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
Ume
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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
4
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
CFP
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 !
Care
While the Customer may seem obvious There are often several customers Especially in Estate Planning and working with College Fund investments
Customer
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So…WHO is driving the Financial Management Decision ?
Or more importantly WHO is influencing this decision and what do they CARE about?
Care
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
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529
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The first Expectation to be an Aggie
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 the know how much YOU CARE !
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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
cAre
Social Styles Matrix
Low
Assertiveness
High
Assertiveness
Slow-Paced Cooperative Avoid Risk Easy-going
Fast-paced Competitive Takes risks Forceful
cAre
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
Social Styles Matrix
Low
Assertiveness
High
Assertiveness
High
Responsiveness
Low
Responsiveness
Relationship Emotional Unorganized
Task Rational Meticulous
Slow-Paced Cooperative Avoid Risk Easy-going
Fast-paced Competitive Takes risks Fordeful
Attitude (Social Style)
Social Styles Matrix
Amiables *Relationship-Oriented *Slow-Paced
*Relationship-Oriented *Fast-Paced
Expressives
Analyticals
*Task-Oriented *Slow-Paced
Drivers
*Task-Oriented *Fast-Paced
Low
Assertiveness
High
Assertiveness
High
Responsiveness
Low
Responsiveness
Relationship Emotional Unorganized
Task Rational Meticulous
Slow-Paced Cooperative Avoid Risk Easy-going
Fast-paced Competitive Takes risks Forceful
Attitude (Social Style)
Social Styles Matrix
Amiables *Relationship-Oriented *Slow-Paced
*Relationship-Oriented *Fast-Paced
Expressives
Analyticals
*Task-Oriented *Slow-Paced
Drivers
*Task-Oriented *Fast-Paced
Low
Assertiveness
with people
High
Assertiveness
with people
High
Responsiveness
to people
Low
Responsiveness
to people
Relationship Emotional Unorganized
Task Rational Meticulous
Slow-Paced Cooperative Avoid Risk Easy-going
Fast-paced Competitive Takes risks Forceful
cAre
Building Effective Customer Relationships
Know Yourself
Know your Customer
Social Styles Matrix
Amiables *Relationship- Oriented *Slow-Paced
*Relationship-Oriented
*Fast-Paced
Expressives
Analyticals
*Task-Oriented *Slow-Paced
Drivers
*Task-Oriented *Fast-Paced
Low
Assertiveness
with people
High
Assertiveness
with people
High
Responsiveness
to people
Low
Responsiveness
to people
If you are an Analytical….
cAre
Social Styles Matrix
Amiables *Relationship-Oriented *Slow-Paced
*Relationship-Oriented *Fast-Paced
Expressives
Analyticals *Task-Oriented *Slow-Paced
Drivers
*Task-Oriented *Fast-Paced
Low
Assertiveness
with people
High
Assertiveness
with people
High
Responsiveness
to people
Low
Responsiveness
to people
If you are an Amiable….
cAre
Social Styles Matrix
Amiables *Relationship-Oriented
*Slow-Paced
*Relationship-Oriented *Fast-Paced
Expressives
Analyticals
*Task-Oriented *Slow-Paced
Drivers
*Task-Oriented *Fast-Paced
Low
Assertiveness
with people
High
Assertiveness
with people
High
Responsiveness
to people
Low
Responsiveness
to people
If you are an Expressive….
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 the know how much YOU CARE !
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
High
Low
High
None/Low
Love
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
1 2
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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????
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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
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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?
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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.
● ●
3 x 3
9x
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
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 the know how much YOU CARE !
Maintaining Customer Relationships Expectations
CarE
Maintaining Customer Relationships Expectations
CarE
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
19%
Company and Brand Impact
19%
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
TIO
NSH
IP
OPENING - Gaining the Attention of the perspective Customer (Prospect) - Build Rapport and TRUST
LEARNING ABOUT THE FINANCIAL MANAGEMENT CUSTOMER
BUILDING BLOCKS FOR CRITICAL SELLING SKILLS IN FINANCIAL PLANNING
Presenting VALUE
Effective Listening —Understanding
Questioning—Gathering Information
Building Rapport and Trust RELA
TIO
NSH
IP
BUILDING BLOCKS FOR CRITICAL SELLING SKILLS IN FINANCIAL PLANNING
Closing—Committing
Resolving Questions and Concerns
Presenting VALUE
Effective Listening —Understanding
Questioning—Gathering Information
Building Rapport and Trust RELA
TIO
NSH
IP
The Big 3 T’s in Closing Timing Technique Tenacity
BUILDING BLOCKS FOR CRITICAL SELLING SKILLS IN FINANCIAL PLANNING
Closing—Committing
Resolving Questions and Concerns
Presenting VALUE
Effective Listening —Understanding
Questioning—Gathering Information
Building Rapport and Trust
Follow Up Service
RELA
TIO
NSH
IP
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
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Fitting Facts
Don Moyer , Harvard Business Review, June 2006
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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
C WHO are CONSIDERED in financial plan? A Attitude or Social Style R RISK attitude E How do they Evaluate your performance