By Larry J. Seibert, Ph.D.
You want your clients to be happy with the service and experience they receive working with your practice. Conventional wisdom says if they're happy, they'll remain loyal. However, despite your best intentions, problems can occur. If you can assess problems and determine which need to be resolved and which need to be prevented, you can build even stronger relationships with your clients.
Problems weaken the relationship between a financial planning practice and its clients. Different types of problems negatively impact the relationship to varying degrees. Some problems, if resolved, will only cause minimal damage to the relationship, while other types of problems must be prevented from ever occurring.
To determine the negative impact a problem experience has on client loyalty, four issues must be addressed:
- Prevalence of problems
- Percentage of problems that go unreported
- Extent of damage that is done to the relationship if the problem is resolved
- Extent of damage that is done if the problem is unresolved
By understanding the last two (damage done by resolved problems and damage done by unresolved problems) you can efficiently allocate your business' limited resources to eliminate problems where you must, and resolve problems in areas where problem elimination is not necessary.
Conduct a Client Satisfaction/Loyalty Survey
To gage client problems and assess the damage it is doing to client loyalty, conduct a client satisfaction/loyalty survey.
Respondents can be unwilling to give negative ratings directly to their planner, so I would not recommend that a planner conduct his/her own survey either on the phone or in person. Respondents need some feeling of anonymity to be open and honest.
We use electronic surveys with many of our clients. We prefer Survey Gizmo over Survey Monkey because it has more features, but it's a personal preference.
Surveys can also be done using snail mail. We don't use postcards, as our surveys tend to be lengthy, but there is nothing wrong with using a postcard for a short survey.
We also conduct a large number of our surveys over the phone. I recommend that a third party conduct phone surveys, as they will have the experience and equipment, and in many cases, can elicit a higher participation rate and better information.
Questions to Include
Include the following questions in your survey to determine the impact that various types of problems have on your client relationships:
- Have you experienced a significant problem when dealing with XYZ in the past six months?
- Please briefly describe the nature of the problem.
- Did you report the problem to anyone at XYZ?
- Was the problem resolved to your satisfaction?
Prevalence of Problems
The first question is used to determine the prevalence of significant problems. The word "significant" is used to separate problems that are relationship-threatening from those that might best be classified as a nuisance.
A relationship-threatening problem could be when a transaction was carried out, and it was not what the client agreed to.
A nuisance problem might be the inability to log onto your company Web site to check one's balance (maybe the Web site is down or not accepting a password). Many Web site problems of a technical nature tend to be nuisances and do not threaten the relationship unless they persist.
Limiting the time frame to six months focuses the attention on recent situations where respondents are more likely to be able to recall specific details. Problems that occurred in the distant past are more likely to have already been addressed through regular process improvements by your business.
By calculating the percentage of respondents who say they have experienced a recent problem, you can determine the current rate of problem incidence among your total client base and establish a baseline against which future survey results can be used to determine the effectiveness of problem reduction and elimination efforts.
Nature of the Problems
In your client satisfaction/loyalty survey, you want respondents who have experienced a recent problem to briefly describe the nature of the problem. That way, you can categorize problems into the appropriate process or department within your business (e.g. financial planning adviser, customer service, account statements, Web site, tech support). A quick tally can determine the areas that generate the most problems.
Some situations can produce problems in multiple categories. For example, a problem may originate in one area (difficulty logging onto your Web site) and carry over into another area (difficulty getting assistance from tech support).
The respondent's verbatim account of the issue can add specific details of how the situation became a problem and can add insight into the corrective measures needed, if you choose to prevent the problem from occurring again.
The next question to pose to respondents who have experienced a recent problem is whether or not they reported the problem to someone at your practice. The percentage of respondents who experienced a problem but did not report it can be used in conjunction with your internal statistics to validate total problem incidence determined by the first question. If 50 percent of survey respondents who experienced a problem actually reported their problem, total problem incidence is twice the number you are aware of.
You can also determine if certain types of problems are more likely to go unreported. Research shows that the primary reason clients do not report a problem is because they believe nothing will be done about it, therefore the time spent reporting the problem will be wasted. If, for example, a larger percentage of Web site problems go unreported than problems in other areas, this might point to a general feeling among your clients that your practice is unresponsive when it comes to dealing with Web site issues.
The fourth survey question asks respondents who reported a problem if their problem was resolved to their satisfaction. Using the results of this yes/no question, segment respondents into three groups:
- Those who did not experience a recent problem
- Those who experienced a problem and had it resolved
- Those who experienced a problem but did not have it resolved to their satisfaction
To determine the negative impact that a problem experience has on your business, you must get an overall respondent rating for each of the processes where clients have contact with your practice.
For example, if respondents are asked to rate their overall experience with their financial planning adviser, customer service, publications/newsletters, account statements, Web site, etc., the impact problems have on the quality rating of each area can be calculated.
The overall ratings from respondents who have not experienced a problem can be compared to the quality ratings of respondents who have experienced a problem to determine the negative effects of problem incidence. The bar chart hypothetically illustrates this comparison.
Notice that for the financial planning adviser and customer service experiences, the drop in ratings from "no problem" to "resolved problem" is minimal. However, the drop in ratings from "resolved problem" to "unresolved problem" is significant. This indicates that resolving problems related to the financial planning adviser and customer service experience can minimize the damage that these problems have on the client relationship. Additional resources needed to prevent problems in these areas are not necessary, and would not provide a high return on investment.
However, the bar chart tells quite a different story for account statements and tech support. Notice that the drop in overall ratings from "no problem" to "resolved problem" is significant. This indicates that problems with account statements and tech support must be prevented, since even successful problem resolution results in a significant drop in clients' evaluations.
Problems almost always have a negative impact on the relationship a business has with its clients, and the impact each type of problem has on the relationship can vary. By understanding which problems need only to be resolved and which problems need to be prevented, you can allocate your problem resolution and prevention resources efficiently, while maintaining the strength of the relationships you have with your clients.
Larry Seibert is a practice leader with the Loyalty Research Center. He holds a Ph.D. from Purdue University. He can be reached at firstname.lastname@example.org .