Steve Luckenbach’s article in the April issue of Investment Advisor, “The Path to Authentic Client Service,” centered on an indisputable point: The poor image the financial services industry suffers can’t be elevated without improved service. I loved his sincerity and intent. The goal of optimal service is beyond dispute. To accomplish that, in my view, more tactics are needed than those he presented.
Think IBM in the 1940s, ‘50 or ‘60s: It never, ever had the best computer by any industry standard—yet always dominated the field. Why? Because while it always had a very good computer (comparable to the role of investment returns in our realm), it also was superior in all the other business disciplines, creating the best overall customer interfacing package. IBM particularly stressed besting peers at a near holy trinity of sales, service and marketing. This multi-generational Watson family/IBM multi-disciplinary commitment is legendary.
Too many RIAs think one-dimensionally and see marketing as advertising and self-promotion—particularly smaller firms—and, somehow in our intangible world, bad even though it is no different, truly, than with tangibles. That sour image taints the phrase “marketing.” Fact is we don’t do nearly enough marketing if you see marketing correctly. Simply, great marketing starts with consumer learning—which is the initiator to all great sales and service.
The Proctor & Gamble Effect
Yes, many do marketing. Fewer know what they’re doing. It is indisputable, in my opinion, that Proctor & Gamble has demonstrated marketing excellence almost forever. And a Proctor & Gamble marketing alumni knows for a fact that marketing doesn’t start with self promotion, but with a disciplined, intimate, evolving consumer learning process—and that fuels all client interfacing actions. Without it, sales and, as importantly, service will be sub-optimal and off-base.
What Your Peers Are Reading
Many RIAs will dispute that, claiming they know their client intimately because they deal with them closely. If you think that way I ask you to contemplate what is more important: what your prospects and clients say to you, or what they say behind your back? The latter dominates.
You Must Focus On It
Ironically, my firm is often criticized for doing too much marketing because of our ubiquitous advertising. But folks don’t fathom the amount of consumer learning behind our ads. Forgetting other consumer learning tactics, in a given year we do between 20 and 75 focus groups scattered around America—each aimed at learning a specific tidbit we don’t know about how our clients or prospects think and feel, so we can better advertise, sell and service. I emphasize all together because, as I cover later, á la IBM, they all feed each other. The purpose of focus groups is to get participants to say things central to their needs and desires that they would never, ever say to you via the sales or service effort.
From focus groups we know prospects search advisors out online, but existing clients rarely do. Existing clients don’t feel they need to: They judge you based on their interaction with you. Hence websites and all search engine optimization efforts are better aimed at prospects than clients. If your first Google page falsely conveys that you’re terrible it will impair your ability to get new clients, but hardly hurts at all with existing ones.
We’ve also learned that most clients have a slight hostility to any new service offered. Their perception? Any new service must somehow take resources away from what they were getting before; since they were okay with what they were getting, this new service is probably negative. Any new service must be presented to overcome this as: “This newbie is not a diminution of your prior benefits.”
Hence, too much service is bad sometimes. We learned most clients don’t like our long, exhaustive quarterly review—it’s too much for them and they don’t even try to read it—but about 20% love it. So we do it, provide a brief executive summary that implies they don’t need to read the rest, and presume we’re doing it for the 20% not the 80%. Of course we don’t know with certainty which are which. Then, we do a weekly one-page review that the 80% love, but the 20% don’t mind—because it’s short.
Another silly lesson you may hate: We learned overwhelmingly clients don’t want a Christmas present—irritates them now matter how you twist it—but they won’t tell you directly.