Harry Beckwith is a marketing genius and advisors can learn a lot from him. His first book, Selling the Invisible (Warner Books, 1997), has sold 550,000 copies and is part of the curriculum at several graduate schools of business, including those at New York University and UCLA. His firm, Beckwith Partners, advises 23 Fortune 200 companies on positioning, branding, and marketing strategies, and among the companies on his client roster are IBM, General Motors, Microsoft, Target, State Farm, Merck, ADP, Hewlett-Packard, and Wells Fargo. His concise style, knack for storytelling, and two-page chapters made it hard for me to put down his books. Beckwith spent two hours answering my questions about how advisors can market more effectively. Here’s what he said.
Talk to me about the quality of service that financial advisors must provide. You believe Starbucks sets the bar, right? Client expectations of service aren’t relative to others in your industry. They are absolute. Expectations for your service are based on what we get in any category. If we felt great about how we were treated by American Express, Disney, or Starbucks, that’s what our expectations are for all services. So you’re not competing with other financial advisors. You’re competing with all other service companies. They establish our standards and expectations and if you don’t meet them, you’ll fail. Many services are discretionary. You probably should have a dentist and a lawyer, but many people don’t. You don’t absolutely need a financial advisor. So if it is not a satisfying experience, people will take the option of choosing no one at all.
You say businesses shouldn’t create what’s needed, but should create what’s loved. What does that mean to financial advisors? That means you shouldn’t benchmark yourself against standard practices. The standard practices are just meeting expectations. You need to figure out what people would love, what they haven’t experienced before, and create that. It might be adding a service only done in another industry and not by financial advisors. But whatever it is, you need to look beyond the standards of your industry. It’s even more crucial for a small business to do this. With advisors, for instance, one thing that can make them special is clarity. People love clarity about money issues. Part of the reason they come to [advisors] is they don’t understand all their options.
Thirty years ago, people’s financial options were limited. But now there are something like 10,000 mutual funds, and that’s just funds. The CEO of a company that offers annuities told me not too long ago that he cannot keep track of all the new types of annuity products. If people in a special niche of the financial world cannot keep up with their own category, certainly the consumer cannot. People are confused and bewildered and cannot admit that. If you’re not utterly clear about what you represent, the plusses and minuses of a product, service, or investment option, there’s a chance your client will nod and pretend to understand but probably will not have the clarity to make a decision. So they probably won’t. The greatest thing an advisor can do is to offer service that makes a client feel important and to communicate with clarity.
How do you make clients love you? From the work I’ve done, it seems that there are somewhere between 10 and 12 pivotal characteristics of an extraordinary relationship with a client. If you focus attention on those areas and get skilled people, then the quality of your portfolio reports, the length of your reports, and the range of products you sell will take a back seat with clients. When clients complain about reports, it’s more often really a complaint about the way they are regarded [by you]. They do not feel important, but it comes out sideways about a report or something else. That’s easier to complain about than saying, “I felt hurt that you didn’t return my calls,” or, “Your receptionist was rude.”
To provide service that people love, the main things you want to focus on are the speed of your service, the sacrifice or appearance of sacrifice to communicate that you value your clients, your apparent expertise–that is, the way you dress and your manner–and the clarity with which you communicate. Clarity of communication is actually the number-one indicator of your mastery of a body of knowledge. Another important area to focus on are the magic words: Thank you. You need an organized plan and policy of follow-up, of saying thanks to clients. Not holiday cards that are mass-mailed. Because everyone gets them, those cards have the opposite effect.
You also need a “How are you doing?” policy. Within 24 hours of meeting with a client or prospect, you need to call and ask, “Is there anything more I need to do?” Following up a day after you’ve had an interaction with a client has an incredible effect on client satisfaction. Doing this and saying “Thank you” [is really telling the client]: “You are important to me.” You also want to make a special effort to remember people’s names, and the names of their children.
You say that small service businesses don’t need a marketing department because everyone working in the firm is in marketing. Explain. Every single act of every individual in your firm is an act of marketing. Every action could have an effect on whether people will hire you. Everyone in your firm is in the marketing department. The more they realize that, the more success you’ll have. If your receptionist is not warm and welcoming, a person could make a subconscious decision not to do business with your firm. If a person calls and your receptionist is warm and friendly, he could make a different decision. Your receptionist is in marketing.
You believe businesses should specialize–shouldn’t try to be all things to all people. You won’t be perceived as an expert in one category if you hold yourself out as an expert in many categories. I can’t identify the best niches. It might be serving a particular market segment, like business owners. Specialists have more credibility than generalists. If you appear to be a small business spread over a wide variety of subjects, you won’t be perceived as having the broad expertise needed.
You believe being small is an asset, which means independent advisors wanting to compete with large Wall Street firms are in good shape. Right? It’s true in life that every strength is a weakness and every weakness is a strength. Being small is a strength. The small planning firm is perceived as nimble, and being more responsive and more individualized, because not being among a million clients makes a client feel more important. But nothing is worse than a small business that is not service-oriented and responsive.
Explain how you know when you have the right price for your service. You have the right price when you have pushback from one client among six or seven clients. That’s doesn’t mean they reject you entirely, but they express reluctance. One in six is right. In terms of rejection, it would be one in eight or ten. You should lose some business on price or you’re losing the ability to capture additional revenue on a per-client basis, which is an important metric. A percentage of clients will be price-resistant no matter what price you set. If you get no challenges, even from those individuals who automatically are price-resistant, then your fee is ridiculously low.
Can independent advisors–small businesses typically with two to 10 employees–have a brand? And what will it do for them? These small firms can brand within their niche or perhaps their local area. Try to dominate a neighborhood or a segment. Maybe you can write an article in a trade publication or neighborhood newspaper. People will see your name and think that within that segment you are a brand. Writing articles costs time and not money. It’s not like TV commercials. You could put your ideas in outline form and then get a professional writer to write it for you. Yes, there is a cost, but it will be a fraction of running ads. And your return on investment should pay for it many times over. Creating a brand is going to make the client feel familiar with you. They have heard of you. In this world, when you have heard of someone, you make assumptions about the competence of the service provider that we don’t make about service providers we’re not familiar with. When you say, “I have heard of them,” the assumption automatically is that “He must be good.” Matisse–I’ve heard of him. So he must be a good artist. It’s a credibility builder. Credibility by association is also good. Most of your readers have not heard of me. But they have heard of Wells Fargo, Hewlett-Packard, and IBM. So you can help establish your brand by associating yourself with other known quantities. As a small business that gets most business locally, you want to have your logo show up in your community as much as possible. Put it on your letterhead, baseball caps, shirts, bumper stickers, at bus stops. Show up at local trade fairs, at the Chamber of Commerce.
You can’t do it sitting at home. You need to show up at events and speak at seminars. If you cannot write or speak, you’ll have trouble selling because so much of what you communicate is verbal, and the clarity to communicate and the confidence with which you communicate is key to people deciding that you are good at what you do. If you cannot do this, then devote time to enhancing those skills.
Talk about advisory firm names. Most advisors name the firm after the partners, use partner initials–a monogram name, for instance–or they call themselves something like “Smith Advisors” or “Smith Wealth Management.” What do you think of that practice? Companies make mistakes having names like “Financial Planning Partners” and “Financial Planning Inc.,” names so generic that you won’t remember them. Go to the phone book and you still won’t find it. I looked through the Minnesota phone book and found 23 firms with names indistinguishable from one another and those were just the ones that began with the word “financial.” Those names are not memorable. The more memorable your name is, the more it establishes your brand. Beckwith is not a common name and I have been well served using that. If I were a Thomson or Jones, I’d have a different challenge.
Monogram names are even harder to remember. Could it be “ABC Financial” or was it “ABT?” I once told someone I was working with ADP, which is one of the biggest companies in the world. A huge number of people get checks from them. But this person thought I was working for ADT, which is a security company. To get a good name–and this is covered in my third book–you want it to be no more than three or four syllables, no more than 11 characters. It should be unique or distinctive. Evocative names are best. Not generic. Implicitly it must evoke one or more desirable traits of your firm.
You believe the phrase “financial planning” frightens people away. Explain why. It has two negative aspects. The word “financial” is a negative because financial automatically sounds complex. And financial is personal: It’s a sensitive subject. So from the very beginning, you’re advertising something complex and sensitive. The word “planning” sounds time-consuming and arduous. We don’t have time and we don’t like to have to spend time on something we don’t fully understand.
As a general proposition, the first thing you’re selling is yourself as a good guy, but more importantly, you’re selling yourself as someone who can be trusted and as a person it would be enjoyable to do business with. The way you establish credibility is to describe what is involved with total clarity to impress people with your knowledge and your ability to communicate. You want people to say, when they see your brochure, “I’ve seen so many pieces like this, but this one is so much clearer.”