Know Your Client

Behavioral Matching Matters

In working with financial services firms (including banks and insurance companies) all over the world I have found many are at different stages of searching for the right path to become more client centered. On this journey to the next level they all have the primary challenges of growing their revenues and managing the ever increasing compliance burden. In my conversations with executives, they would say that solving these challenges is contradictory.

The question then becomes what strategies can be deployed to simultaneously build greater relationships with clients (and thereby revenue) and at the same time enhance compliance? The tension between building a relationship culture which is revenue positive and enhancing the provision of compliant offerings can be solved with a human behavioral solution. When you boil it down both issues are deep down caused by human behavior. Harvard research in 2002 tracks 87% of all business issues down to human behavior. Most of it is the lack of interpersonal communication skills, not the competencies of the parties involved. Whilst it is easy to see relationships as driven by communication, so is compliance. Compliant offerings cannot be made without the right communication framework.

 

How information is framed will be very important to guiding clients into the right solution. For instance, some clients will need to hear a recommendation through the lens of their family stability rather than financial goals, and others will want benchmarks and specific data versus a summary of the key facts. Also, the bedside manner of advisors is critical as some clients will want logic and others a more empathetic conversation. Getting it wrong causes more emotion and the likelihood of increased litigation. Just look at the fact that research shows up to 80% of medical malpractice cases are caused by poor medical staff communication.?

 

So, imagine a world in 3 years where your firm through the one technology platform deploys online behavioral management solutions that are heavily rooted in validated behavioral science to:

1. Match the advisory team to each client (and their family members), thereby enabling communication with every client based on their unique terms, including the re-framing of key information and engaging them with a customized service experience in every interaction; and

2. Match the solutions delivered to every client based on their unique financial personality, thereby increasing decision-making confidence and also providing risk management for the firm.

3. Dynamically monitor the mood of every client as the market moves, and the continued suitability of the solutions the client is invested in. Put another way the approach of outfitting the client in a tailor made suit and providing customized life-long experiences will engage them and at the same time provide higher levels of corporate risk protection. Our research shows that such a behavioral matching approach can increase revenue by 23% a year and also substantially minimize the costs of litigation and fines. The key for the firm to implement such a matching approach is to make it a corporate imperative from the top down. The advisors and sales teams need to be engaged in the strategy that behavioral matching builds a relationship culture. The home office teams with the proactive input of the compliance team need to build robust technology processes which enable the real time monitoring of financial personality, solutions, in person meetings and email communications so that they are customized to the client and are also compliant.

 

What are the drivers which make it compelling to implement a behavioral matching approach happen now?

1. The need for financial services firms (including banks and insurance firms) to be completely client centered. Every dimension of their service must be “client first”, including the charging of fees. President Obama’s statements earlier this week on bad investment advice highlight the need is now.

2. The market competition for clients is very strong. The winners will offer a differentiated service which includes the provision of highly customized offerings. The focus on demographic based “persona” models are not enough as they do not provide personality insights which are more differentiated.

3. The regulatory environment over the last 5 years has got more strict in the requirements to offer suitable solutions. The trend is for the compliance intensity to increase exponentially in the next 5 years, with the requirement to document evidence of knowing client behavior at a much deeper level than ever before.

 

Over the last few years, the area of behavioral finance has moved from a research discussion to practical reality. Now, a behavioral finance approach can be implemented and if done properly it will provide a behavioral matching solution to the tense problems of building relationships and providing compliant offerings.

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Clients Enjoy Participating in the DNA Behavior Discovery

The question we are most often asked is “will my client want to participate in the Financial DNA Discovery Process?” Our Wealth Mentors have had very few clients resist participating. The reality is people do enjoy learning about themselves. It can even help in their business and personal lives. It is liberating for them to know what their strengths are and the struggle areas. The key point is that the client feels understood. Further, people love to talk about themselves. After all, that is their number one topic.

So, why not guide the discovery process and let them talk about themselves. If there is a barrier in an advisor’s mind about their client participating, it is usually just in their own mind.

The important point in getting the client to participate in the Financial DNA Discovery Process is to ensure it is introduced as a normal part of your service. Taking that further, connect it to your desire to provide them with a customized life-long service experience, set their goals and help them not make emotional decisions in reaction to events and markets. The process can start with Communication DNA Discovery; which only takes 2 -5 minutes and the rest of the steps can be progressively introduced over time.

We have many delighted clients. Click on this link to read about a recent successful client story.

If you are feeling any resistance yourself, then there is no harm in completing the process to find out and experience for yourself the power of the experience. You will feel liberated and want to ask questions!!

 

Learn more about DNA Discovery for increasing client engagement and customizing experiences .

What are your thoughts? For additional information please contact us

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How to Close the 40/60% Relationship Gap in Engagement and Sales

Social media, in all its forms, is an important tool for businesses. When used appropriately, it enables interaction and engagement between service providers and their customers. An undeniable example for the power of social media in todays world is all the concepts, products, applications, services, etc. that have grown exponentially in reach through Facebook interactions and presence. The important thing to note is that these arent even business services that affect peoples bottom lines or their wallets. The common component in catching on to the social media fire is the connection sharers feel to the message portrayed. Regardless of what has been long in practice, no one wants to be sold to and everyone can now see the signs to look out for, avoid, and ultimately, dismiss. To close the relationship gap in engagement and sales, organizations have to focus on the engagement and the sales will follow. Furthermore, those organizations that have included both a communication and behavioral ingredient to their social media marketing are likely to be ahead of the marketing game.

Research shows that only 15% of online users completely read all their emails (Juniper Communications Research). How can an organization find and engage those 15% and perhaps more importantly, how will the organization be able to engage the other 85%. Although its not surprising that most of todays world is too fast-paced for lengthy communications through social media or any other medium, individuals still have natural preferences and information needs. Once an organization has tapped into what these needs are, the possible engagements are countless. For example, individuals that make decisions based on facts and thorough research will not be swept away to buying in to an abstract idea or proposal. To truly engage those with such a preference, honesty in specific facts, details, and data is the key to crafting a trust-building engagement.

Understanding how to engage customers so that they buy, stay, and refer, is probably one of the most important marketing behaviors to tap into. The importance of true customer engagements also reflects in the role organizations place their customers in when focusing on engagements leading to sales rather than sales leading to engagements. When customers are engaged, they play the role of supporters of your organization rather than just customers and this in turn leads to long-term loyalty, perhaps even regardless of service or price. But, how does an organization maximize their customer engagement through marketing platforms such as websites, taglines, and all marketing messaging? If the business is unaware of what kind of prospects are out there and interested, it is difficult to decide whether to add more graphics, more modern touches, more words, more stories, or more of a social media presence. By doing one of these, the organizations marketing might alienate a large group of others as in todays fast-paced world, all business have to compete to catch consumers limited attention span. The best way to engage various types of communication preferences is to follow a matrix type of message deployment on your websites or other communications. Since more goal-focused people tend to want things short and to the point, the most important information should go in the top left of your website or publication with graphics to the side and more detailed, elaborate information below. The idea is to take advantage of the patience that people preferring certain types of communication have and allowing them to scroll or move down further to get their information.

Initial questions to be addressed are:
1.Are you on the same page as your customers when having conversations? Research shows that sales and service teams will naturally engage only 40% of customers.
2.What are you doing to close the “Relationship Gap” with the other 60%?
3.How are you utilizing communication channels to gather information on the preferences of prospect pool?

A major advantage to interacting in the vast online market would be to have an objective and simple system to quickly understand how individuals like to hear and/or see information. Therefore, a useful starting point to engaging customers is having your employees, prospects, and customers complete the Communication DNA (CDNA) Discovery Process.

The CDNA Discovery Process uncovers natural preferences for how an individual wishes to be communicated with by others. This is powerful information for executives, marketingand sales teams,as well as others, to know in building personal and business relationships based on greater trust and knowing what is important to the customer.. The results of CDNA also offer an accurate report to integrate into the organizations marketing strategy.

The CDNA Discovery Process helps businesses and organizations increase engagement of their diverse customer base at all levels using technology platforms that are seamlessly integrated to all relevant processes across the business.

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It provides a hub of human behavior solutions powered by Communication DNA Discovery which are implemented by businesses using the DNA Relationship System for increasing customer and employee engagement across the business on an enterprise level. CDNA also simplifies the marketing process by categorizing prospects into four main communication style: lifestyle, goal-setter, stability, and information. If you find most of your prospects are information style and your organizations messages have not been providing enough key facts and details, then this could answer the discrepancy in interest attained from your marketing. Conversely, if you are providing a lot of details and maintaining a logical, scientific approach to creating interested customers but your customers are more big picture thinkers, you efforts are ill-placed.

Once you have the customers behavioral, decision-making, and communication style information at your fingertips, you can start to use it in your inbound marketing strategy and send your sales teams strongly engaged, well informed, and highly qualified leads. Research by eConsultancy shows that personalized online experiences produce a 19% increase in sales. At DNA Behavior, weve seen similar increases with an average of 23% uplift in revenue. Continuing into the marketing arena,this communication system will provide significant insight into the message format required to segment communication into the behavioral and communication style of existing and potential customers.

Closing the 60% Relationship Gap in customer engagement and marketing messages becomes a real possibility with the use of CDNA and will add an instinctive differentiator to your current business model.

LET YOUR SALES TEAM GIVE YOU A 23per REVENUE LIFT

Let your Sales Team Give You a 23% Revenue Lift

Successful selling is about making and maintaining connections! Yes, but its also more than that.

Successful sellings greater success lies in building relationships that deliver repeat business, referrals, and bottom line lift.

There are key behaviors that, when identified, are found in the most successful sales environments and some of these behaviors may not be what you imagine. The hard sell does not sustain relationships with customers. Customers are now better informed and have a good idea about what they will and will not buy. Very often the last step in the buying process is when they connect with the salesperson, advisor, or agent.

So what makes some businesses more successful than others in customer engagement?

Its all about understanding and unlocking human capital performance which involves matching unique communication and behavioral styles to drive successful sales.

Organizations looking for a differentiation that will move their business ahead of the competition understand that the soft skills of building relationships and managing client behavior are more important than selling skills.? Identifying ways to know, engage, and grow a customer relationship is becoming an important conversation among business leaders.

In particular, the Insurance industry, as an example, is facing challenges which require looking at ways to overhaul the ways of operating in order to stay viable as a business. Those in the insurance industry are confronting industry regulatory issues, a customer base that rates insurance as a low priority, and they are also trying to understand how to leverage social media to create a personalized, relevant, and enjoyable experience for their audience.

Perhaps the answer lies in relationships and engagement, as some competitors are discovering as they step out into the world of customer centricity in terms of the way they conduct business.

CASE STUDY

Ernst & Young in their paper titled, The Journey Toward Greater Customer Centricity, make the following observations:

 

Many insurers are not keeping pace with changing market and consumer dynamics and are far behind other industries in meeting customer expectations. To succeed in this fast-changing environment and achieve sustainable top-line growth, insurers need to focus on redefining customer relationships, transforming business models to embrace data and digital and introducing an innovative culture in support of strategic decision-making.

Achieving customer centricity is less about implementing a grand vision than about building cadence today, next week, next month and next year. But the time has come when the journey is a strategic necessity, and all insurers need to be clear about where they stand and what steps lay ahead for them.

Customers are willing to build long-term relationships with their providers and purchase multiple products. However, insurers must improve the effectiveness of their communications, as well as recognize and reward the value of the relationships.

THE ISSUE

David, a highly skilled and qualified insurance provider, had a number of customers whose policies required review. He arranged meetings with them and on each occasion, failed to persuade the customer of the need to increase their insurance coverage. ?David had always seen himself as a relationship builder and had, in fact, sold the customers their initial policy some years before. However, they now seemed to be less approachable, no longer demonstrated trust in the relationship, and even seemed offended by Davids approach. Such reactions confused and concerned David as the offense taken was completely unintended, which was especially worrisome as the success of his business depended on customers such as these.

David and his business colleagues decided to review customer exit interviews of those customers who had cancelled their policies over the years. One clear, yet significant, thread began to emerge. While customers indicated satisfaction with the policy and coverage, they showed dissatisfaction towards the interactions they had had with sales staff and/or advisors.

Essentially, the communication and behavioral style of the advisors and frontline staff had changed since policies were first drafted/ put together.

David could see that changes in the overall economy had required a shift in approach with advisors becoming more pressured into delivering a bottom line result at all costs. The business had focused more on training advisers to Sell! Sell! Sell! and dropped any real commitment to a client-centered approach or virtually any reference to relationship building. This resulted in a team that lacked skills in behavioral insight, relationship building, and customer engagement on any level other than completing a successful deal.

THE SOLUTION

In a sales/advisor/customer relationship scenario, its unlikely that behavioral and communications styles will be similar. But its accurate to say that customers tend to feel comfortable with and buy from sales people that display behavioral styles similar to their own.

Simply training advisors on how to understand, adjust, or moderate their own behavior is not enough and might be seen as patronizing and condescending as customers are much savvier about the kinds of relationship they intend to have when purchasing any kind of service.

David decided to introduce communication and behavioral training and awareness to all the staff. In addition, he requested customers to complete their own communication and behavioral style profile. Initially advisors were hesitant to ask their customers to complete the discovery process but very quickly and confidently, they were able to demonstrate to customers the value in participating

Using the information for client experience management, David was able to match advisors to customers and ensure every customer touch point was appropriately covered by staff who understood their own and their customers communication styles.

The Power of Communication DNA

David contacted eight of his customers who had been reluctant to undertake a review of their insurance coverage and requested they complete a Communication DNA profile explaining that he would send them a URL link to enable them to complete the process on line in advance of their next meeting. He explained that it would only take a few minutes to complete but that the outcome would enable David to serve them in a much more engaging and professional manner.

Immediately, when David saw the results of the Communication DNA, he realized why he had been unable to engage with each of the eight customers. He had been numbers and details-focused, clearly putting numbers before people only to recognize that:

  • Four of the customers required a sociable and conversational approach;
  • Two needed help to make a decision and would have found Davids communication style to be confronting;
  • One was still mulling over the information and paperwork, and
  • The last one was overwhelmed with the details and wasnt comfortable on any level with the need to change or review their insurance coverage.

The contrast of this insight against Davids need for results, his logical and unemotional approach, and determination to get a sale across the line, illuminated why he had failed to engage with his customers.

THE OUTCOME

David openly shared his insight into his own and the customers communication preferences. The engagement between each began immediately as trust was built through this initial sharing of communication styles.

With the knowledge David now had about his customers, he could have chosen the option to match them with a more suitable advisor in order to build a relationship which was a path he was implementing within the business. But in this case, David understood the importance of fully integrating the whole principal of customer centricity and to openly work with his customers to build quality relationships. Such quality relationships would only happen by becoming familiarized with how to adapt ones own communication style to build engagement with customers whose communication styles were different.

This people before numbers approach significantly moved the business forward in terms of repeat business. Over time, David saw evidence of how understanding communication was successfully impacting the bottom line of business.

THE TAKE AWAY

Understanding communication and behavior to build engagement cant be seen as tokenism or the latest trend. It is a serious solution to growing businesses where selling, promoting, or advising in any form is at the core and center of the business. The solutions implementation needs to be rooted at the C suite and used to frame the business focus. Then, it must be implemented across the organization to all those who have any point of contact with customers.

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Who’s in Charge of Minding the Client?

Mind the Client Relationships

Advisors are expanding their practice and planning for their own eventual retirement.? The consensus is generally that younger team members can bring new skills to any practice. Theyre good with social media and they can, it is assumed, relate to younger clients and prospects.

In a recent webinar, the main presenter made an intriguing observation that millennials have spent so much time on social media that many have not developed the finer skills that advisors need to succeed?the ability to communicate face-to-face with a client or prospect.

In other words, the essential people skills.

Based on this observation, it would seem that the youngest advisors excel at social media, while the older ones are good at the more technical aspects of the job, thereby leaving few who are truly at their best with client management. ?However, the topic is not that black and white.

What really needs to happen is that advisors, young or old, must know themselves at a deeper level to uncover their natural strengths.? If an advisor is a people person with less affinity for details and research, then this advisor will be at their best with client management.

Perhaps it would be best for the relationship advisor to partner with a more research and detailed advisor who can prepare the financial plan and the retirement cash flow scenarios.? The relationship advisor can focus on the big picture, the clients emotions, and reactions while the more technical advisor can review the details of the plan.

Its best to remember that a successful advisor is not all relationship and no technical skills; just that everyone has more of one or two strengths than another. It makes sense to share your greatest talents with your clients. In order to do this, a productive practice is to combine the skills of your team and learn from one another to strengthen struggles and fine-tune natural talents.

So, who is to take ownership of minding the client relationship?? If you have structured your office to capitalize on each individual team members strength, you all are as a strong unit!

Protect Clients from Themselves

guiding clients behavioral finance

Your clients long-term financial goals may be out of sync with the risks theyre willing to take to reach them.

According to a recent survey by asset manager Natixis, while about 70% of investors they polled said that growing their assets is increasingly more important than protecting their principal investment, nearly 60% also said they were unwilling to take on more than minimal risk.

For financial advisors, this is both a challenge and an opportunity.? The challenge is being able to accurately assess a clients core natural risk propensity and tolerance and the opportunity is to educate the client on realistic expectations and strategies to reach their goals.

Where advisors often fall short is not identifying all of the risks associated with each client: investment, financial, and personality risks.? This is an important factor because clients under stress will operate based on their core natural behavior.

As clients get closer to retirement, they are under a lot of stress. Their worries regarding accumulation of enough money for retirement may push them into new, riskier investment decisions. Escalating long-term health care costs, market uncertainties, and the emotions associated with being in the withdrawal stage rather than accumulation phase will push a client to act according to their core natural behavior.? In many cases, this mix of stress and decisions based on clients reaction to that stress is not beneficial for the long-term success of the portfolio.

As a financial advisor, you need to manage your clients behavior and protect them from themselves.? This is an important step in client engagement and your successful practice because under stress, client risk behavior is less predictable without an objective tool. Some clients will want to jump at every opportunity, others will over-spend, and still others will want to take no action.

In many cases, couples behavior will be directly opposite one another. So, there is an added challenge for advisors to know each of the behavior of each individual in the pair to be able to address them in different ways.

How do you uncover these behavioral risks in your clients?? You need an objective, third party system so that your clients behavior under stress becomes predictable and is less of a guessing game. In combination with your experience and wisdom, discovering clients financial natural behavior will allow you to become a behaviorally smart advisor and enhance client satisfaction and financial profile.? Better to be a witness, than a judge, commented one financial advisor who uses Financial DNA as his primary tool in the client discovery