Topic 4 Flashcards
Relationship marketing
Retention of clients by building long-term relationships with them
Focuses on identifying specific needs and finding new ways to add value to grouping of clients
Acquisition
Ask every new client for 5 referrals; know what your conversion rate is
Leads to increase lead and equiry rates, increase conversion rates
Growth
All risk clients are identified in the database
Leads to active reviews, cross-sell, up-sell
Retention
Leads to active reviews, ongoing communication, relationship development
What needs to be evaluated in a relationship marketing strategy
- Would clients be interested in entering into an economic relationship with you based on the value that you can add to their lives?
- What is the time period for which the product will be actively kept?
- Do customers generally require high or low maintenance?
- How long would it take for a relationship marketing strategy to yield results?
5 client life-cycle stages (question 2)
- Prospects
- First-time buyers
- Early repeat buyers
- Core clients
- Defectors
Stage 1: Prospects
Not yet clients, but they are likely to become clients.
Develops an initial set of expectations about the product or the service he is likely to receive.
If expectations are exceeded, they make the first purchase
Stage 2: First-time buyers (customers)
Prospects move into this stage after completing one transaction
Usually have the lowest retention rates within a business’ client base
Stage 3: Early repeat buyers (clients)
After servicing a customer and securing ongoing business with him, a customer will become a client
Clients are likely to buy more policies as they gain confidence in the financial planner and the company.
Still evaluating the relationship
Stage 4: Core clients (supporters)
Clients become supporters after they begin to purchase one product or more from you every two years
The product and service meet their required specifications and value.
Rarely reevaluate the company’s product
Stage 5: core defections
Core clients become willing to switch financial planners or brands.
May be caused by new competing products or services, a client service problem that was not rectified properly or boredom
Some defections are controllable
Interest in entering economic relationship (question 1)
A client will not enter into a relationship with you if he perceives no economic value in your offering
Pareto Principle (question 3)
Known ar the 80/20 rule.
80% of the business profits come from just 20% of a business’ total number of clients
States that the top 20% of clients in a correctly segmented client base have different needs and expectations and are generally worth more to the business than the remaining 80%
What to develop to determine how long it takes for RMS to yield results (question 4)
- Processes that are customer-focused rather than product-focused
- Clean and clear communication about your practices objectives across the organization
- Key processes that add value to customers
- Collaborative relationships across departments and with other organizations
- Restructure and refine your financial planning practice structure
Once developed, how is RMS ended off
- Identifying how this process will be monitored and controlled
- Identifying how the efficiency of this process will be measured
Business plan
- Mission statement
- Vision statement
- Value proposition
- Organizational chart
- Services and pricing
- Marketing strategies and sales avenues
- Action items and timelines
Mission statement
Answers “What do you do, and why do you do it?” And “Who can you help?”, “What is your influence?”
Centered on the process of what you need to be doing
Vision statement
The end result of what you will have done
The force that will sustain you when your mission statement seems too heavy to endure, enforce or engage
Written in present tense
Value proposition
The statement that is designed to show your potential clients that your services are going to be bigger, better, and more valuable than any of your competitors
Tips to create a value proposition
- Define your target audience
- Know your competitors
- Define the needs your product or business meets
- Dispel myths
- Create a clear mission and message
- Bring it to life
Organizational chart
Identify who is in your business, the roles of individuals within your business, and what infrastructure is available to you to carry out your business
Services and pricing
Place a value on this expertise and research prices in the market
Break down your offerings and create some content and context around them
Influenced by the RDR initiatives within the Treating Customers Fairly framework
Consider marketing strategies and sales avenues
Craft a strategy that works for you and be detailed about the people or sites you’ll partner with or reach out to, such as creating a website or starting a blog
Map of action items and timeline
This is your to-do list and outlines the functional aspect of your business plan, which provides clarity and direction, such as developing your ideal client profile, your menu of services, and your investment philosophy
Integrating relationship marketing within your business plan guidelines
- You need loyal staff
- You need loyal clients
- Know your clients well
- Price appropriately
- Communicate with your clients
- Train your staff constantly
- As the leader of the business, you must hold it all together
Marketing mix
The combination of price, product, place, and promotion that is used to market a product to a client.
This mix should depend on and be different for each individual client, depending on the circumstances
Quantifiable marketing strategies (changes required)
- Marketing strategy, tactics, and execution become client-centric and product-centric
- You manage a client’s life stage and marketing mix
- You manage a portfolio of clients balanced across acquisition
- Marketing is managed using appropriate relationship marketing measures, and costs are balanced against financial returns
- Able to communicate changes in the asset value of your client
- You will center your approach round client acquisition, retention, and add-on selling
Questions to ask in quantifiable marketing strategies
- Does it drive acquisition?
- Does it drive retention?
- How useful is your approach in creating add-on sales?
- Does the strategy help NJFS to optimize efforts and resources expended on acquisition, retention and cross-selling?
- Is the strategy client-focused
- Is the strategy tailored and targeted?
- Is the approach static or dynamic
Financial benefits of client retention (5 sources)
- New relationships
- Changing relationships
- Cross-selling
- Reduced operational costs
- Word-of-mouth referrals
New relationships
Due to the initial amount of time spent on gathering and capturing the relevant data to conduct a needs analysis, a considerable amount of investment from your side has been made to secure the relationship in the first place.
Changing relationships
As your clients move through the various life stages, there is an expectation that they would be able to afford higher premiums as their disposal income grows and they are promoted to better positions
Cross-selling
If a client has ONE product with an organization, there is a 15% probability that he will maintain his relationship for five years
With TWO products, that probability will rise to 45%
With THREE products, an 80% probability is achieved
Reduced operational costs
Operational costs associated with any one client reduce over a period of time
Use social networks as a means of acquiring new relationships as it is one of the least expensive methods of marketing and could reduce your acquisition costs, thereby increasing your profit
Word-of-mouth referrals
Result from satisfactory long-term relationships
It is easier yo trust a financial planner who has been referred to you by your best friend, rather than one you meet for the first time
