieve their goals.

Self Esteem Impacts Financial Performance

One of my strong beliefs is that confidence sustains your performance. If you lose your confidence this will have a negative impact on your financial decision-making, and all other decision-making. The reality is that when your confidence goes down then you can become pressured to make poor decisions. Your emotions will be higher and rationality reduced.? It is then harder to stay with a financial plan when you have lost your confidence. You become reactionary to events rather than being committed to your decisions, which comes from confidence.

Now there is research which shows a direct relationship between having high self esteem and a good relationship to money.? Please review the Aviva Feel-Good Insight Report prepared in June 2010.? This is a study into financial well being. Click here to review.

One of the key research insights is that 85% of people who are in control of the finances have high self-esteem. Further, they are likelier to feel happier about their financial situation. Self esteem can be improved by sensible financial behavior, improved understanding and the right advice. 62% of people with high self esteem have set financial goals and save to invest in them. 72% of those with low self esteem lack any savings or investing habits for the long term.

So, what are you doing to build your confidence? What are you doing to ensure your self esteem does not get eroded?

In the end, it is practicing smart behaviors.? Take a look at our DNA Performance Model to learn more – click here.

Advisors Can Differentiate By Integrating Behavioral Finance Strategies

Recently, Merrill Lynch and Capgemini have issued a very important research study which demonstrates how much investors confidence has been eroded by the turbulent markets. Investors are still very wary of the future.? Click Here to read the article.
The article points out that the following:

  1. Investors want a more active relationship with their advisors, including a deeper understanding of their investments and how they are aligned to their goals, based on their actual risk profile.
  2. Many investors are being driven by their emotions when making investment decisions which is increasing the need for advisors to engage in greater dialogue with their clients.
  3. Clients are now demanding fundamental changes in how they are served, and are favoring firms which can understand both their emotional and intellectual needs. This is increasing the need for advisors to incorporate a behavioral finance approach towards portfolio management. Advisors need to be able to incorporate the emotional factors into stronger portfolio management and risk management capabilities. A behavioral finance approach of this nature can be a big differentiator among firms.

This research is very consistent with other research, such as from Gallup, which demonstrates the need to emotionally engage with clients at a much deeper level. This is the new “behavioral economy”.