Is your
marketplace getting more or less crowded? Are you
finding it harder and harder to stand out?
Have you already noticed or do you fear pricing
pressure from this competition? Long term,
your inability to stand out will affect your
pricing and ultimately hurt your profits.
This business
condition is referred to as
"commoditization" - consumers perceive no
difference between your service and the services
of any other financial advisor.
To make matters
worse, more and more of your "business partners"
are also selling directly to end consumers.
If you are like me, you spent time this weekend
watching the NCAA basketball tournament. Did
you notice the volume of commercials for financial
services by the large corporations? They all
want to give me advice directly and manage my
money. Here are a few that stood out to
me:
·
Another Law & Order cast member wants me to
work directly with TD Waterhouse.
·
I can now "Talk to Chuck".
·
Fidelity, Principal, and TIAA-CREF are all "very,
very concerned" about my retirement.
·
Even E*Trade wants to offer me retirement advice -
I remember when they just wanted me to be a
day-trader.
I am sure there
were other commercials that got your attention,
but my point is, to the consumer, there are a lot
of people who can provide them financial
advice. When consumers begin to lump your
service in with all of the others out there they
now see you as a commodity. Ultimately, this will
result in you working harder and harder for less
money - fee compression.
Fee
compression can also be directly attributed to how
you value your service. It's not unusual,
for many financial advisors to consistently
undervalue their services. In fact they are often
quite unaware of the true value they bring to the
table. Instead they set their fees based on what
others in the profession charge. If that is
your pricing strategy, you're acting like a
commodity.
Brand
Preference
Brand
preference is your strategy to combat
commoditization. If your service is perceived to
be the same as your competitors the only way to
compete is on price. For almost all
companies, competing strictly on price is a
one-way trip to going out of business.
So how do you avoid competing on price?
Create points of differentiation, which will help
you define and distinguish your abilities as
unique and different from other firms. You
want to differentiate on dimensions that are
important to and valued by your target
market. It sounds pretty easy.
But the reality is, in a side-by-side
comparison of written materials - brochures and/or
websites, most financial advisors are using
language that is interchangeable with everybody
else's. Too often,
financial advisors recycle the ideas of
others. The result: a "me-too" marketing
strategy that does little to differentiate you
from competing firms.
For example, if you were to review marketing
collateral from 10 to 15 other firms, you would
find most of their marketing material emphasizes
basically the same exact attributes - quality
service, integrity, honesty, trust, experience,
and unbiased advice. Because these terms are
so overused, they actual add to the perception
that you are no different than any other
advisor.
I am not saying those attributes are not
important. But, they are the minimum
standards you need today to just play the
game. If you want to win the game, you need
to differentiate your firm and your services based
on attributes that set you apart in the
marketplace, not sound exactly like everyone else
out there. When a prospect asks you, "so
what makes you different", how do you
respond?
Brand
Your Solution
As
consumers, we want solutions to our
problems. People buy solutions.
Although problems are great motivators, we are
also moved to take action based upon the perceived
ability that someone can help us reach a desired
future outcome - your aspirations and goals.
Your goal is to get clients to see you as a
valuable investment that will help them achieve
their most important outcomes.
When
you start with thinking of the value and desired
results your clients would like to achieve,
differentiation becomes easy. We believe one
of the best ways to differentiate your firm is to
use a strategy of positioning your
benefits in terms of the
solution you provide. In other
words, brand your
solution.
The
way you would go about branding your solution
would be by clearly articulating benefits and
outcomes your service model delivers, in terms of
a total client experience. Then give your
solution a name. The name must
appeal to your target market. Promoting,
selling, and delivering your now named client
service model becomes your brand.
Here
is an example. We worked with Vantage
Financial Partners, Inc. of Arlington Heights,
Illinois, to clearly identify their target market,
define the client experience and outcomes desired
by this type of client, and develop the service
model to insure they experience that desired
result. The name they choose for their
branded solution is The Executive
adVantageTM. {Vantage
specializes in stock option, corporate benefit and
financial planning for high-level
executives.} Now able to effectively
communicate their value in a way that is
meaningful to the executives they work with has
produced amazing results for Vantage; profits are
up and discussions of how much they charge are
down.
Many
Positive Outcomes for You
Using
a branding your solution strategy will
result in some very beneficial and profitable
outcomes for you. The first and maybe the most
important, is that you realize you can charge
higher fees. Those fees should be based on
the value a client receives, not based on time
spent or what others are charging. Clients
will willingly pay what you're worth if you
package your services accordingly.
Because
you own a unique solution your prospects can not
get anywhere else, they can not shop you for
price. As a matter of fact, when your
initial discussions revolve around understanding
and producing desired outcomes, price rarely comes
up. Having a clearly defined client service
model that you can explain to clients will also
help them understand the ongoing value of your
relationship - retention increases.
You
can avoid one of the traps most owners of
financial advisory firms fall into - positioning
and selling only YOU. If the only reason
clients work with your firm is because of you, no
matter how much staff you add, if clients always
want to see you, do you have a business or do you
have a job. By branding and selling your
solution, you can grow your business beyond
you. You then have the option to add other
professionals to deliver that solution.
You
have also increased the value of your firm.
Your brand becomes an asset. Because your
clients are attracted to your solution, the reason
clients stay with your firm becomes less dependent
on you. This means your client base is more
transferable, thus more valuable to a potential
buyer.
Knowing
what value you can provide to clients is never
enough. You must also be able to package it
and effectively communicate that value in a way
that is meaningful to your target clients.
Kevin
Poland is the CEO of The Renaissance Group.
Our branded solution for eliminating your business
challenges is E-Myth Mastery Business
Development. To receive a free
consultation or to be added to our email
announcement list for our new
Tele-Seminar series on marketing and
business management topics, you can contact him by
email at Kevin@RenaissanceConsultants.com.
