Monday, 23 July 2012

Some customers you don't want...

by Tony Vidler.

Understanding the needs of different types of customers is essential in order to get your value proposition, service offering and process as RIGHT as you can to attract the right types of customers for your business.

Broadly speaking there are two groups of potential customers; 
1. Transactional focus
2.  Relationship based

The engagement, or "sales", process is quite different for each group.

Traditionally most advisers have been trained to deal with the transactional customer - which is hardly surprising.  Most of today's advisers were trained by product manufacturers in the past whose sole concern really was selling products. Today's professional adviser sells their expertise and time, and while there are often product solutions involved in the process they are not at the center of the advisers' value to the customer.

The customers with a transactional focus are pretty much focused on short term decision making.  They are essentially driven by price, or immediately perceived value for the price they have to pay.  In the absence of exceptional value in relation to other potential suppliers of advice or product solutions, they will focus on price alone.

Their greatest concern is paying more than they think they should right now.  As such, they will compare potential suppliers, or advisers.  They will haggle and express dissatisfaction at ANY price in a bid to get the best price-value they can.  They will question every recommendation, conduct their own research, ignore the commercial value supplied to them in time and effort by advisers, and be swift to complain of any perceived shortcomings.

Why would you deal with them if you are a professional adviser?  The very thing that differentiates you and adds value lies within your expertise and skills.  The core adviser value is not in the products you happen to suggest at any given time - and it is certainly not in the price of those products (which you cannot control much of the time in reality anyway).

The customer with a relationship focus may not articulate their needs in this way - they don't look for an adviser they can have a relationship with as such.  They do however understand that today's advice or product solution is simply a step in a much longer or larger process for them.  That is, they anticipate needing ongoing advice, service or solutions.  As such, their greatest fear is making a wrong choice.  That is quite a different motivator - and therefore underlying need that must be addressed and resolved - than the transactional customer.

The entire emphasis of your process is fundamentally different with each type of customer.

Traditionally trained advisers that retain an emphasis upon product as their core offering will naturally attract transactional customers - with all the haggling, stress and tyre-kicking that comes with that.  Advisers do so because the focus of their marketing and advice process is on that non-consumer-friendly process of "selling & closing". 

If you shift the focus of your marketing and positioning to one of engagement and building trust with customers you will attract those who value your ability to help them avoid making wrong choices, and with whom you will have much longer and valuable relationship with.

In the group of customers that seek relationship-based advice, there is significant lifetime customer value (which is a separate article in itself) for the the adviser business.  Those who seek transactional solutions focused on price are not really the clients for individual advisers of the future.  They will be the customers of the institutions that specialise in providing mass-market, not overly personalised, product solutions at the cheapest price they can get away with.

The business future for the professional adviser of tomorrow is in letting the transactional customers go to the institutions, and focusing on those who are more concerned with making wrong choices.  THEY are the ones who will value expertise and advice.

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