Establishing and MaintainingBuilding Strategic...

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Dr. Kerry Litzenberg Department of Agricultural Economics

Texas A&M University October 28, 2011

Building Establishing and Maintaining Strategic Relationships

with Financial Customers

The Top 5 Mistakes Financial Services Professionals Make & How to Avoid Them*

1. Focusing on your experience rather than a prospect’s or client’s issues. Know and practice the mantra, “It’s not about me.”

2. Failing to invest adequate time in building trust with prospects and clients.

3. Neglecting to identify and work with clients’ money personalities.

4. Failing to hear what a client is not saying. 5. Avoiding the human aspects of the financial services

profession. Michael Wasserman & Associates, Inc. Issue: 8.9.11 Volume: 28

The sales call Is the “point of contact” Between Customer and entire company (organization) Represented by the Professional Salesperson

Sales Call

Company Strategy (Mission)

Marketing (4 P’s)

Promotion

Personal Selling

Territory

Key Account

Corporate

Salesperson

Typical (large) company STRATEGY (create and maintain a Competitive Advantage)

Marketing

Customer

The Relationship between Financial Planner

And Customer Is still the

“point of contact”

Sales Call

Company Strategy (Mission)

STRATEGY – Financial Management (Create and Maintain a Competitive Advantage)

Marketing

Customer

“If a person (man) can write a better book, preach a better sermon, or make a better mousetrap than his neighbor, though he build he house in the woods, the world will make a beaten path to his door.” Ralph Waldo Emerson

Great Products drive Sales XXXXXXXXXXXXXXX Customer Relationships

Value-Based Customer Relationships Drive Sales

XXXXXXXXXXX XXXXXXXXXXXXXXXXX

As Financial sales become more Complex Relationship becomes more important… Increasing complexity requires NEW Ideas and Innovations to Provide Customer Service and meet Customer Expectations

HOW you sell has become more (or at least as) important

than WHAT you sell

Customers expect more depth and expertise today than ever before

Customers do not CARE how much you know Until they know how much you CARE !

C WHO are CONSIDERED in financial plan? A Attitude or Social Style R RISK attitude E How do they Evaluate your performance

They don’t CARE how much you know ……. Until they know how much YOU CARE !

While the Customer may seem obvious There are often several customers Especially in Estate Planning and working with College Fund investments

Customer

So…WHO is driving the Financial Management Decision ?

Or more importantly WHO is influencing this decision and what do they CARE about?

Financial Manager Financial Management Customer

Strategy of a Sales Call “Helping the Customer Buy”

Through Needs-Based Relationship Selling

Value-Based Relationship Selling

Buying Process Awareness Interest Evaluation Trial Adoption Follow Up

Plan for the Financial Management

Sales presentation

0. PreApproach (Prospecting) 1. Approach (Opener/Probing) [Building Relationship] 2. Detail Product 3. Handle Questions 4. Complete Sales 5. Followup

Technical (Financial) Skills

The Buying Decision Process Step 1: Need Recognition/Awareness

Step 2: Information Search/Interest

Step 3: Evaluate Alternatives

Step 4: Choose to try (trial)

Step 5: Adoption

Step 6: Post Sale-Follow Up Step 6: Post Sale - Follow Up

Building Effective Customer Relationships

Know Yourself

Know your Customer

The first Expectation to be an Aggie

They don’t CARE how much you know ……. Until the know how much YOU CARE !

Maslow’s Hierarchy of Human Needs

Self Actualization

Self Esteem

Social Needs

Security

Physiological Survival Basic Needs

Families/Clubs Organizations

Group Acceptance

Respect of Others Psychological

Self Worth

Customer Social Styles

Assertiveness the degree to which a person holds opinions

about issues and attempts to dominate or control situations by directing the thoughts and actions of others.

cAre Attitude (Social Style)

Assertiveness Scale (Opinions and Control)

Low ………..…..Assertiveness…………..High Slow Pace Fast Cooperative Control Competitive Avoids Risk Confrontational Reserved Opinions Forceful (Opinionated) Supportive Team Player Independent

Assertiveness WITH People

Social Styles Matrix

Assertiveness

Slow-Paced Cooperative Avoid Risk Easy-going

Fast-paced Competitive Takes risks Forceful

Customer Social Styles Responsiveness the level of feelings and sociability

Attitude (Social Style)

Responsiveness Scale (Feelings and Sociability)

Low ……….Responsiveness………High Task Work Orientation Relationship Rational Emotional Meticulous Organization Unorganized Inflexible Time Flexible Controlled Gestures Animated Formal

Responsiveness TO People

Assertiveness

Responsiveness

Relationship Emotional Unorganized

Task Rational Meticulous

Fast-paced Competitive Takes risks Fordeful

Amiables *Relationship-Oriented *Slow-Paced

*Relationship-Oriented *Fast-Paced

Expressives

Analyticals

*Task-Oriented *Slow-Paced

Drivers

*Task-Oriented *Fast-Paced

Assertiveness

Responsiveness

Expressives

Analyticals

Drivers

Assertiveness

with people

Assertiveness

with people

Responsiveness

to people

Responsiveness

to people

Building Effective Customer Relationships

Know Yourself

Know your Customer

Amiables *Relationship- Oriented *Slow-Paced

*Relationship-Oriented

*Fast-Paced

Expressives

Analyticals

Drivers

Assertiveness

with people

Assertiveness

with people

Responsiveness

to people

Responsiveness

to people

If you are an Analytical….

Expressives

Analyticals *Task-Oriented *Slow-Paced

Drivers

Assertiveness

with people

Assertiveness

with people

Responsiveness

to people

Responsiveness

to people

If you are an Amiable….

Amiables *Relationship-Oriented

*Slow-Paced

Expressives

Analyticals

Drivers

Assertiveness

with people

Assertiveness

with people

Responsiveness

to people

Responsiveness

to people

If you are an Expressive….

Adoption Diffusion Curve

Add Late Adopter @ 13 ½ % Laggards = 2.5%

caRe Risk

Using the Innovation Adoption Scale in Sales (I.R.I.S.)

Innovator

Early Adopter

Early Majority

Late Majority

Laggard

Influence on Other Risk Information

Social Attitudes

Med-Low

None/Low

Consider

Tolerate

Very Little

None (only for survival)

Research Articles

Extension Meetings

Neighbors & Friends

Wait & See

Uses little information

Not Involved

Little

Most Active Local

State & Regional Some Local

National & International

Why Aren’t Innovations (New Products/Services)

Easy to Sell?

Eager Sellers and Stony Buyers John T. Gourville

Harvard Business Review June 2006

Why People BUY????

Psychology of Gains and Losses Kahneman* and Tuersky

1. Attractiveness of Alternative - not based on objective actual value + but on subjective or perceived value

2. New Products evaluated relative to Reference Point (usually what they already own)

*Nobel Prize in Economics 2002

3. Improvements from Reference Point = GAINS Shortcomings = LOSES

Psychology of Gains and Losses Kahneman* and Tuersky

Loses have far greater Impact (than similarly sized gains) LOSS AVERSION

*Nobel Prize in Economics 2002

Endowment Effect ? Richard Thaler

Status Quo Bias?

Embracing Innovations

Consumers Are Usually

>Skeptical about a new product’s performance,

>unable to see the need for it,

>satisfied with the existing product, and

>quick to see what they already own as the status quo.

● ●

Consumers overweight the incumbent product’s benefits by a factor of three

Companies overweigh the new product’s benefits by a factor of three

Companies Are Often

>convinced the innovation works,

>likely to see a need for the product,

>dissatisfied with the existing substitute, and

>set on viewing the innovation as the benchmark.

Gourville, HBR, June 2006

Maintaining Customer Relationships Expectations

Professional Financial Planning Practice

“Managing client expectations and emotions is and has always been a critical part of any financial advisor's practice.” Staring Down the Eye of the Post-Downgrade Storm By Donna Mitchell, Financial Planning, www.financial-planning.com August 9, 2011

Professional Practice

“Even though both wealth managers and investors agree on the definition of empathy, 62% of investors report that their wealth managers fail to demonstrate empathy.” Wealth Managers Not Empathetic Enough: SEI Survey By Ruthie Ackerman, Financial Planning, www.financial-planning.com August 2, 2011

Building Customer

Loyalty

1990’s Rule of Relationships Build Relationships First ………..and sales will follow

2010 Rule of Relationships Help customers think differently Bring them new (good) ideas and EARN the right to a Relationship

Find: Creative and Innovative ways to help the Customer

Value to Price Ratio

9% Product and Service Delivery

Company and Brand Impact

Sales Experience 53%

B2B Customer Loyalty Drivers

Unique Market Perspectives Navigate Alternatives Avoid Pitfalls Educate on New Opportunities Widespread Support Easy to Buy From

Sales Executives Council, 2010

The SALES PROCESS Establishes

The Relationship (selling to the

customer)

BUILDING BLOCKS FOR CRITICAL SELLING SKILLS IN FINANCIAL PLANNING

Effective Listening —Understanding

Questioning—Gathering Information

Building Rapport and Trust RELA

OPENING - Gaining the Attention of the perspective Customer (Prospect) - Build Rapport and TRUST

LEARNING ABOUT THE FINANCIAL MANAGEMENT CUSTOMER

Presenting VALUE

Closing—Committing

Resolving Questions and Concerns

Presenting VALUE

The Big 3 T’s in Closing Timing Technique Tenacity

Closing—Committing

Resolving Questions and Concerns

Presenting VALUE

Building Rapport and Trust

Follow Up Service

Summary

Sales Approach (Skills) Matters

Financial Services Customers Care about the sales process

Be sure to find out about the customer -

Not just their financial situation and goals

But their Personal goals and expectations

Then match your selling strategy to their Needs

Fitting Facts

Don Moyer , Harvard Business Review, June 2006

Dr. Kerry Litzenberg Department of Agricultural Economics

Texas A&M University October 28, 2011

Establishing and Maintaining Strategic Relationships

with Financial Customers

Thank you And Good Luck CARE

Establishing and MaintainingBuilding Strategic...

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