Unpacking the customer value proposition concept
What is customer value proposition (CVP)? If you’re in the services business an in depth knowledge of your customers and their expectations provides the edge you need to maximise profitability over the long-term. To find out more about CVP in the financial intermediary space we attended the Masthead professional development day held at the Indaba Hotel, Fourways on 2 September 2010.
Derick Fereira, national marketing manager of broker distribution at Old Mutual, spent some time explaining the CVP concept before borrowing from Business Help Australia to talk the audience through the eight-steps to create a watertight offering. Before launching into the eight steps Fereira appealed to the financial services professionals in attendance to pay more attention to who their customers are. You have to know which of your customers adds value to your practice and spend more time on appropriate customer “selection”. As Walter Pike of The Marketing Website says: “A customer is someone you’ve selected, studied and designed a value proposition for!”
Eight steps to a more profitable practise
Step 1: Seek feedback: The first step to ‘polish’ a service offering is to establish what your clients think about your offer. Conducting an objective assessment with your best clients can have long-term benefits by way of future referral business!
Step 2: Create a plain language high-level articulation of what you do for you clients, and how it benefits or satisfies their needs. You should steer away from unclear statements of intent and stick with powerful ‘promises’. Clearly state your product and the benefits that accrue to a client who purchases it.
Step 3: Decide who your offer appeals to best. “It’s critical to create a demographic picture of your clients, by age and location,” says Fereira. A “picture” of the geographical location of your client base is essential for your customer resources management (CRM) and subsequent financial needs analysis (FNA). The smallest piece of information can open a world of selling opportunities. Using the example of someone walking into a motor vehicle dealership to purchase a VW Kombi he notes: This guy is probably married with three or more children. He’ll be involved in school and community activities, take annual holidays etc. By knowing where your customer lives (CRM) you can immediately begin thinking about his/her product needs (FNA). Future CRM solutions will rely on “rich” data.
Step 4: Analyse your offer. If you want to stay ahead of the game you need to know exactly what service you deliver to each of your client segments. To simply say you are a risk broker is too vague – what do you specialise in? Creating a successful offering is about continual review, keeping your clients up to date on developments and making sure you’re on top of new products and regulations too. Remember – clients don’t leave their bank because of high fees, but because of substandard service. Says Fereira: “Anyone can sell someone once! A good approach to customer service determines whether you’ll be able to complete a second sale.”
Step 5: Compare Step 3 to Step 4. If your offer matches the client segment you’re trying to sell to you’re ok!
Step 6: Understand your numbers. An important part of being in business for yourself is to match costs with your offering. You need to know what it costs to deliver your offering to your customers. Your practise is about obtaining lifetime value from your customer rather than the one-off sale.
Step 7: Reinforce your offer at every single opportunity. The idea here is for you and your staff to carefully articulate your brand and value proposition at every possible opportunity.
Step 8: Review your offering. A financial services practise must remain relevant no matter how much the industry changes. You remain relevant by reviewing your offering and the environment you operate in at frequent intervals. If you don’t the ongoing burden of Policyholder Protection rules, FAIS, FICA, retirement fund reforms, Pension Funds Adjudicators, commission changes, Fit and Proper, TCF etc will bring you down. Business is where the “adapt or die” phrase is proven.
Quality over quantity
One of the lessons shared at the Masthead professional development day was that an intermediary with an average book of 519 clients was short 10-weeks to hold a “proper” meeting with each client once per year. “This suggests we’re not putting enough effort into selecting customers,” says Fereira. To succeed the modern day independent financial adviser must take the role of business owner more seriously.
Editor’s thoughts: There you have it. You must up your customer service from the “tied” agent level to that of a business owner intent on maximising the lifetime value in each client. Do you pay enough attention to quality when assessing your customer database? Add your comment below, or send it to gareth@fanews.co.za
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