Will you marry me?

 by Tony Vidler.

I have no idea what the actual statistics would be, but I am willing to wager that the success rate of popping the question "will you marry me?" onto a prospective partner who you have not yet dated is probably pretty low.  

If you've dated for a bit, the odds get a bit better, though only marginally so.  If you've been engaged for a while and everyone knows what the end game is, then the odds are pretty good that you will get a "yes" to "will you marry me?".

How does this apply to financial advice?  Well...the biggest problem with financial adviser marketing is the tendency to pop the "will you marry me" question to people who haven't decided yet whether they want to spend a Saturday night with you. 

This lies at the heart of dealing with a common adviser question: "How can I make my marketing more effective?"

Before answering this question though it is important to understand a more fundamental question: What is the difference between marketing and selling?

Many advisers seem to think that these are one and the same thing.  Or, if pressed a little further, "marketing" is often confused with "advertising".   Marketing does include advertising... as it also includes having a clear value proposition, understanding the target market, the branding of the individual and the branding of the business entity, and a number of other things.

Thinking bigger picture though; marketing is really about creating opportunities to gain a client or some new business.  Selling is the process of converting that opportunity into an actual piece of business that your accountant can see.

To answer the question posed at the outset then, one has to understand that while there may be many components that go into creating really effective marketing, the underlying question that the adviser is really asking is "how can I create more opportunities to engage with people who would be willing to take the actions I would recommend"?

The part that really matters in this underlying question is "opportunities to engage with people".  THAT is the piece that you must concentrate upon to create "more effective" marketing.  This revelation is the point where advisers often say "aha, I get it" and their marketing efforts lift as they begin to focus upon creating new opportunities to generate future new business.  It makes sense to them that if they are able to attract attention, and engage with people, then they begin to establish a relationship of trust. Surely having done this the prospective client will take my advice and work with me?

It is at this point though that the bulk of such marketing efforts fall down in a heap.

The reason?  Lack of patience and understanding of the engagement process.  It's akin to having a couple of Saturday night dates and then wondering why the dream date doesn't want to marry you yet.  A lot of adviser businesses at this point are creating a lot of Saturday night dates....but there's no follow through.  It's just lifting the initial activity level really.

Engagement (in this business sense) is really about inter-acting with people on a regular basis in a way that they feel comfortable with until they decide they want to be with you.  Your marketing purpose is to get, and then hold, their attention and build their level of interest in what you have to offer in the way of valuable advice and solutions.  At some point in the engagement process you - or more likely some other event unrelated to your marketing and positioning - will trigger "desire" on their part to act.

That is when the marketing process is finished, and selling begins.  Although, if your marketing and engagement process is done well, the reality is that there is very little selling involved. 

The necessary level of trust and credibility in you as the right adviser has already been established.  The rest is process and technical competency being applied to the clients' need.  

The reality for a financial adviser business though is that engagement is forever.  The actual marriage part - your client buying you or your solution at some point - is actually just a moment in time.  It is a purchase. A transaction.  A fait accompli....if the engagement was a fulfilling one.

Engagement with clients, for the successful advice business, is long term.  Once you have them as clients, then the engagement and ongoing interaction becomes even more important, as they can add significant value to your business if you can move them from supporting you to the point where they are advocates for your business.

To make your marketing more effective - to get better results for your business - stop asking the marriage question.  It's not about the big moment and the big "sale".  Build systems and processes to engage people in a way they feel comfortable with, and share information and insights, and help them help themselves.....and they will want to take it further!

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It's not about you...it's about the value.

by Tony Vidler.

Financial advisers often struggle to create a value proposition that accurately expresses how they work differently, or what makes them special compared to others.

It isn't that they don't have points of difference, or that they struggle to put ideas into words...generally they are very good at both. Each adviser has a unique way of interacting with customers, and maintains relationships a little differently, and has slightly different views of how and where product solutions fit in, and what the relative strengths and weaknesses of different strategies are.

Despite that, a room full of advisers when working through the process of trying to articulate their value proposition, almost always come up with the same line of thought (and often use the exact same words) to try and describe themselves and their businesses.  

It ends up sounding something like this:

"you should do business with me because I am honest, trustworthy and a nice person. I care about people and am very good at my job. I am clever and have qualifications and you will have peace of mind if you work with me"

This is the very simple summary of the typical statement advisers first come up with - as a customer might hear it.

So what's wrong with it? Well, pretty much everything....So let's pull it apart.

1. Honest, trustworthy, etc...these personal attributes are simply expected. There is no value-add here - customers expect this as a minimum standard of integrity.

2. Nice person...of course you are. If you weren't you would have no customers, in fact, you'd have no business if you had no ability to relate well to others and be a decent human.

3. I care....well, once again, you are expected to aren't you? If you did not actually care about others you would not be in a profession of trust where an essential component is the ability to think of the other persons objectives and be willing to work with them to get them the results they want.

4. I'm clever & have qualifications, etc....of course you do. Otherwise you shouldn't be in the business of advising people about money.

5. You will have peace of mind. NOW....the big problem with this is no customer actually believes it, and not very many advisers can actually deliver it.

So let's recap....5 parts to the typical value proposition statement designed by most advisers and 4 of them are "hygiene factors", and one is frankly unbelievable in the minds of the customers.  By "hygiene factor" I mean it is a given in the customers mind...as in any hospital will be hygenic.  It is not in itself a point of difference for hospitals.

In a previous post I outlined the formula, or the questions that must be addressed, to come up with a genuine point of difference that really means something to a customer.  

( http://tonyvidler.blogspot.co.nz/2012/05/3-questions-you-must-answer-to-define.html )

Basically when trying to create an articulate value proposition it falls down in 2 key parts:

• The adviser doesn't think of how different they are to other advisers. They think of how different they are to the customers. So the proposition ends up sounding the same as all other advisers' value propositions...hardly a unique point of difference...and simply highlights the distance between the customer and the adviser. 
• Secondly, the value proposition doesn't really capture what benefits the adviser actually delivers to the customer.

And that is the core objective of it:  articulate the benefit to the client that cannot be obtained from someone else.

Here are some general areas where you might be exceptional and doing unique things, and are able to do what customers value:

• Customisation:  using the masses of data and information in a highly personalised manner, or perhaps providing service or advice that is tailored to highly specific customers.
• Risk Handling:  taking away risks for customers; transferring responsibilities; removing the need to consider specific risks - making their world less risky than it was.
• Convenience:  being able to combine things in a way others can't; getting access to what customers need and value faster, easier, and so on; being there - instead of them having to initiate action, etc.

This is just a short collection of concepts to highlight that creating a value proposition is not about you.  It is about the end result for the customer - the thing they value.  When you get that, and are able to express it succinctly, then they will get you and the value you bring.


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3 questions you must answer to define your Uniqueness

by Tony Vidler.

The difference between a good (but not spectacular) salesperson, and a truly magnificent salesperson is the ability to succinctly articulate what makes them special. 

This is often referred to as having a "Unique Selling Proposition", or USP.
 
A good USP is the thing that in a moment makes a potential customer think: "Aha! - I am interested in talking to YOU".

That moment can be the difference between merely making a living, or making a mint.

So how does one go about defining their USP?

Well, it's hard work. You have to think honestly about what makes you different, and how you deliver value, and then be able to capture that in a simple statement that people can get, or get intrigued by, in moments....it is not a 5 minute job to work out for most people.  In fact it is something that you might be constantly thinking about and working on for many many months.  

To get on track with defining your own USP there are just a few questions that you need to be able to answer.  So here are the questions you have to answer in order to distill the essence of what makes you special, and why somebody should deal with you.

1. What do I really do?

(Note:  not what are the mechanics or functions of my job, but what things do I achieve for others)

2. What am I genuinely passionate about? 

(Note: "passionate" is an over-used word, but think about what you would do for no financial reward (if you could), because you genuinely love doing it)

3. How does what I do, and what I am passionate about, combine to make a fantastic difference to another person?

(Note:  This is the toughest one to work out - and is the essence of a great USP)

Some good (but not GREAT) examples:

"what makes me unique is my ability to grasp complex technical information REALLY quickly, and provide practical simple solutions straight away that clients can benefit from."

"what makes me unique is my ability to positively influence people to change their thinking on how their financial future can be, and then help them make it happen the way they want it to."

"I am great at being able to to stay focused on the end goal for my clients, and to be able to adapt their plan for them as the world changes so they are always on track to achieve their big goals."

There is a common structure here in articulating the USP.   Identifying immediately that you are able to describe something different about you in comparison to others, focusing then  on the key function that you perform better than others, and then translating that into the core benefit for the client.

Simplistically, the formula for a great USP could be described as:

My brilliance + my passion = Your gain

a final example....

"I am the best in the business at taking complex financial problems onboard, and delivering simple solutions that work for my clients.  I make their financial issues easy for them to fix."

It can be very hard work distilling all that you know, and all that you can do, into a simple sound-bite that people can grab, and understand, in moments.  If you are able to though, you will find that more prospective clients engage you.


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5 Marketing "places to be"

 by Tony Vidler.

Free marketing always appeals, and it is often said that "any publicity is good publicity"? That's an exaggeration of course as not all publicity is actually good - some can cripple a business or brand. However, any publicity (or marketing) that is free AND where you can control the content has to be good.

Talking with advisers about the topic inevitably leads to the question:
"which social media platforms should I use?".

The answer (as it often is), is "it depends". In order to work out the right answer you need to understand the evolving trends, the broad differences between the most popular platforms, and then match that with your own skillset and target market.

Social media has progressed well beyond just being a convenient way of seeing the latest photo's of your overseas relatives, and the explosive growth of business and end-consumer users is phenomenal. Twitter grew from 6,000,000 to over 250,000,000 in just 3 years. Facebook has over 800,000,000 users now. Little old Trademe in New Zealand has over 700,000 posts per month on its message boards.

That's a lot of traffic and users engaging in the social media world. It's where you are most likely to find, and engage, likely future prospects for your business in a non-threatening and collaborative way.

The greatest benefit though for the business owner is the ability to grow your personal and professional network and reputation - which is valuable over the medium to long term. The connections you make, and the conversations you have with them, will provide good marketing opportunities. You will have an opportunity to engage with, and get to be known and trusted by, people you would not otherwise come into contact with.

Social media as a method of marketing is not totally free of cost of course - though it doesn't cost hard cash generally. It does however take some time and commitment from you. There are an array of really useful platforms and tools to help you manage multiple social media marketing efforts fairly rapidly and efficiently however - and many of them even have good free versions (e.g. Hootsuite), meaning you can manage the time commitments pretty well on a day to day basis.

For New Zealand businesses the 5 social media channels well worth considering are:

1. LinkedIn. For business to business connectivity this platform is without peer. If you want to be talking to business owners or executives/management then you need to be here. It is professional in its approach, there are interest groups for any market niche it seems, and there is a wealth of intelligence to gather. Linkedin appears to have the highest success rate of the social media platforms for generating new business.

2. Facebook. More than 2,000,000 users in NZ alone, it is without doubt the largest and best known social media channel. Particularly useful for engaging with consumers (as opposed to other businesses), and with an ability to provide quite a variety of content (images, links, video's, blog's). There is an abundance of evidence that consumers who engage with your business (or "like" you) on Facebook are far more likely to purchase from you.

3. Twitter. Still a little "wild west" in social media terms, as there is very little content control, and everything is short and sharp. It is essentially the internet in 140 characters or less...that is, there is an abundance of useful and interesting content on virtually any topic you can think of. It is extremely useful as a resource - communications, content sourcing, becoming a thought leader - or following thought leaders. An often under-estimated element is that it is often humorous and a little light-hearted, which is in itself excellent for a social channel.

4. TradeMe. Often under-estimated by NZ businesses as a marketing platform, beyond the obvious use as a place to sell the old office furniture. It truly is the social channel that Kiwi's flock to, and apart from the core auction-focus, there are advertisements, message/bulletin boards & market intelligence in abundance. Distinctly useful for any business aiming at retail consumers - they are here in their thousands by the minute.

5. You Tube. This ones surprises business owners when you talk about it, but it is the second most popular search engine in the world (after Google). This is a place where consumers go looking for things, so if you are looking for consumers.....here they are. Interestingly there is strong evidence indicating that businesses that use video in their marketing (via website, YouTube, etc) have far greater consumer engagement and dramatically increase the chances of obtaining new business. Most consumers seem to prefer watching a video rather than reading a detailed article.

Whatever social media platform appeals to you in your marketing, it is important to look at it as an element of the overall marketing strategy for your business. The more marketing tactics that are interwoven, the more effective the overall marketing strategy will be. It is smart business to create content for your own website, and then share it via social media channels (plural!) and extend the reach of your message. The social media platforms can extend the reach and knowledge of your brand beyond the passive "billboard" that many business websites are.

So; 2 big tips for being effective in your use of social media:

* Be Relevant. It is social - so remember to engage with people, communicate, inject fresh ideas into the mix, and above all - be interesting.

* Don't blatantly (and boringly) self-promote. Nobody wants to be bombarded with advertising, and people will switch off to your brand entirely if their only experience is being directly marketed to constantly. By all means let people know what you do - but no more than a third of the time in your communications. Make the rest interesting, engaging, entertaining, informative and so on. It has to be worth their while to continue following you.

Final thought: don't expect overnight dividends. It may take many months of actively engaging with the market before you have established the credibility and authority for your target market to decide you are worth hiring. But hang in there, with relevant and useful content being delivered to your target market via multiple mediums, you will become a trusted expert, and logical person to turn to for their business needs.


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Why you shouldn't be a social media peeping tom

by Tony Vidler.

For quite a while I have been talking to financial advisers about how the marketing world has changed in recent years - and how their own marketing methods have not (generally speaking). 

In short, I have been beating the drum for the advisers to consider social media and digital marketing platforms as a core part of their communications with consumers and customers alike.

Driving this belief that advisers are missing the most fantastic and low-cost marketing strategy available today is the fundamental concept of "that is where the customers are". 

 Basically it makes good sense to use the platforms and methods of engagement that the consumers themselves use. It's not rocket science is it? Go where the customers are if you want to find more customers.

Recently I saw a wonderful article from Strategi - "Social Media - an advisers double-edged sword". It was fabulous, and just what the doctor ordered. You see, I have been "missing in action" for a few weeks, distracted by & dealing with some family illnesses and the like. Not a pleasant time for anyone concerned, and what I really needed was a jolly good laugh....and I got it courtesy of this excellently idiotic article.

The essence of the joke was the (I presume) serious suggestion that financial advisers can benefit most from using social media as a listening outpost only. They are urged not to comment or participate, but merely tag along as a listener to what everyone else is doing - particularly their competitors (other advisers). The advice therefore was listen, but don't talk. That is clearly advice from someone who doesn't understand a thing about social networking.

The 2 primary purposes of social networking are:
1. be social
2. network

Forgive me for stating the bleeding obvious, but it obviously wasn't bleeding obvious to everyone commenting on the subject.

How does one be social (in any sense) by not conversing or engaging with others? You'd be the total life and soul of the party and dozens of folk would want to invite you into their lives if you spent your entire time eavesdropping on conversations and not contributing anything. That's just the sort of person I'd like to do business with. Yeah, right.

How do you network, or engage with other people for mutual benefit, if you are intending that it be a one way street? That is someone to trust with your wallet isn't it?

It was the most ludicrous piece of marketing advice I have seen for some time - and there have been some seriously bad contenders. This was a doozy though.

The point has been fairly made for some time in a number of jurisdictions that there is risk for any business when using social media as part of their marketing - and perhaps moreso for financial advisers. Clearly there are compliance issues that every adviser must be mindful of - with ANY of their marketing. There are standards expected of an adviser to be truthful and honest in ANY of their advertising. Should an adviser provide personalised advice to any consumer with a megaphone in a public place, they are a goose (at the very least). Advisers are smart enough to know that by the way, and probably don't need to be told that any further.

The rules that apply to advisers in terms of their duty of care to clients, or restrictions upon providing personalised advice without engaging in the appropriate process, or respecting privacy issues apply to anything they do. Naturally that includes social media activity.

One of the (slightly) amusing things about this particular concern of the moment is that the doom & gloom brigade are suggesting there is an issue with advisers use of social media. It is "alarming" no less according to Strategi - who by the way are able to provide an audit and compliance sign-off for any alarmed advisers and then provide guidance on how to go about getting it right. (Free plug for Strategi there!).

I'm no expert on these things, but I am an active user of social media myself. Not necessarily a fantastic user, but with over 900 LinkedIn connections, 800 Twitter followers and about 1200 regular e-zine readers - pretty much all financial services (or associated) folk - I do tend to see enough of what people are using social media for to have an idea about whether there is an alarming problem or not in this industry.

There isn't. It's a load of cobblers (as far as NZ is concerned anyway).

I cannot recall a single example on LinkedIn, Twitter, Facebook or in email newsletters where advisers are being misleading, deceptive or providing personalised advice to consumers. I do not see too many blogs, so perhaps there IS an alarming problem there. However the few blogs I do read present no issues that I can see, so I am willing to wager that there is not a blogging problem of epic proportions either.

As far as I can tell, the few advisers who do use social media actively are quite mindful of their role and use the networks as a means of providing useful content and interesting information of a general nature. That is excellent content marketing, and they are to be congratulated.

One of the most critical things that advisers need to do is engage with consumers, and be a reliable source of excellent and useful content. 

 A relatively recent study revealed that only 19% of New Zealanders' cite the financial adviser as their primary source of financial information. We have a long way to go - and providing quality content is the key - before we are even close to being seen as a credible information source to the majority of the market. Content marketing via social media is in my view one of the areas where the financial advisory community can easily and affordably add to the financial literacy of the nation - which is an excellent outcome.

For any advisers considering using social media as part of their marketing strategy, here are simple rules (and they are provided free!):
1. Be honest - as you would be in any other marketing
2. Be mindful of privacy issues - as you would be in any other marketing
3. Personal advice should be given to people personally, not broadcast via satellite. But you knew that.
4. Engage with people. Social networking is about being social, and conversing - that's a two-way thing. But you knew that.
5. Don't be a social media peeping tom. It's despicable and nobody likes them. But you knew that too.

And one final rule for business in general:

Don't listen to self-interested and inane advice. Your clients won't, and nor should you.


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What's in a name?

by Tony Vidler.

...that which we call a rose by any other name would smell as sweet.

Shakespeare raises an interesting line of thought with that quote:  something is called a particular name only because that is what the majority of humans agreed to call it.  A rose could just as easily have been called a "hippo" couldn't it?

What triggered this line of thought on the matter of naming things, or labeling, was an interesting little article about some research done by a firm called Cerulli in the States.  The key finding of this piece of research was:

59%of Advisors perceive themselves as Financial Planners, but only 30% truly offer planning services.

I have no idea of the size of the research group, or whether it checked beyond American borders or anything else, however my guess is that this finding would be largely accurate here too.

In essence, the research asked advisers to classify themselves and their practices on their own perception of the services they offer the market.  The researchers then reviewed those answers against what the adviser practices actually were, and the work that had actually been done with their clients.

Several interesting conclusions arose.  Most advisers seemed to offer some of the elements of financial planning, but then focused nearly all of their efforts on asset accumulation and/or wealth management work.

Also, it is strongly implied that many advisers aspire to provide in-depth or comprehensive planning services, but the majority of their retail clients are not necessarily in need of such services.

Thirdly, it highlights the ongoing confusion amongst clients AND advisers over the industry terminology and titles.

Certainly there is nothing inherently wrong or unethical about calling oneself a financial planner (for example), if one is qualified to use that label and is offering financial planning services to consumers.  That is not at issue at all.  It is irrelevant whether the consumers use the full range of such expertise or not really, if the adviser has the expertise and is offering it.

I do wonder though whether an adviser is giving them-self the best chance of capitalizing on their core value proposition in the consumer minds?  That is, in their branding are advisers linking their expertise and value to what the consumer thinks they want or need?

The essence of appropriate labeling, or naming of anything, is surely to convey an image which is immediately understandable to the target audience.  We continue to call a rose a rose simply because that is accepted, understood by the majority, and instantly conveys an image to the person we are communicating with.

In other words, it works as a form of communication.

So professional advisers might need to re-consider how they label - or brand - themselves.

Despite the many years of work that may have gone into earning the right to be called a Financial Planner (or any one of a number of other suitable professional qualifications), and how much distinction there might be within the industry in using such titles or qualifications, it may actually be largely meaningless to the target market.

It is all well and good to comprehensively explain to an audience that this pretty thing with a nice aroma is a typical example of the Rosaceae family.  It is completely accurate, clearly imparts that you have some specific knowledge of the subject, and sounds very clever.  

But do people get it?  More importantly, will they want one?


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WOMBAT is the word!

 by Tony Vidler.

A couple of recent conversations reminded me that there is one single thing that is continually forgotten, or under-utilized, in the marketing efforts of professional advisers - TESTIMONIALS!

You may well ask what this has to do with a Wombat - you may even wonder what the heck a Wombat is.  Humor me for a few moments though, and all will become clear I hope.

In literal terms a Wombat is a native Australian animal, renowned for its tough, resilient, plodding approach to life.  Even their metabolism is remarkably slow - some 8-14 days to digest their food.  Slow and steady is their way.  In colloquial terms the acronym WOMBAT is often used to describe a human that is rather useless really - a Waste Of Money Breath And Time. 

That observation has nothing to do with anything really, but is perhaps a useful or amusing piece of nonsense - you may know a wombat or two, and now have a useful label for them that is not openly offensive. I know some wombats for sure.

From a sales and marketing perspective though WOMBAT stands for Word Of Mouth Beats Any Thing.

Word of mouth advertising is the best there is.  Referrals and endorsement from happy customers, who advocate for you to other potential customers, produce the best new customers.  Cost of acquisition for the new client is generally one of the lowest of any marketing methods.  Ease of business in terms of gaining rapport and establishing trust is superb.  Your expertise and value is largely accepted by the potential customer before you even meet.

Everyone knows this of course, but few generate enough referrals to be able to rely upon them as the primary constant source of new business.   There are a number of reasons why that is the case, not least of which is the reluctance for professionals to beg their clients for the names of others.  That is something which nobody feels good about - especially your customers.  The extremely basic concept often touted is to ASK!  Ask and all shall be delivered!  Well...it IS true that if you ask often enough, you'll get something from enough people, so that it is sort of effective I suppose.  Truth be told this method usually results in obtaining little more than a list of the client's B-list acquaintances, and they are barely qualified at this point (if at all).  The result is effectively a new list of cold-calling candidates for you, and a nervous new client wondering what the heck they have just done. Brilliant.

Let's face it, it is poor form and a bad look (especially early in a business relationship) to put somebody on the spot and bluntly ask them for a bunch of names.  Do you really expect that someone who is still only beginning to trust you will deliver your next wave of super clients?  Just because you asked the magic question do not expect your new client to open his contacts list and electronically transport his entire social network to your I-phone, with the ringing endorsement that everyone they know should place their faith in you. The chances of that are nearly as good as playing Lotto.  You'll perhaps win plenty of small prizes if you play this game often enough, but you'll still be losing money overall and missing out on the big money.

Word of mouth though is where it is at.  Constant streams of referrals from satisfied customers ARE possible.  However, like the wombat you have to be prepared to plod along, and understand the slow metabolism at work here.  

You do have to be referrable to begin with of course.  That is, be someone professionally who is easy to trust, and easy to recommend because of your expertise, enjoyable manner of doing business and interacting with customers, and because there is a bit of a WOW factor in the customer's mind.  You do things that exceed their expectations, and impress them enough that they are confident to share their positive stories with others.  And people actually like telling others about their good experiences, so give them the chance to do so by being a good experience.

Clients also have to know that you actually want new clients.  Now that sounds really basic, but it is amazing how many customers believe you are successful, and busy - too busy in fact to take on anyone new.  Incorporate the message into your entire marketing and client engagement process that your business depends upon doing such a good job that clients introduce new clients.  And you have to keep reminding people that this is still the case.  It should be part of your marketing process that you are continually conveying this message.

There is a huge difference too between asking for referrals, and asking to be recommended.  The first is usually an uneasy process, the second is usually a comfortable process for the clients.  Asking to be recommended might not generate new leads immediately, it is a bit more passive than that.  It is however the road to repeated referrals from satisfied clients.  It is where clients become advocates for you and your business.

One of the simplest methods of all for generating awareness is to actually ask a question that invites criticism.  Of course you have to comfortable enough and confident enough in your relationship with the client that you are prepared to take that risk, because the last thing you can afford to do when asking the question is defend a position.  Whatever the clients answer is, is valid to them. Their perception is the reality of the relationship.

The little chat, and key question, that is often very effective in opening the recommendation discussion and positioning for it is:

"You know that we enjoy working with you and you are exactly the type of client we are focused upon helping, but I am a little worried that we might not be quite up to the mark in your view.  You see, clients that are really happy with us and think we are doing a good job generally refer others to us - that's actually how our business grows; through word of mouth from satisfied clients.  I am not aware of us being recommended by you to others, which makes me think we haven't got it quite right.  Can I ask what we need to do that would make you happy to recommend others to us?"

The objective here is to actually find out what you need to do in order to become referable.  then you have to be prepared to act upon that feedback - if it is reasonable & fair.  If it isn't reasonable, you were probably having the talk with the wrong sort of client to begin with, and probably don't want more clients like that. You do only want to ask those who can refer you to the right sort of clients for your firm.

Ideally what you also want from this chat is endorsement from the client.  That may come in a number of forms - perhaps they are comfortable with you being allowed to refer to them as one of the clients of your firm.  No details of their business with you of course, but a simple acknowledgement that you provide advice to them and they are comfortable with others knowing that.  In itself, that is powerful to other prospective clients, particularly if the endorsements are from well known people or businesses.   

Testimonials are gold.  Brief and to the point (50 words or less are best) - about why they think you are excellent, and hopefully why you WOW'd them.  Put the testimonials on your website, your brochures, and any marketing material you can.  Put them everywhere it makes sense, and where other potential customers can find them.  If you find yourself in a situation where you have a delighted customer for some reason, definitely ask them for a testimonial while they are delighted.

These days many potential customers will check you out before even meeting you.  Give them something positive and powerful to check.  Google rules!  So feed Google....Customers gain confidence from realizing others have positive experiences with you.  It takes away some of the risk for them in deciding to engage you.

Naturally I follow my own advice in this respect, and gather testimonials from happy clients and business colleagues.  You would not believe how many people refer to the Testimonials page when they meet with me.  Seriously - more than half refer to it at first meeting.  They have not necessarily read everything, in fact mostly they are looking at the names of the people who provided the testimonials and forming a view on that basis alone.

The key to a successful and perpetual stream of the right sort of new clients is to be referable, ensure people know that you rely upon it, exceed client's basic expectations, and seek their testimonials.  It is about generating Word Of Mouth.  It really does Beat Anything Else.

http://www.strictlybiz.co.nz/testimonials


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Anchors away! How to work out who to drop...

 by Tony Vidler.

Let's begin the new year by challenging the number 1 Myth pervading professional service firms - Big is good.  Big is NOT necessarily good when it comes to an ideal sized client base.  A big client base can simply be an anchor.

Most professional service firms seem to feel that there is strength and better profitability in achieving a bigger size.  More clients equal more success.  Continually adding new clients adds more profitability.  Well that wasn't my own experience, and nor is it the experience of many others I work with.

Yet the myth persists, that getting more clients fixes everything.  What's wrong with the ones you have?

Maybe there is nothing wrong with your existing clients.  But then again maybe there is something wrong with some (many?) of them.  There might not be anything "wrong" with the people themselves - it is just that they are not the right fit for you and your business.  One of things we never speak about in polite business society is "not all clients are good clients".  There are some clients you just shouldn't have. 

A respected adviser once said to me when he was reviewing his business model, "I decided to go through my 400 clients and only keep the ones who trusted me, actually followed my advice,  and would never sue me".  He kept 8 of them, and sold the rest of the business.

That is too difficult a move for most advisers, however it graphically illustrates the point that not all clients are ones you should be working with.  If you know who is the right sort of client, and focus your attention on those ones, then not only do you build a better business over time, but you have a far more fulfilling and enjoyable life I'd suggest.  That same adviser had rebuilt his business over a 3 year period to about 170 clients, serviced by himself & 2 other advisers, and with an unbelievably high turnover (we are talking many millions in revenue in that business).

Clearly the business referred to is an exceptional one, operating in a particular niche and providing the very highest possible range of personalised service and expertise.  It is not a typical advice business in other words.  But it did start out as a fairly normal type of advice business.

Small can be very good.  Big can be very good too of course - but it should not be thought of as an automatic path to business security.  While it is true that many fixed costs inside a professional service firm are reasonably static, or not proportionately related to number of clients one has, there is usually some sneaky overhead-creep that goes along with increasing the size of the client base being serviced.  The variable costs directly related to marketing & servicing naturally go up with increasing client base size.

One of the more interesting and worthwhile things an adviser business can ever do is to spend some serious effort analyzing the business they have.  Work out what your servicing costs per client are each year for example.  Work out what the overheads per client are.  Understand what your clients cost you - and not just in hard cash, but in support personnel time and in adviser time.  If you go through the exercise I would venture that you will be quietly amazed at what you are spending on average per client.  And we haven't discussed the lost opportunity costs....

A quick example to make the point.  Let's say you send a greeting card 1 x p.a, a couple of newsletters p.a., review letters and reports mailed 1 x p.a., disclosure 2 x p.a., maybe a seminar 1 x p.a. for clients, and perhaps one invitation to a function each year.  These things are pretty typical and can easily add up to a cost per client of $150-200 in direct servicing costs.  Apportion out your fixed costs amongst the clients....often another $150/head fairly easily.  Staff time dealing with a couple of calls and emails a year?  Another $50-75.  Adviser time?  Another 2 hours a year - call that a minimum $300.

So, the client is costing you perhaps $800 a year to keep.  (Can you AFFORD to bring on more?)

The really interesting part though is when you begin the process of segmenting your client base and working out what each segment brings in revenue each year.  Your very top end clients, that follow your advice, and think about their affairs will be presenting you with average revenue of $1,200-$2,000 p.a. on a reasonably consistent basis.  Every 2-3 years there will be a big bit of work done with them that provides a lot more.  And they will, if the relationship is nurtured well, provide you with more clients of that type.  The lifetime value of these clients can be immense.

Clearly a good investment.  Get more of them.

However, at the other end of the scale I regularly witness advisers holding on to smaller clients.  Perhaps they purchased something from the firm 9 years ago, or sought some advice and paid for their plan 4 years ago, or were handled as a bit of a pro-bono exercise.  When you drill down and look at the ongoing value these "clients" present the numbers are startling.  It is not uncommon to see an average revenue per client below $100 p.a. at this end of the client base.

Yet advisers think that those clients should receive the same "basic service" (albeit without the function invite) as every other client.  Result?  They cost you many hundreds of dollars a year to keep.

The primary rationale for keeping these types of clients is flawed.  It is usually "I don't have to spend money marketing for new clients - these are my new business opportunities for years to come".  Sorry, you've already had them for years and haven't been able to make inroads yet, so what are the chances that will change in the next couple?  Really?

Some advisers take it further and actually go out looking to buy client bases of this sort - so you get to pay a lump sum in today's dollars that represents some multiple of anticipated future earnings for people that cost you money to keep right away.  I may not be a great businessperson, but that one doesn't look like a good deal.

The reason for outlining this is to simply challenge the accepted wisdom that "big is good" when it comes to running a professional services firm.  Big MIGHT be good, but it might not either.  A big revenue base is certainly good.  A big fistful of profit each year is good too.  A big reputation is good.  But a big "client base" that is predominantly low-value transactional customers is not a good client base at all.  It is a prospect bank perhaps.  In reality, it is rarely even that.  Such customers who do not value advice, or the adviser, or place any significant store on the service they receive are not worth keeping.  They are an anchor preventing, or slowing down, your ability to sail for new worlds.

If you do nothing else in your professional service firm this year about your back office, do this one thing.  Analyse your client base.  Segment it, and decide logically what each segment represents in terms of current and future value to your business.  Understand what each segment costs you to maintain.  Understand the risks of continuing to be seen as the possible professional adviser to apportion responsibility to, for people who do not actually value the advice or the adviser, and who are a drain on the firms resources.

It may be that providing different service or support offerings for different classes of customers is the way forward.  Perhaps some simply need to be culled.  Some will undoubtedly benefit from your increased attention and move up the value chain...but not everyone.

Working out who to drop is often the best way forward.  It is not a quick process, but it will be one of the most beneficial things you can do for your firms future. Drop the anchors, and get going.


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How to do it in 3D (Marketing that is...)

 by Tony Vidler.

Advisers typically are focusing their attention on next years marketing refinements about now.   Rightly so, as marketing is everything. The only thing that gets in front of marketing your business is the hand to hand combat of acquiring actual paying customers.

When talking about the issues with advisers it seems they often see marketing as being one of two quite different things - and neither are entirely right. It is either something "strategic" and broad and slightly fuzzy, that is about business branding, positioning, look and feel of a business - the what it looks like and stands for aspects.   The focus inevitably turns to having a clever logo and tagline.  Of course marketing is partly about that.  Alternatively they think of marketing in a much more narrow sense - oftentimes confusing advertising and sales tactics as BEING the entire marketing plan. A point that is often lost in the adviser thinking is that marketing and selling are quite different things, with quite different purpose and with quite different skillets required. 

So a quick recap:  at it's most simple level, Marketing is about creating the opportunity to sell. Sales is about converting the prospect (opportunity) into a customer.  Marketing is about how the battle is to be fought and deploying the right resources, in the right place, at the right time and in the right way to achieve the objectives.  Sales is hand to hand combat, and is where all the smoke and explosions and noise are.  To consider the entire marketing strategy then one has to step back from the cut & thrust of daily business.  

When it comes to marketing strategy for professional services firms it is usually considered in a single dimension. An enormous amount of time and effort is spent trying to differentiate the business and make it mean something in a prospective customers mind - but only in the context of making it look different to every other business promising the same thing.   Financial advisers make a lot of effort to try and look different to other financial advisers - whilst offering the same core value proposition, delivered the same way, to the same target market as their competitors.  The result is they are trying very hard to look different while trying to look exactly the same. (check out the postscript for an example of this!)

What if you thought about marketing professional services three-dimensionally though?

In the 3D marketing mindset there are the dimensions of breadth, height and depth.  Your marketing thinking should extend to all 3 dimensions, and consider strategically how to use all the dimensions.

Breadth to a large degree is about considering the stuff that consumers expect you to do.  It is about your expertise and range of services. For example, the consumer clearly expects the financial planner to be able to do financial planning, and all that involves. The insurance broker is expected to be able to broker a risk management solution. So on one level there is the element of simply having to position your business to meet the basic expectations of the consumer.  In this space there is still opportunity for your marketing to promote differentiation though while doing what is expected, and sought, by the customer. This is where having a strong Unique Selling Proposition (USP) can be effective, or where broadening the services and expertise that get delivered alongside the basic expectations can add value and enhance your brand. The thinking around breadth of offering is how to add on services & skills that are valuable to the customer that they didn't expect when first comparing the market.

Even if you do not extend services or have a USP that customers can place a value upon,  your marketing and brand can be enhanced by building upon your core services through continual improvement or refinement of expertise.  That is building upwards - doing the same things as everyone else, but being incrementally better at each piece of what you do. Being technically stronger, having (and showing) a greater understanding of particular market niches, providing better advice results than others in the same space, stronger/better professional standing, operating to higher standards voluntarily and so on are examples of building your brand and offer to higher levels, whilst still competing in the same broad offering that the competition do.   The basic offering is similar to competitors - still doing the financial plan or finding the right risk management solution - but having better expertise or solutions choices, or providing more consumer certainty and safety than competitors, and being able to demonstrate it.

The third aspect is not often considered as part of the marketing strategy, as it tends to get put into the "service" category. The depth of the customer experience is a vital element of the overall marketing strategy.   At one extreme there may be a business model where the customer relationship is utterly superficial and transactional (think of direct insurance sales online: nothing wrong with it but the business model clearly doesn't provide for or offer any real depth of customer experience).  At the other extreme is the adviser (I know of) who has roughly 170 high net worth clients around the world, with himself and 6 other people (together with outsourced experts) providing the highest level of personal service and personalized financial solutions possible to the chosen few. And their clients pay a lot for that personalized financial planning expertise.  The depth of the customer service and level of personalization are themselves competitive points of difference that are integral to their marketing strategy.

So when thinking through and revising the marketing plan for the next year (and beyond), think about doing it in 3D. Have a clear strategy that covers how you will be positioning yourself in the broader market, and how you will be able to differentiate in the first level of competitive choice. Then have a solution on how to build upon those base expectations in such a way that it provides higher value or greater safety for the consumer that they did not initially expect when first comparing their choices. The depth and quality of the customer experience when engaging you (not just the "after sales service") is a further critical element of the overall marketing strategy.

If you can combine all the elements into a 3D offering you will be able to create a "WOW" customer experience. And people pay more for, and stay longer with, superior performers who exceed their expectations.

(P.S. I thought I'd check out how imaginative professional service firms in New Zealand get with their naming & branding....here's a snapshot. The number of companies using the following words in their name just in little old NZ:

Services - 43,155

Consultant - 18,710

Solutions - 10,953

Associate - 8,554

Financial - 3,450)


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The Secret to Valuing Advice

by Tony Vidler.

Putting a value upon advice is a tough issue - for advisers and consumers.

There is a pretty basic concept as far as "Value" goes for any consumer purchase though, and it can be put into a formula:

"Value = Benefits - Cost"

For a consumer something is valuable if the benefits exceed the cost.


 Whether that is a lounge suite, a car or professional advice.  The real issue is rarely just cost, no matter how much we hear people debating it or questioning the cost of something.  Let's consider a quick example of pure "advice" where the value is rarely questioned.

Consumers routinely pay several thousand dollars to an estate planning specialist for advice on how to keep their assets from prying hands.  The cost is explicit, the benefits easily understood by the consumer, and an assessment of "value" is easily calculated.  To the consumer they have exchanged $3,000 (say) for advice on how to keep $1,000,000 in assets away from future prying fingers.  There is clear value as the benefits obtained from the advice far exceed the cost.

In financial services the benefits obtained from the advice are difficult for many advisers to articulate, and therefore explaining the value generated falls into the too-hard-basket. After all, we are usually talking about "probable benefits" which does make it difficult.  Probably you will receive this type of result by investing this way.  Probably you will receive that type of benefit IF that risk event happens.  Probably, probably....  So generally the advisers problem is being able to describe the benefits in a meaningful way to clients.  Without a clear understanding of the benefit that will be obtained, the consumer simply cannot accurately assess the value of advice.  To answer the value question for consumers, the adviser needs to be able to clearly describe the benefits arising from the advice.

With little research available in NZ we need to look overseas to provide some examples. In 2008 in Australia there was some research on the value of advice, particularly with a view to trying to quantify the value received by a consumer for various financial services. This included services delivered with and without advice. The mere provision of simple tools (e.g. online calculators) costs relatively little to deliver to consumers as we'd expect. Consumers obtaining single issue solutions (e.g. advice on workplace super scheme options) typically paid $250-$1,000 for that advice. Those seeking more comprehensive financial advice (e.g. annual full advice plans) faced fee levels of $1,500 to $20,000 for advice.  Handy information, though not specific enough for most consumers, but the wide spread on the numbers reflected different adviser business models.

So there is the first part of the problem in valuing professional advice. There is such a range of delivery methods and cost structures that there is no possible way a consumer could compare and then value personalized full advice unless they understand what makes it different to other types of "advice", and why it is more pertinent to them. Without that explanation an adviser is firstly competing against a Google search and consumers can only compare costs.

The second element is being able to explain the benefits that will be derived from the advice.  A graphic example came from some different Australian research.  It found that the preparation cost for a typical planner preparing & presenting comprehensive advice was just over $3,000 to deliver.  Unfortunately the clients placed a value of only about $300 on it.  A massive difference between actual cost of delivery and its perceived immediate value.  Why?  Because the clients couldn't see the benefits. 

Consider the areas that were perceived to be valuable to consumers. There were the expected contenders such as budgeting, tax management issues, debt re-structuring, cash flow management, maximizing government benefits, life insurance and so on that presented value to some degree. There were some slightly different perceived benefits as well though, such as better lifestyle, goal setting, financial education and negotiating improved benefits and/or fees that were deemed valuable.

Advisers do all these things so there is little doubt that advice DOES create value at some level. There is a good story there, but how to place particular value on it that can be measured easily by the consumer?

Consulting actuaries attempted to quantify the value of the advice, in present value terms but over the life of the estimated advice/benefits period. It indicated that advice given to a younger family during the wealth creation phase resulted in over $320,000 additional value during the course of their financial planning life. The cost of the advice attributed to this same family over the same period was about $40,000. There were a number of tested scenario's - one with much more impressive numbers (over $600,000 added value), and some with less impressive numbers. All uniformly compared the cost of the advice component with the additional benefits received by the consumer from that advice though.

The conclusion was resounding in all scenarios. Advice added value above and beyond the costs of obtaining that advice.

There were additional intangible benefits that couldn't be quantified in dollar terms that shouldn't be ignored either. Some 66% of consumers cited "peace of mind" as a benefit; 63% felt they had "greater control of finances"; 62% felt they had "the prospect of a more comfortable retirement". These are "value" too.

Undoubtedly the case can be made that good professional advice provides benefits that are well in excess of the cost.  It is valuable therefore.  The secret to valuing the advice component is in addressing two issues clearly - and as early as possible.

The first hurdle for advisers is to be able to explain why their structure and method of delivering advice is superior to other choices for the consumer, particularly the low/no cost choices.  Then the benefits for the consumer have to be articulated, and preferably quantified wherever possible.  

It would seem that experienced advisers would have the very real advantage of being able to draw upon their real life examples and provide case studies showing the work they have done for clients in the past, and showing the costs charged and the benefits obtained (testimonials in this respect are gold!).

Like the estate planning specialist in the earlier example, the cost of good advice compared to the benefits it can produce for consumers should leave no doubt that it is valuable.



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