From the July 2006 issue of Investment Advisor • Subscribe!

July 1, 2006

Providing More Than a Commodity

Clients come for the advice; get them to stay for the experience

Last month we introduced research conducted by JPMorgan regarding clients' passion points, and talked about how you can tap into them to grow your business. This month we discuss applying the knowledge of these passion points--from concepts of language and touch points to service level--so you can further your efforts with clients and prospects.

To recap, relationships are built on understanding your clients' needs and wants. While you may categorize clients by age bracket, source of wealth or family status, our research shows that clients are more than their demographic and should also be grouped by emotions or passions.

As with any successful business, advisors need to reach out and make clients comfortable so they want to do business with you. Like so many other industries, financial services must show differentiation to ensure clients do not look elsewhere.

Making a Difference

Think about the marketing model that Starbucks or Home Depot has successfully employed. What was once just a commodity (e.g., coffee or hardware) has now become a consumer "experience." The customer doesn't just go for the coffee or hardware, but wants to visit because she relates to the surroundings, feels comfortable there and may thus purchase more.

This is known as the "experience economy," which was first identified by James Gilmore in a 1998 article for the Harvard Business Review, "The Experience Economy: Work Is Theatre & Every Business a Stage." He theorizes that we are in the middle of an economic shift--from a service to an experience economy. Companies that want to stand out from the competition need to offer more than goods or services--they need to provide experiences.

No longer suppliers, companies are stagers of events designed to be experienced. This experience economy does not necessarily mean luring customers with low prices or even hard-to-find items; rather customers are intrigued by being a part of something. For financial services, it can be taking very complex information and translating it into a more "engaging" outcome. Instead of statistics and actuarial charts, clients are more responsive to or intrigued by experiences in which they can interact and where they feel comfortable.

What are clients interested in and what clicks with them? Since there is no one-size-fits-all approach, you need to individually consider your clients and targets. Look at the archetypes we discussed last month--Goodlife, Artisan, Unplugged, Wellville and Legacy--and think about your top clients. (See "Client Archetypes".)

Once you have identified which archetype each of your clients fits into, you will be able to further your discussions and customize your services appropriately, thereby transforming a commodity service into a "client experience." And that can mean improved client acquisition, client retention and client referrals for you.

Client Acquisition:

Review your list of "top 20 clients." Do you see similarities in terms of archetypes? If you do, it may say which segments with which you naturally have an affinity.

This process can help you determine your niche market. Who is your ideal client? Who do you work best with? Once you have established this, you can create a targeted marketing plan for this segment. Take your interests and those of your key clients and apply that knowledge so you can network with your target market.

How can you get in front of the target audience for your business? Your everyday life can be your best prospecting tool. Think about what organizations or clubs you already participate in or have a desire to join. These not only offer you knowledge, enjoyment or relaxation, they can offer new business prospects.

Client Retention:

Studies show that, on average, most affluent investors work with at least three advisors. Therefore, for you to win out, ask yourself these questions: What differentiates me? What am I doing to ensure that my best clients are engaged and committed to me? Am I customizing my approach to match the aspirations of my clients?

If you do not know the answers, you are probably not delivering the client experience needed for long-term retention. In this age of the experience economy, excellence in investment skills is not enough. In fact, the Spectrem Group's 2004 survey of the affluent states that, "Clients value strong and substantive personal relationships with their advisors in which it is evident that the advisor understands and cares about their personal goals and preferences. Too many advisors who are technically very capable fail to connect with clients to convey a sincere interest in their clients beyond developing an investment strategy, managing a portfolio or conducting a plan."

Similar to most relationships, establishing long-term and mutually beneficial connections with your clients takes some extra effort. These extras must be customized based on a client's respective emotive values or passion points.

The niceties of everyday conversation, your presentation style, your drip campaigns, and what you serve or where you take a client will differ according to that person's archetype. In other words, every "touchpoint" you have with a client should be thought of in terms of enhancing the client experience.

For example, Goodlife clients must feel important, valued and special; and that working with you is a privilege. They are impressed with what others cannot easily get, do or see. Therefore, when positioning your solutions, make sure to highlight why it is appropriate specifically for them and not a solution that would work for "everybody."

Client Referral:

For most clients to feel comfortable in making a referral to you, they need to feel a strong connection to you and your business. They must feel better understood and served by you than any other professional they may have worked with in the past. They need to feel that the experience of working with you is exceptional.

A proactive approach to getting introductions to your clients' friends and family will be through networking and conducting unique client appreciation events. Ask your clients to come as your guest and "bring a friend" to an event that relates to their unique passions. Social settings are a great way to learn more about existing clients and an even better way to get your clients to introduce you in a less threatening setting to potential new clients.

Get started by identifying small but targeted activities. You want to be creative in your approach by appealing to your clients' specific passions or unique hobbies. For example, for your Artisans you could hold a small "cookery class" at a local reputable restaurant with a well-regarded chef. This type of event is not only entertaining, it's interactive.

These events not only help you to spend time with your clients and their friends, they also show them that you know what they like and can customize your approach to help them achieve their ultimate passions. Remember, people do not make financial investments for financial reasons--they want the investments to pay for other non-monetary aspirations.

Furthermore, part of your marketing strategy is to get your clients talking about you. Think about the last memorable experience you had. Imagine your clients mentioning you in an incredibly positive light because of these experiences. As investors gravitate toward choosing providers in the experience economy, don't you want to be the provider of choice?

In working with the affluent, it is safe to say that it cannot be a "one-size-fits-all" undertaking. It is about understanding each of your clients and what cultural influences drive them. With a bit more customizing according to their passions, you will have what you need to stand out from the crowd, and be a strong contributor in this increasingly competitive "experience economy."

Susan L. Hirshman, CFP, CPA, CFA, CLU, is a managing director for JPMorgan Asset Management in New York. In that position, she develops strategies to provide wealth solutions to the affluent market. She can be reached at susan.l.hirshman@jpmorgan.com.

Reprints Discuss this story
This is where the comments go.