In the early days of navigation at sea, mariners were forced to travel close to the coastline, using landmarks to help them assess their position and keep them, their crews and their vessels from danger.
While rudimentary, the process worked well if the sailor knew the territory. If they didn’t, they ran the risk of steering their boats into rocky and dangerous territory - and at that point it’s a bit late. That was the case, of course, until the simple lighthouse helped alert them to danger ahead.
Not unlike early sailors we often use very rudimentary techniques to assess risk because we only see the problem when it is, in fact, a problem.
We would benefit from our own lighthouse – or perhaps a more sophisticated way to spot danger ahead.
In our industry, of course, risk is less likely to look like a rock. So we’ll focus, instead, on one of the most fundamental sources of risk, and that’s flight risk.
Before I jump in, I’ll acknowledge that you may not see flight risk as significant because loyalty is strong in the industry. However, your perspective changes the scope of the risk.
So let’s connect the dots and look at a different way to manage risk, from the most basic approach (Level 1) to the most sophisticated (Level 3).
Today we typically react to 'outcomes'. If a client leaves it’s a bit like hitting the rocks and we have little choice but to react to the situation.
We didn’t know there was a problem because we couldn’t see the rocks. And all our effort goes to fixing the immediate problem. It may work, however it requires significant effort (and creates an emotional drain) so it’s not the most productive use of time.
Let’s add a lighthouse to the equation. In our industry that means you have a process in place to identify clients at risk before they leave. The easiest way to do that is to measure satisfaction over time.
A client who is dissatisfied (or even neutral) is at risk, and knowing that is like seeing a lighthouse in the distance. There’s danger ahead but we still have time to respond and change course. Better, but still not ideal.
But what if, instead of reacting or responding to a problem that has already happened, we could avoid it all together? To get there we need to focus less on client outcomes (e.g., a client leaves or indicates dissatisfaction) and more on client signals.
Client signals are those things that may lead to a particular outcome, such as dissatisfaction. They tell you there is danger ahead before that danger becomes imminent. They give you an opportunity to respond.
Let’s look at an example that draws on the collective experiences of our clients.
Now, with that new insight, two things happen.
Let’s dig further into the same example.
With that information, things get really interesting. Now you can not only flag clients who may be heading toward dissatisfaction, but you know the adjustments that will have the most significant impact.
Tracking those signals, however, demands good client data and a sophisticated level of analysis. And they may be different from one advisor and one firm to the next.
At Absolute Engagement we work, primarily, with larger enterprises to help them capture and use input from clients. One of the benefits of scale is access to significant client data.
But data isn’t enough. There is an art and science to analyzing that data to uncover real insights and translate those insights into action.
We’ve found that the drivers of satisfaction and loyalty change from one business to the next. What is common, however, is that there is a set of factors that drive both.
In order to create a meaningful early warning system across the organization, you’ll need to gather the right input from clients, analyze it to understand how to take action and connect the dots to specific follow-up activities.
Of course, it doesn’t. And that’s exactly why some firms stand out from the crowd.
There was a time when the idea of a data-driven client experience was novel. Today it is table-stakes for any progressive firm. Any client experience that is not data-driven is driven by assumption. And if that is the case, the client experience will, at best, be outdated and at worst, miss the mark completely.
Thanks for stopping by,