Customer retention has long been recognized as an effective and often overlooked growth strategy for many businesses.
Customers continue to do business with you because you understand what they need, and meet and exceed their expectations delivering it, supporting it and servicing it. In other words, you have to really know your clients in order to keep them.
The best way to grow a business is to retain your customers.
While new client acquisition is often the focus of sales efforts, retention of and selling to existing customers has long been recognized as an effective growth strategy.
Consider these facts:
• A 5 per cent reduction in the customer defection rate can increase profits by 25-95%. (Bain & Co/HBR)
• A 2 per cent increase in customer retention has the same effect as decreasing costs by 10 per cent. (Emmet and Mark Murphy)
• The probability of selling to an existing customer is 60-70 per cent. The probability of selling to a new prospect is 5-20 per cent. (Marketing Metrics)
• It is six to seven times more expensive to acquire new customers than it is to keep a current one. (White House Office of Consumer Affairs)
• 80 per cent of your future profits will come from just 20% of your existing customers. (Gartner)
The best way to retain your customers is to know them really well.
‘Know your client’ has become a buzzword in the financial services industry, often associated with an increasingly complex set of compliance requirements.
But how many advisors really know their clients? I’m not just talking about how your client answers the risk tolerance questions on the Know Your Client forms, but how many advisors truly know their client’s full financial picture and what motivates their financial decisions.
Successful advisory practices grow and thrive because they are built on serving the needs of their clients.
Here are five ways that really knowing your clients can drive sales and growth in your practice.
1. Know the lifetime value of your clients.
Each one of your clients has chosen to do business with YOU and you’ve worked hard to earn their trust. Now, you need to be leveraging this hard work and trust to get to know your clients better as people so you can better serve them long into the future.
As your clients move through life, their needs evolve as their careers, relationships and assets change. This creates significant opportunities for you as their trusted advisor to help your clients navigate these life changes. As engagement grows between you and your clients, they will naturally want to introduce you to their inner circle of family and friends that they watch out for and try to help whenever the need arises.
2. Know when to communicate with your clients.
Milestone lifecycle events are often when your clients make important financial decisions. When people marry and start families, they begin thinking differently about mortality and how to protect their loved ones financially. As families grow, so does their need for financial planning around education funding, investments and retirement.
Pay attention to your clients’ stage of life and anticipate their needs. Track as much data as you can about your clients – their birthdays, anniversaries, and other milestone dates, as well as financial products and coverage they own – whether you manage those investments or not. Use this information to be proactive in raising their awareness about their changing needs and helpful in finding solutions.
3. Be your client’s primary source of information and knowledge.
By taking a comprehensive view of your client and his/her needs, you can position yourself as a trusted advisor who is working alongside their other advisors, accountants, and lawyers to ensure the client’s overall financial plan is in place and on track.
Position extra attention as a way to add value to your clients and become an irreplaceable part of their team. While they may initially choose to keep a multiple-advisor team, the knowledge you have about their portfolio and your willingness to work with others on their behalf will take your relationship to a higher level. It will also help you cultivate a referral network among other advisors on the team.
4. Get to know your client personally.
Take a genuine interest in getting to know your clients and the details of their personal lives. Pay attention to what’s important to them, starting with their families. Know the names of their spouses and children, as well as their birthdates and life details. If you’re not a detail person, develop a system for tracking this information.
Don’t just call your clients when you are trying to sell them something. Become part of their extended network and make an effort to spend social time together. Treat your clients as friends and always be willing to extend a helping hand.
5. Know where your clients spend time online.
Your clients, to varying degrees, are spending time online. They are sharing pictures with friends and family on Facebook, networking with business colleagues on LinkedIn and getting their information from news, financial and trade media websites.
You need to be connecting with your clients on social networks and listening to what they’re interested in. If you aren’t developing strategies to engage your clients online as part of your day-to-day business activities, you can be guaranteed someone else is.
Rick Hyde is the founder of Ticoon Technology, a company that designs front office systems for many of Canada’s largest financial institutions and life insurance carriers. Rick’s expertise in the financial services industry is based on almost twenty years of experience designing, selling and implementing web-based wealth management and financial services solutions for many of North America’s leading banks, life insurance carriers, fund dealers and brokerage firms. Rick works with executive teams to design solutions that drive ROI and support the strategic vision.
By Rick Hyde