The changing face of client demographics means advisers need to re-assess who they serve and what they have on offer. In this article, practice management experts Business Health present some options on how to deal with fluidity in your client base and how to assess what clients want and need...
Recent analysis of our client satisfaction survey (CATScan) database clearly reveals the evolving face of Australian practices, presenting for every owner a challenge: “What does my client base ‘look like’”, “What does it mean for me this year” and “What should I do about it?”
The survey found:
- 49% of clients are aged 60+ years
- 40% are already retired
- 36% have been with their adviser for seven or more years
- 81% of practices are generating over half their revenue from existing clients
(All stats quoted have been taken from the January 2016 analysis of our HealthCheck, CATScan and Estate Planner databases.)
Faced with these statistics it seems to us that for the average practice (and its licensee) there are at least three options plus one ‘mandatory’ action to consider…
Option 1: No Need For Change
This is always an option – maybe the practice is skewed towards a younger demographic or the principal is absolutely certain that the practice is already providing a comprehensive service to meet their clients’ ever changing needs.
A nice feeling to have, but it’s always better to be sure than sorry! Perhaps seeking reassurance through a client survey is something that should be considered given that only 30% of practices state that they have a structured approach to seeking client feedback.
Option 2: Expand Services To Meet The Client’s Changing Needs
Older clients will obviously have a need for areas such as aged care and estate planning. It’s with interest we note that ‘Range of Services’ has been rated down by clients over recent years, to the point where it is now the third lowest of the 9 Key Performance Indicators assessed through our CATScan client survey tool. It’s perhaps for this reason that 41% of principals are now looking to broaden their services/solutions suite.
These practices will need to consider if they want to up skill existing staff or bring into their firm the necessary expertise. Alternatively, they could look to outsource, through a referral arrangement, to external experts – but a cautionary word – while this can be a great value add, the challenge will be how to charge (if at all) for this service.
Option 3: Move Clients On
“Move along” those clients for whom the practice can no longer provide the necessary services. Transitioning clients to another practice is never an easy exercise, but it can sometimes be the best option for all parties.
Option 4: Attract New Clients Through Ramped Up Sales And Marketing (MANDATORY)
Okay, it’s not really an option but, in our view, it will be a key success factor for many advisers.
The reason for this is that to offset the inevitable reduction to revenue levels which will come through the natural attrition of clients, we hope that new client acquisition is on the agenda, particularly for these practices who display the following behaviours:
- Average marketing spend of $15,896
- 65% of practices don’t have a documented sales/marketing plan
- 6.3 face to face client appointments per week per adviser
A place to start thinking about these options may be by asking your clients about the services you provide and what they value and what else you could do to create further value for them.
Client Feedback as Profit Driver
No one will argue that the most valuable asset of any business is its clients, yet as stated above less than three in ten Australian practices have sought any feedback from their clients over the past 12 months or more through any structured approach.
Yet, here’s the kicker… through our various analysis, we can see that those practices who formally ask for feedback from their clients are considerably more profitable than those who don’t, recording a 111% increase in profit.
But before you start cold-calling your clients asking questions consider these seven tips for seeking feedback.
- Who – Ask clients whose feedback you will listen to/take action upon; differentiate the feedback from “A” clients and “Others”.
- What – All responses will be confidential, anonymous and capable of being benchmarked against your applicable peer group.
- How – Our data reveals, 75% of practices are using a written or online survey, while 10% conduct a telephone survey and 3% use focus groups.
- When – At least every two years (will give you time to act on the feedback).
- Prerequisites – Be prepared to listen, acknowledge and take the appropriate action.
- Always share – Share the feedback with your clients, staff and referral partners
- Why – Show your clients that you really appreciate their support, don’t just tell them!
You will be demonstrating in a very tangible way that you do indeed care about your clients and how they’re feeling about their adviser. You’ll also learn what you could perhaps be doing better. Finally, you’ll get some great testimonials for your marketing material, plus you’ll be able to demonstrate your client focus to your referral sources.
What are your clients thinking?
Always a good question to ask but especially now, given the current environment. Wouldn’t you feel more comfortable if you could answer this question with confidence, based on knowledge!
Business Health is an independent organization specializing in advice and solutions to the financial services industry. Since its establishment in 2000, Business Health has evolved as one of Australia’s leading practice management groups. In addition to its Australian clientele, Business Health has clients in the United States, Canada, South Africa, Hong Kong, UK and New Zealand.
This article is republished with permission of Business Health and appeared as a series of client emails earlier this year.