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Principles of CRM
CRM – Client Relationship Management is a term that is gathering serious attention from attorneys, accountants, merchants, bankers and financial advisors. CRM applies modern technology to strengthen the client/customer relationship on a cost-effective basis and it can have a dramatic impact on your future income! As society has changed and multiplied the products, distribution channels have undergone radical transformation. Those old, personal relationships are a matter of history. Major corporations are spending millions on CRM tools, but the insurance agent can do it relatively inexpensively. A CRM system for a financial advisor/life insurance agent has several basic components:
Defining your present clientele. The first step is to establish two cut-off levels. The higher separates the Class A clients from the Class B clients. You can build your practice most effectively by only acquiring new Class A clients. We are looking for a dollar figure for “reasonably expected first year income.” Suppose you have had successful client relationships with first year income ranging from $2,000 to $10,000 and you feel that you’d like to receive at least $3,000 from a new client during the first year. How many such clients could you accept in a year? If the answer is 2 per month, would you be satisfied with $72,000 (24 x $3,000) of new client income? If not, you must set your goal higher – in terms of per client income or number of new clients – or both. This dollar value of new income, or assets under management, per client becomes the dividing line between Class A and Class B clients.
What would be the demographics of those new Class A clients? Are they Retired? Self-Employed? Professional? Business Owners? Executives? In a particular industry or occupation? Where are they located? Are there enough of them within your business geographic circle?
The next level separates your Class B clients from the Class C customers. The Class C customer is someone who initially or on an ongoing basis pays you so little that you are pulling down your opportunity for income growth. One life agent had over 500 policy owners that paid him less than $25 each per year (5% of $500 average premium). Many had been assigned to him. Each one took up a small bit of time, but occasionally he had to provide extensive personal service, which required more time. He requested they be reassigned to other agents and concentrated on acquiring new, more affluent clients. This move increased his income by more that 50 percent within a year!
Your goal with Class C customers (notice I did not refer to them as “clients”) is to gradually raise the bar and shut off these unproductive customers. If you cannot refer them away, then hire a service person to handle them and be firm in not getting involved personally.
Sometimes a middle group Class B client grows into a Class A status through job performance, investment success inheritance or good fortune. It is important to retain these clients effectively and harvest from them as many quality referrals as possible.
Retain Your Key Clients. The Class A client will offer Class A prospect referrals – if the relationship is strong. Your goal is to keep these Super clients Super Happy! This means using high tech to maintain high touch! You cannot be in contact too often. If you are, they will mention it – but that is a rare event. Class A clients merit the offer of a periodic review. They should be receiving a printed newsletter. They should also receive personal mail (or e-mail) with accompanying articles and information of value.
This quality contact should also include a mid-year planning letter and a year-end tax memo. It does not matter if these are not read closely – your clients will appreciate the effort. One financial advisor was beginning to question sending out a six-page year end tax planning memo to 300 Class A and B clients when he received a call from a total stranger, “My boss just handed me your tax planning memo. I’ve recently transferred into the company and need some advice.” The result was a $360,000 rollover, followed by an estate plan, college funding and a funded charitable remainder trust.
Maximize Referrals. It is not sufficient to receive a lot of referrals from clients – the important thing is to convert them into clients. Most financial advisors and life agents send out a "referral letter” when receiving a name. Then they place a phone call. The likelihood of connecting with that first call is very slim. The professionals who keep calling falls off sharply, and very few make more than three calls. Yet studies have shown that many sales take place after the eighth attempt. Secretaries, voice mail and answering machines shield many affluent persons.
How do you penetrate this veil? How can you get someone who does not know you personally to grant you an appointment to discuss personal topics? How can you motivate the referral to come to your office where you are in the best position to present yourself and your services?
The answer is “nurturing.” You must continue to send quality information (absolutely not sales literature) until you have gained trust and confidence. One experienced MDRT agent said, “You mean I keep mailing to a business owner even though we’ve never met and I have never gotten through for an appointment?” The answer is, “Yes”. This agent earns an average of $12,000 for each new client. How many letters does that justify?
Articles that are appropriate for the recipient must accompany nurturing letters. Copy that would be appropriate for a business owner would be wasted on a retiree.
There is a software products that can cope with the tracking and mailing to quality prospects and clients. The program, which is relationship oriented and is used by many insurance agents and financial planners with an “advisor” focus, is Practice Builder Financial, for about $1,100. Practice Builder contains hundreds of letters, a thousand articles and six pre-formatted client marketing campaigns. To use the mail-merge facility in a word processor for multiple mailings to different classes and stages of prospects and clients is virtually impossible – you need CRM software.
Market to qualified prospects. Many agent/advisors need to “prime the pump” before an adequate flow of referrals from super happy clients has been achieved. The way to do this is to acquire a list of quality suspects. A suspect is someone who ought to need your service. A prospect is someone that you know enough about to be relatively certain they need your service, can afford it and are approachable.
When buying names from a name source you can improve the percentages remarkably with a few steps. The first is to accept no name that does not have a phone number. This avoids those who are already cocooning with an unlisted number. It also means that you will have a method of contact. Is this still valid – using the phone, even to an answering machine?
The answer is a qualified, “Yes” if the call has been preceded by a number of relevant mailings. The call to an answering device might go like this: “Mr. Johnson, this is Sarah Bright, with Foremost Financial Services. We have been sending you a series of articles about retirement planning, and I just called to see if you have any questions. I’m awfully sorry I missed you, but if you have any questions or would like some information you know how to reach us at 414-5500. Thank you!” Will the phone call be returned? Probably not, but the atmosphere is being improved. Sooner or later the prospect will respond – if there is a genuine need.
Adjusting for the Internet. When developing a CRM process for your practice you should embrace the Internet by making constant reference to your website. Your mailings (whether automated or personal) should all contain a stationery reference to your website – as well as a specific message frequently embodied within the text. Your website should encourage direct contact through e-mail requests for more specific information and phone calls to establish an appointment.
Newsletters Continue the Reinforcement. Periodic newsletters should strengthen this integration of marketing media. Offering a “free” subscription to your newsletter is an excellent fulfillment technique that can be incorporated into your website. The same software that prepares and distributes your drip mailing can address the envelopes for newsletters and even add periodic cover letters.
How do you bring this all together? It starts with the realization that you can’t keep acquiring clients the same way you’ve done in the past. You must market upward, broader and more efficiently. You must let technology work for you. You must let systems free you up from the less attractive aspects of calling for appointments and spend more time delivering advice and service to your Class A clients.
Valuable Articles and Information for your professional planning practice: Businesses Reply Mail Report by Ed Morrow
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