Is your practice customer-centric?
By Ed Morrow
Intl. Assoc. of Registered Financial Consultants
Relationships are key. Companies spend a fortune on customer relationship marketing (CRM) programs to build those relationships. In turn, those CRM-centric relationships are fundamental planks of brand loyalty. They justify and amplify loyalty.
And loyalty matters. According to business trade publication Brandweek, 76 percent of consumers across all demographic groups consider a product's brand before making a final product selection. The same holds true when a consumer acquires, switches or retains a professional service. Loyalty is the first consideration.
The average cost for acquiring a new customer is approximately five times more than keeping an existing customer for almost all industries and professions. Therefore, building brand loyalty can save your organization up to 500 percent on new customer acquisition costs, year-after-year.
Brand loyalty is the repeat purchase made or a professional relationship that is sustained by the consumer out of commitment to the brand. Brand loyalty is evident when the consumer deliberately chooses a brand from a set of alternative brands rather than simply through inertia — there is inevitable overlap between habit and loyalty.
Brand purchasing is where a prospect identifies with a brand so strongly that he or she significantly reduces all shopping efforts and merely makes the purchase decision based on brand. Furthermore, this purchaser is positively oriented to having a good purchase event, and is for more likely to be a sustaining customer. Branding greatly simplifies the purchase decision.
Brand building is an evolutionary process. When a consumer develops loyalty towards a brand, he/she develops a favorable attitude towards the brand resulting in commitment. When the customer becomes emotionally rather than merely intellectually vested in a brand, loyalty to the brand becomes cemented. This is why many highly successful financial advisors plan some type of event for clients that is not focused on business. They want to extend this bonding/branding from merely business to the emotional level. Respect becomes trust, and trust turns into loyalty. This is client retention at its best. However, it can set the stage for disappointment if there is inadequate or unfeeling follow-up by the advisor or staff.
Customers will buy products or services if there is true or perceived differentiation, a high level of service, and consistent value. Brand differentiation pivots on a firm’s ability to meet customer needs on that emotional level, rather than merely an intellectual level. But functional differentiation is inevitably short-lived. Your attempts at branding and loyalty creation can typically be replicated by rivals. You must expect them to try. If you build a pizza brand based on one concept, such as fast delivery, you can expect competitors to try to steal it with — you guessed it — faster delivery. So, rather than fast delivery, you would want to build your brand based on delivery that's fast, hot and savory. Now, that's pizza!
Every type of enterprise — including broker/dealers, agencies, banks, trust companies and consultants — needs to be able to execute customer service at a consistently high level; hence the value of aligning your CRM strategies correctly to create a quality of service differentiator.
There are good examples of how CRM can be used to boost brand loyalty. For example, L'Oreal, the world's largest beauty, skin care and cosmetics company wanted to broaden the scope of its luxury products marketing to shift the focus from products to customers. The firm operates in a highly-competitive marketplace for luxury beauty products where customer retention is a key performance indicator.
It standardized on Siebel CRM and Analytics software, the steady use of which resulted in greater customer loyalty. As well as improving customer brand loyalty, L'Oreal benefited from an improved response rate and lower cost of direct mail. It gained a consistent 360-degree view of its customers across multiple channels. Most importantly, L'Oreal can now classify "value customers" more easily and retain them, further boosting brand loyalty.
Annual purchase of L'Oreal products per customer were increased by more than 30 percent the first year and by more than 62 percent over prior second-year expectations.
How does premium pricing relate to financial advisors? It may be offering clients ongoing preferred service levels (e.g. gold, silver and bronze) at a graduated fee (such as 300, 200 or 100 per month) for differentiated levels of service.
The ultimate goal of branding is to create loyal customers. With loyal customers, marketing is easier, selling is faster, premium pricing is more acceptable, repeat business is much higher and positive word of mouth helps generate new business.
From a marketing perspective, well-branded customers build a relationship with the brand, and often become advocates of the brand by word of mouth, which results in further strengthening of the brand. Action branding
Personal service can be branded just as effectively as a product, but it must be applied a bit differently. When all branding and promotion effort is on one advisor, it can easily be interpreted as ego-centric. Nobody likes a braggart! The branding must be on Smith Financial Advisors and not just on John Smith. Images and identity should extend to Mary Brown the client service manager, Mildred Jones, who manages all investment reports and records, and Tommy Smith, who organizers seminars and frequently participates in client meetings and all the hospitality functions. Yes, all the professional accolades of John Smith as he earns new designations and honors are part of strengthening the brand, but they must fit into an overall customer-focused Smith Financial Advisors brand image.
Consistency counts! Delivering a consistent customer experience across markets is essential for building a strong brand. Initially, brand loyalty is most likely to stem from functional benefits, but the relationship that develops is likely to go beyond this in a short space of time.
So, what does it take to strengthen brand loyalty? As noted above, delivering a high level of customer service and ensuring customer satisfaction are clearly the most powerful differentiators in the marketplace, and help cement brand loyalty in the process.
Going back to basic principles
There are some fundamental tenets of brand building that apply. For a start, you need to have a proper identity to work with and to use as the springboard for unique positioning and differentiation. It must be nurtured and remain consistent at every touch point, inside the company and outside. There has to be a single, cohesive brand experience. For the customer, every touch point must work together to create that experience.
What is brand identity for an advisor? It starts with simple basic physical items: A logo that appears on everything, a service motto, consistent use of signature colors and typestyles. When you send a message to a client at home, the client should instantly pull it from the stack, recognizing by your outer stationery that it is from you — one of their preferred brands.
And you/your brand should carry with it the image of professional, valuable information and services. Your envelope equals valuable content from a known and respected source.
Differentiation is essential
Once you have that in place, you need to differentiate yourself. Focus on something that sets you apart from the herd. Create a position Positioning is the place a product or service occupies in the minds of prospects. Decide what position suits your background, abilities and audience, and then build the marketing and CRM strategies around that.
One lady advisor who had the RFC designation in addition to an MBA from a very prestigious school decided she liked lavender. Her stationery and business cards are all in pale, discrete lavender. She had 9" x 12" envelopes made in her signature color. Small labels, naturally in lavender, or with a dark lavender border, could be affixed to any report or message she wanted to pass on. She knew it was working when clients started to give her lavender scarves and bracelets. Soon, she had a genuine leather lavender briefcase and yes, a lavender Acura. Her motto: "It's not color, but careful consistent planning and execution that creates our happy and comfortable clients."
There are certain questions to be asked in order to align your CRM program customer loyalty activities and the management of your brand:
- What is the annual and lifetime value of your loyal customers? For a financial advisor this can be a very large number.
- How do you allocate marketing spending between loyal customers, in revenue and profits?
- What is your brand's (your clientele's) level of repeat purchase and how does this compare to your industry average?
- What is the profile of your loyal customers? How do you acquire more of them?
- How well and how often do you reward loyal customers? Do you hold some type of appreciation event? If not, why not? Do you have some other types of loyal customer rewards?
- What opportunities can you give to loyal customers to buy more from you?
- What opportunities or inducements will encourage loyal customers to recommend you more often? Referrals are the best and least expensive of avoiding the “prospecting rollercoaster.”
- Have you learned all you can about the buying process from the incoming customers? What are they buying, when, how important is price as a factor and so on?
- Are there mechanisms in place to gather feedback at the end of the sale? How was the customer’s personal experience? Any suggestions for improvement, etc? Do you have satisfaction survey?
- Are you proactive enough in your customer outreach? As you prioritize your existing customers, do you contact customers on special occasions and ask directly if they would like additional services or to make additional investments?
Above all, be aware that this is a long game. It's going to take time. Don't confuse brand awareness with brand loyalty, and certainly not with brand equity. Awareness is step one. If customers don't know you exist, they certainly won't consider you, but that's far different from having a loyal, long term relationship.
A CRM program that is designed just for financial advisors can be of great help, but loyalty comes through experience and time. Sending frequent mailings, articles and updates is part of cementing a relationship, and it must be automated. But CRM technologies must be viewed as enablers that operate within the context of wider business strategies — valuable as a means to an end, but not the "silver bullet" that some might claim them to be.
Think of your CRM software as a machine gun capable of firing hundreds of bullets. It is a useless weapon unless you have a large supply of bullets (i.e. letters, articles and checklists) properly positioned for access. This automated delivery of communications is referred to as a CRM “action plan” or a “marketing sequence”.
Public relations experts have always held that “perception is reality,” meaning what a prospect or client believes about you and your firm is far more important than the reality. You may be an expert on retirement plan distributions, but if your prospects, clients and other advisors do not know this, your expertise has no reality. It does not exist.
The Packard Motor Car Company felt that producing the finest car in America as well as building the powerful motors that drove all the PT Boats in World War II was fame enough. So, they did not promote and polish their brand. They did not advertise. Anybody own a Packard?