How to focus on the customer, not just the transaction

By making a business too transactional some advisers run the risk of putting product sales ahead of people’s needs.

Overall we need to return to the idea that advisers and financial service businesses sell their time and expertise and not just products. To embed and add value in their business, advisers need to invest time and effort with their customers. By moving away from solely price-driven interactions the net result will be a better customer experience and outcome, a stronger relationship, a stronger brand and ultimately a more robust and a more sustainable business.

Intermediaries should aim to focus on the idea that each contact with a client is potentially transformative for that individual and build their processes around delivering the best possible experience and outcome for them. This greater emphasis on customer relationships will not only create a stronger relationship and increase the opportunity for repeat business but is more likely to lead to the purchase of additional products too.

Likewise, when it comes to generating new business leads the ability to access ‘client lead data’ has never been easier with a myriad of firms selling different data sets. The temptation these providers offer is a large quantity of data and the ability to grow your business quickly. However, don’t be fooled and end up putting quantity above quality. If the data is incomplete or the customers are not engaged this business will not persist. The old adage remains true ‘all that glitters is not gold.’

Our preferred customer-centric approach works. For 4 years now we have been running our Business Quality Awards as part of our wider Distribution Quality Management programme. The aim is to recognise and reward best practice within the advice industry. We consistently see firms reaping the benefits of putting client interaction at the centre of what they do and on Thursday 12th February we will be recognising those achievements again at our annual awards ceremony at Legal & General’s London office.

One great example of how powerful this can be is the adoption of effective Early Warning Systems. These allow firms to identify when customers are at risk of losing valuable life insurance due to their policy lapsing. This in turn allows advisers to take the opportunity to contact their customers at crucial times which increases the opportunity to ensure relevant cover is maintained but also encourages further conversations around other financial needs and strengthens the overall relationship with their clients.

In 2014, the Early Warning System helped Intermediaries clients claim £30.6m against their Life and Critical Illness cover policies. Early intervention and subsequent discussion enabled clients to reinstate their policies and then went on to successfully claim.

Even the way that a business structures its remuneration and income streams can have an effect on the culture of that firm. Let’s take commission on protection sales as an example. The temptation for many advisers is to always take commission up front. This is a valid commission model however this does front load your business somewhat. It can also encourage the transactional model discussed above and enshrine the pursuit of new business over building long-term relationships with clients.

Conversely those advisers that opt to drip feed commission will create greater resilience to market fluctuations, encourage stability and retain value in their business. However and perhaps most importantly, it helps to keep the customer the central focus and builds loyalty to an adviser’s brand. That in turn increases the opportunity of better quality repeat business as a result of that rapport. Although investing time and effort may seem daunting help is at hand via Legal & General’s Distribution Quality Management programme and as our numbers show ultimately the effort is certainly worth it.