If you surveyed your clients and 99 percent reported that they were satisfied with your firm, you'd probably be very pleased. However, according to a recent study, client satisfaction is not enough to build your practice. To really grow, you need engaged clients.
Julie Littlechild, president and founder of Toronto-based Advisor Impact, which is focused on helping advisors gather and use client feedback across North America and Britain, says an engaged client is a client who not only utilizes and appreciates the array of financial planning and investment management services you provide, but understands your unique market niche. According to Littlechild, the distinction between a satisfied client and an engaged client is best illustrated in the differences in how they make referrals.
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Loyalty EconomicsAdvisor Impact's report "The Economics of Loyalty" sets a new standard for client relationships, focusing on "engagement" rather than "satisfaction."
To convert content clients to engaged clients, advisors must:o Gather more and better feedback on what clients value the most in the relationship.o Clearly define and quantify service standards for clients.o Implement a systematic process to review performance in meeting those standards with clients (e.g., an annual report card).o Assess your client review process to actively engage clients.
To leverage the commitment of engaged clients, advisors must:o Help clients to spot referral opportunities.o Clearly define and communicate the characteristics of your ideal client, including any minimum requirements.o Assure clients that you treat all clients in the same manner; ask for feedback and share the results.
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"While both content and engaged clients are satisfied, almost all of the referrals come from the engaged clients," Littlechild explains. "Furthermore, engaged clients are more apt to be concerned about an advisor's ideal client profile. That is, when you get a referral from an engaged client, he or she has already qualified the lead and laid the groundwork by educating the friend or colleague about your firm and suggesting to your prospect how you might help them. More than simply handing out your business card, an engaged client generally relates a personal example, perhaps about an issue you have you've resolved for them — and that personal experience establishes a valuable connection."
Littlechild reports these and other new insights in "The Economics of Loyalty," a comprehensive study conducted by Advisor Impact with the help of Vanguard. To understand the economics of client satisfaction and the impact on advisors' practices, Littlechild and her team surveyed 1,000 Americans, all of whom work with a financial advisor and contribute to or make the financial decisions in their household. (This was a carefully structured sample based on household investable assets, including a full sample with $5 million-plus.)
She presented findings in her keynote address at this year's FPA Business Solutions conference held in March in Chicago. While a summary of the survey was distributed to journalists in April, the full report is now available to anyone interested (you can download it at www.AdvisorImpact.com on the industry insights page).
Not Just SatisfiedAccording to Littlechild, the findings presented in "The Economics of Loyalty" support her initial hypothesis that advisors can positively impact their firms' profitability by moving clients along the satisfaction continuum to higher levels of commitment.
