Three Nontraditional Ways to Boost Your Top-Line Revenues

Bob Veres

Many advisors are quietly complaining that their firm’s growth rate has stalled. Without market appreciation, they’re finding that they have to bring on a growing number of clients in order to maintain their historical 20% increase in top-line revenues. Plus every year, the assets corresponding to that 20% number grows accordingly.

What to do? In addition to the traditional things like working your client referral network, courting centers of influence and hitting the social media with tweets and blogs, a few nontraditional avenues of growth have opened up. If you aren’t exploring them, you may be leaving a lot of money on the table.

Client surveys

Let’s start with the simplest: creating new lines of communication with your clients via regular client surveys.

Spenser Segal, CEO of ActiFi, Inc. in Bloomington, MN argues, persuasively, that collecting consistent feedback from clients is the best way to increase wallet share and prevent client attrition. His firm recently purchased the industry’s top survey system from Julie Littlechild at Advisor Impact, and his staff has spent months analyzing the metadata: client responses to tens of thousands of questionnaires plus the answers to thousands of advisor questionnaires.

Segal’s first conclusion was fairly straightforward: Referrals are the source of between 80% and 90% of all new clients across the profession.

The second insight about the data, which Segal found profoundly revealing, is the fact that ‘engaged’ clients – that is, clients with whom you have more than a strictly professional relationship – will provide 100% of your referrals.

The rest of your clients, who are probably receiving excellent advice and service, will contribute 0% of your referrals and add nothing to your marketing efforts.

Adding fees, conserving clients

So how can you use surveys to raise your top-line revenues?

“At your next meeting with Client A,” Segal says, “You add to the agenda: Mr. Client, what are you most worried about? If he says he’s concerned about his overall risk profile and how well he’s insured, you offer to do a comprehensive risk analysis.”

This simple feedback loop uncovers client concerns, raises your project-based fees and helps you adapt your service model to your clients’ needs as their lives evolve. These projects add up over time.

If you send out a professional survey once a year, ask what services are missing from your menu. Propose new ones. Ask if there are any services being provided currently that are not high on clients’ priority lists. (Cutting back on labor-intensive services doesn’t boost your top-line revenues but it does enhance the bottom line.)

Your survey can also identify instances where clients are not happy. Many times an advisory firm will do a client survey and discover that 90% of clients report themselves to be ‘satisfied’ or ‘very satisfied.’ Everything’s good, right?

“That kind of survey becomes a feel-good exercise, where you conclude that you’re doing pretty well overall,” says Segal. “But what you really need is a client-by-client breakdown, because at the end of the day, every client relationship is different. Just because you’re doing a great job for Clients A, B, C and D doesn’t mean you’re meeting the needs of Client E.”

How does this boost top-line revenues? Segal’s survey data shows that, on average, 11% of advisory clients are dissatisfied, and of those, 64% have never expressed any sign of dissatisfaction to their advisor. Segal says that many times an advisor will be surprised when a client decides to move on, and then realized too late that there hadn’t been a lot of contact between them lately. In other words, most of the time, these are problems that can be fixed quickly and easily with a little more attention.

To perform a cost-benefit analysis, suppose you have 200 clients, and you discover through the survey process that 20 are at-risk to leave you, even though they haven’t complained or given you any indication that they’re dissatisfied. Let’s say that with 10 of them, you’re not terribly surprised, and (how to put this delicately?) you’re not mourning their decision to pester another advisor and heap abuse on her staff.

But the other 10 are good clients. Let’s suppose they average $500,000 in portfolio value and you’re billing under an AUM process. If you can catch the dissatisfaction early enough and repair the relationship, it could result in roughly $50,000 a year more in revenues than you would have had if those clients had walked – and this increase is cumulative, meaning that the second year your boost is $100,000, and $150,000 the third year. Multiply that over 10 years and we’re talking real money, just from that one survey, once a year.

Creating engagement

Meanwhile, you could be raising the number of new clients coming in the door. If 100% of client referrals are coming from clients who are ‘engaged’ with you, then your best strategy for raising referrals is to have more engaged clients.

How? At the recent Shareholders Service Group conference in San Diego, Segal drew a matrix which divided clients into three categories: ‘at risk;’ ‘satisfied’ and ‘engaged.’ Typically, for a healthy planning firm, 25% will fall into the ‘engaged’ category; they’re your biggest fans, and they believe that it would be a favor to others to tell them about you.

If you can raise the percentage of clients who fit into this category, just by moving just a few clients from ‘satisfied to ‘engaged,’ it opens up all the people those newly-engaged clients happen to know to your referral network.

To move clients from ‘satisfied’ to ‘engaged,’ Segal recommends that you, first, identify which clients fit into which category. Then identify 10 ‘satisfied’ clients who you feel you have a good connection with.

Finally, create a very simple face-to-face client survey that costs you roughly 25 seconds of your time. Ask two questions at the end of your next annual meeting.

The first is: “On a scale of one to 10, where “1” is that you plan to leave tomorrow, and “10” is that I have exceeded every expectation, where would you rank us?

“I actually don’t care what number they give me,” Segal said. “There are clients who would never give anybody anything higher than a ‘7.’ But,” he continued, “I’m paying a lot more attention to their answer to the second question: “What would it take to get us to a “10?”

Chances are, the client will tell you something very specific that you would never have heard otherwise. Your client is telling you how to move her from ‘satisfied’ to ‘engaged.’

The cost-benefit analysis here is straightforward. You have this conversation with 10 clients and maybe you move five of them from the ‘satisfied’ status to ‘engaged.’ They start referring clients, and with conservative estimates, you might end up with five additional clients a year, total – one for each new engaged client.

Multiply the value of a client relationship by five and that’s the projected boost to your top-line revenues – each year – from a marketing strategy that is totally different from anything you’ll hear from sales gurus who speak at industry conferences.