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Practice Management > Marketing and Communications > Client Retention

Why Client Engagement Strategies Fail

By Emily Zulz

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Client engagement can lead to additional wallet share, more referrals and increased retention, and, yet, it’s something so many advisors struggle with.

During a webinar hosted by Marie Swift of Impact Communications, Julie Littlechild, founder of Advisor Impact, and Spenser Segal, ActiFi CEO, discussed several client engagement initiatives that when done right can result in growth and increased profitability. ActiFi and Advisor Impact introduced a new client engagement program together at the end of last year.

What does it mean when a client is engaged? Littlechild explained, “They were engaged because they were the most satisfied and the most loyal. They were engaged also because they were advocates of the business of the advisor. They were telling other people about it.”

Clients who are highly engaged also place a higher value on advice.

“What they’re saying is ‘I don’t just see my advisor as a proxy for performance. I can understand and isolate and value the advice that is provided as a separate and distinct thing,’” she said.

Yet, only about a quarter of clients are engaged, though, according to Littlechild.

Why is this? Why do advisors fail engaging their clients?

Segal narrowed down why client engagement strategies fail to two major things: lack of execution and lack of client input.

A major problem is the advisors’ inability to translate feedback into “cohesive improvement initiatives” or an action plan. And many times, according to Segal, advisors lack the commitment and follow-through.

“As an advisor, you can stay pretty busy all day, every day just meeting with clients, doing emails, following up on phone calls,” Segal said, adding, “If you only have one hour a week — let’s just assume the other 39 hours of your week are booked solid responding to client requests, meeting with clients — what can you do in that one hour that is going to meaningfully drive engaged client relationships?”

Take input from the client, Segal said, and translate that client feedback into a specific agenda item that gets added to a calendar.

“Something as simple as that can be very powerful,” he said.

But, first, advisors need to get clients’ input — and that means asking the right questions.

“You really have to go another level in terms of questions that you ask, how you construct those questions and how they get asked at the root of what really matters to the client,” Segal said. Segal also points out that a question will often need to be asked more than once.

“The client remembers what they want to remember — generally, it’s about 25% of the stuff you talk about,” he said. “If you’re talking about estate-related issues at a point in time where that’s just not on the top of their mind — even though you really did talk about it  — they don’t remember any of it. And maybe they had an event in their life, a relative passed away, now it’s top of mind.”

Successfully executed client feedback enhances loyalty and referrability, which can lead to increased growth and retention.

“We all know that referrals [are] the second most cost-effective way to grow your top and bottom line, and yet [that’s] not being realized,” Segal said.

When advisors ask the right questions and get clients engaged, they’re able to identify the “at-risk” clients and uncover their concerns, gain insight into what is working well and what can be improved, as well as uncover additional wallet share and opportunity.

Littlechild added, “To some extent, we’ve almost fooled into believing that we’re doing everything we need to do. With some focus and different execution we can see significant results.”

Segal and Littlechild pointed to data that looked at the referral and retention potential available in the 200 households it surveyed retention — if client engagement is fully realized.

Looking at potential referrals, they calculated an estimated lifetime revenue on new clients as approximately $417,600. Moreover, the potential lifetime revenue retained from “at-risk” clients was nearly $259,200.

“When advisors realize this, it’s quite eye-opening,” Segal said.

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