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.”
Financial planning is hard to market because it is an intangible service. Clients think the plan is the benefit, but you believe the planning process is actually most valuable. Explain that. Planning is one of the most educational things you do. In the course of designing the plan, the person learns his tolerance for risk, the investment options and relative strengths and weaknesses of index funds versus actively managed funds. He learns about forms of insurance, why he might consider disability insurance. He learns all this in the course of making the plan. So he doesn’t just get the plan but also gets a greater level of understanding, a greater level of comfort with finance, with knowing how money is invested to help achieve goals in life.
The plan is of limited value because it is going to change, because the world we live in is changing. Also, people change their minds about what they want.
Marketing trust is crucial to advisors’ success. How can they do that? You begin by recognizing that you are marketing your credibility to help that person achieve his goals, and that he will be in a better position if he works with you than if he doesn’t. Marketing trustworthiness means that you show clients that you will not hide fees. If people believe that you might make more than you deserve, they won’t trust you. That’s first and foremost.
In marketing trust, so much depends on the character of the person. When you go to an industry event, for instance, you might meet 10 people, but only one may stand out as someone you could work with. What is it about them that makes you decide that? Part of it is absolute sincerity. It becomes complex, but in all my books [all from Warner Books, Selling the Invisible (1997), The Invisible Touch (2000), and What Clients Love (2003)], I isolate characteristics of people and services that inspire trust. Humility, integrity, sincerity, a genuine affection for people–they’re the stuff of humanity. Building those character traits is hard work. You can always do better, learn to relate better, present yourself more credibly, learn to get a better perception of how others view you to correct misperceptions.
Advisors who have small practices or who are just starting out find it hard to produce marketing materials. Where should they start? Don’t assume you know how to do it, educate yourself. The ideal is to have a credibility piece–a brochure. It could be small–a format that fits in a No. 10 envelope. You need the credibility piece no matter what size clients you are working with. In the financial industry, the mother of all marketing pieces is the credibility piece. That’s the piece that says this person knows what he or she is doing and this is who the person is.
You need a photograph because we assess people with our eyes as a human being. At a minimum, someone just starting out should have a photo and the critical pieces of evidence that establish his credibility.
Talk to me about words. What are the right words to use in marketing copy? You think a lot of brochures are ineffective because they are filled with language that is overused and, as a result, undervalued. It’s as if the words are assembled from other brochures. It’s the same language you read everywhere. You can go through every clich? and put a noun here and verb there and you have your copy. That’s not believable. Writing teachers tell us not to use clich?s because readers do not believe them. “World-class services” means nothing. “Commitment to excellence” means nothing. They mean nothing because we have all heard those words used before by so many companies that later acted in a crappy way. Those words are guilty by association.
“Very” and “region’s best,” and other superlatives have no meaning anymore. I believe that people don’t choose the “best.” They choose the one they feel very good about. They choose “the better.” They choose “who will be better for me.” In service after service, people choose what is positively good. If it is positively good, we are satisfied, and we don’t look around anymore. Advisors need to make their service positively good, with no risk for signing on as a client.
A lot of advisors have been damaged by the bear market. Any thoughts? The ones most hurt were unclear about the cyclicality of the markets. In any relationship of customer service, the key to delivering good service is managing expectations. If clients get at least what they expect or more, they are satisfied. Advisors who have problems with clients because of the bear market did not explain the cyclicality of the markets. Now, with market going forward, the key is to give people the bigger picture and the historical perspective.
You’re a big believer in surveys. Explain why and how advisors can do them. Actually, I am a big opponent of surveys. But I am a believer in surveys done by a third party. You get a better read on what you do and whether you do it well, how you can communicate more effectively. I am not in favor of customer satisfaction surveys because they won’t yield new information. And whether they say you are bad, good, or great, you must always get better. If people get used to a high level of service, that becomes the new level of expectation and you must then improve constantly. So asking, “How am I doing?” is not that important. If you do a written survey, because writing is [hard] work, clients and prospects won’t provide you much information. If you ask them to identify themselves by name, they are not likely to provide information about a specific person who works for you. The real value of surveys is not to assess customer satisfaction but to get information that lets you decide how to communicate and position yourself more effectively.
What are the most important ways advisors should market? Because of scale, I am a great believer in the power of publishing. The cost is low, the return on investment is high, and you learn by doing. You learn to express yourself more clearly, and that has great value. As you write, you figure out things. And it is so inexpensive.
Also, whatever you do by way of marketing, do it well. Do it right and seek out a professional. The professionalism of your appearance has greater influence over people’s decisions about you than your actual expertise. People can evaluate whether you look good if you have a nice brochure or a nice Web site or a good logo, and if you look like you’ve made money. But they cannot evaluate whether you know what you are talking about. If they could, they could manage their own investments. It’s the tyranny of appearances.
What are the main ideas advisors need to know when they are writing their marketing copy? They should not do it themselves. People who don’t write for a living write about as well as they draw. You would not go out and draw a portrait of someone and sell it, would you? It’s not good to write a portrait of your own company if you are not a professional.
If you get outside help, let them write the first draft. If you won’t get professional help, buy a few books about writing. My favorites are Positioning by Ries and Trout, Ogilvy On Advertising, and Zinsser’s On Writing Well. For your first brochure piece, keep it short. Establish credibility. That will get people to listen more carefully the next time you communicate. More detailed information is not needed until a prospective client is closer to the decision.
In my mind, it’s always best to err on the side of brevity. To the extent you talk about disability insurance, for instance, you need to say why it is important, and the benefits of getting it. But you don’t need to go too far into the mechanics or the process. Just summarize why a client needs it and why you are good on advising about it. Ideally, each specific category should be 35 words or less in your initial brochure. Then, when they [prospective clients] are close to being committed, you can have a more lengthy piece. But you can confuse a prospect by initially offering too much information. If you confuse them, they may not become clients.
In a recent survey we conducted, advisors overwhelmingly cite referrals as their chief source of new clients. Yet you say that word of mouth is dead. Why? Yes, the majority of business for most small businesses is from referrals. But where else would it come from if you’re not attending community events, running ads in publications, writing articles for local newspapers or trade magazines, or giving seminars? Then, of course, referrals will be the leading source of referrals. But the network of leads tends to be finite. If you really want a growing business, you need to expand beyond that circle of friends. In smaller communities, relying on referrals is more popular. But in a community of 300,000 or 500,000, the population is more fluid and the network does not work as well.