Topic 4

Question 1

Relationship marketing

Answer 1

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

Question 2

Acquisition

Answer 2

Ask every new client for 5 referrals; know what your conversion rate is

Leads to increase lead and equiry rates, increase conversion rates

Question 3

Growth

Answer 3

All risk clients are identified in the database

Leads to active reviews, cross-sell, up-sell

Question 4

Retention

Answer 4

Leads to active reviews, ongoing communication, relationship development

Question 5

What needs to be evaluated in a relationship marketing strategy

Answer 5

1. Would clients be interested in entering into an economic relationship with you based on the value that you can add to their lives?
2. What is the time period for which the product will be actively kept?
3. Do customers generally require high or low maintenance?
4. How long would it take for a relationship marketing strategy to yield results?

Question 6

5 client life-cycle stages (question 2)

Answer 6

1. Prospects
2. First-time buyers
3. Early repeat buyers
4. Core clients
5. Defectors

Question 7

Stage 1: Prospects

Answer 7

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

Question 8

Stage 2: First-time buyers (customers)

Answer 8

Prospects move into this stage after completing one transaction

Usually have the lowest retention rates within a business’ client base

Question 9

Stage 3: Early repeat buyers (clients)

Answer 9

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

Question 10

Stage 4: Core clients (supporters)

Answer 10

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

Question 11

Stage 5: core defections

Answer 11

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

Question 12

Interest in entering economic relationship (question 1)

Answer 12

A client will not enter into a relationship with you if he perceives no economic value in your offering

Question 13

Pareto Principle (question 3)

Answer 13

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%

Question 14

What to develop to determine how long it takes for RMS to yield results (question 4)

Answer 14

1. Processes that are customer-focused rather than product-focused
2. Clean and clear communication about your practices objectives across the organization
3. Key processes that add value to customers
4. Collaborative relationships across departments and with other organizations
5. Restructure and refine your financial planning practice structure

Question 15

Once developed, how is RMS ended off

Answer 15

1. Identifying how this process will be monitored and controlled
2. Identifying how the efficiency of this process will be measured

Question 16

Business plan

Answer 16

1. Mission statement
2. Vision statement
3. Value proposition
4. Organizational chart
5. Services and pricing
6. Marketing strategies and sales avenues
7. Action items and timelines

Question 17

Mission statement

Answer 17

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

Question 18

Vision statement

Answer 18

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

Question 19

Value proposition

Answer 19

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

Question 20

Tips to create a value proposition

Answer 20

1. Define your target audience
2. Know your competitors
3. Define the needs your product or business meets
4. Dispel myths
5. Create a clear mission and message
6. Bring it to life

Question 21

Organizational chart

Answer 21

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

Question 22

Services and pricing

Answer 22

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

Question 23

Consider marketing strategies and sales avenues

Answer 23

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

Question 24

Map of action items and timeline

Answer 24

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

Question 25

Integrating relationship marketing within your business plan guidelines

Answer 25

1. You need loyal staff
2. You need loyal clients
3. Know your clients well
4. Price appropriately
5. Communicate with your clients
6. Train your staff constantly
7. As the leader of the business, you must hold it all together

Question 26

Marketing mix

Answer 26

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

Question 27

Quantifiable marketing strategies (changes required)

Answer 27

1. Marketing strategy, tactics, and execution become client-centric and product-centric
2. You manage a client’s life stage and marketing mix
3. You manage a portfolio of clients balanced across acquisition
4. Marketing is managed using appropriate relationship marketing measures, and costs are balanced against financial returns
5. Able to communicate changes in the asset value of your client
6. You will center your approach round client acquisition, retention, and add-on selling

Question 28

Questions to ask in quantifiable marketing strategies

Answer 28

1. Does it drive acquisition?
2. Does it drive retention?
3. How useful is your approach in creating add-on sales?
4. Does the strategy help NJFS to optimize efforts and resources expended on acquisition, retention and cross-selling?
5. Is the strategy client-focused
6. Is the strategy tailored and targeted?
7. Is the approach static or dynamic

Question 29

Financial benefits of client retention (5 sources)

Answer 29

1. New relationships
2. Changing relationships
3. Cross-selling
4. Reduced operational costs
5. Word-of-mouth referrals

Question 30

New relationships

Answer 30

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.

Question 31

Changing relationships

Answer 31

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

Question 32

Cross-selling

Answer 32

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

Question 33

Reduced operational costs

Answer 33

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

Question 34

Word-of-mouth referrals

Answer 34

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