Editor’s note: David Leo is a longtime columnist with Rethinking65. To read more of his articles, click here.
David Leo
Personalization or one-to-one marketing is commonly used by financial advisory firms as a way to boost client satisfaction, retention and referrals. But many advisors don’t emphasize that they are doing this and therefore their clients often don’t recognize this value they are receiving.
I don’t think you should beat this subject to death with your clients, but it is worth discussing and showing them how you actually make decisions based on your understanding of who they are. It is a value of doing business with you. While it alone may not differentiate you from other advisors, the fact that it is part of your process shows you respect each client’s uniqueness and want to enhance what you do for them.
One-to-one marketing can also reduce the costs of marketing and sales overall if you’re able to retain your very best clients and get excellent introductions to high quality prospects.
A Good Analogy
Before I get into some suggestions on how to make your one-to-one marketing more effective, let’s talk for a moment about Amazon. The ecommerce platform continually updates client purchase information to create more tailored experiences, including recommending other products. The tool suggests products that not only fit the individual based on purchases, but also various aspects of their personality.
Sometimes the recommendations are a miss. For example, Amazon continuously suggests doorbell cameras for me — items I don’t view as necessary since I live in a New York City apartment building that has a doorman. Although I’ve rejected these recommendations for years, Amazon persists in sending them to me.
Customize by Client Characteristics
Amazon has an estimated 310 million active users worldwide. But if you have 150 clients, you may have an easier time customizing your one-to-one marketing efforts and won’t try to sell them products they find irrelevant. Many advisory firms customize their services based on clients’ characteristics, wants and everyday needs.
At the first level, these are generalized characteristics based on a client’s life and their personalities, such as:
Life Stage (young professional, mid-career, pre-retirement, retirement)
Family Situation (single, married, children, mixed family).
As an advisor, you have a fiduciary responsibility to serve your clients well. At the same time, you are personalizing your services by taking into account these bulleted points plus each client’s net worth, income, goals (wealth accumulation, income generation, capital preservation, tax planning, legacy planning, etc.), level of financial sophistication, and special circumstances (such as business owners, expatriates or sudden-wealth recipients). You may use other categories and subcategories.
The point is, many of us do this breakdown every day for every client to better serve them. However, our clients may not notice that we are paying attention to them and their needs. So, it’s relevant to communicate to your clients that factoring in these considerations are meant to add value. As the common quote goes, “If you don’t blow your own horn, no one else will” — which essentially means that if you don’t promote your own accomplishments, nobody else will do it for you.
Determining and Delivering Client Personalization Needs
Many years ago, while working with a Peppers and Rogers consultant, I picked up a technique called the “IDIC mode” for building and retaining personalized relationships with clients. This model suggests taking four actions to build, keep and retain long-term, one-to-one relationships with customers. These steps are:
I — Identify clients individually with addressable characteristics as well as habits, preferences, financial situation, family situation, personal interests, etc., etc., etc.
D – Differentiate clients, by value, wants and needs.
I — Interact with clients both cost-efficiently and effectively.
C – Customize (personalize) aspects of your behavior/offerings to the client.
Personalization costs time, effort and dollars; therefore it’s critical to identify and differentiate clients by the value they bring to the business. If 20% of your clients provide you with 80% of your revenues, those clients should receive the highest levels of personalization. Beyond this, you should:
Discuss how you personalize/differentiate the remainder of your clients.
Consider low-cost personalization strategies to provide to the next 30% of your clients who contribute a significant portion of your revenue. After all, they may be part of your future 80%.
Provide targeted workshops or seminars on topics relevant to specific client segments.
Providing technology support.
Offering specialized services.
Providing behavioral finance coaching.
Examples of Personalization
Beyond investment strategies, personalization can also be applied to communication frequency and styles. Some high-net-worth clients may prefer more hands-off communications and more concise, summary-style reports — and that’s okay. But what happens when clients with smaller portfolios seek high engagement? That’s not a problem if you embrace automation to provide clients with monthly performance updates, bi-weekly market commentary emails and other educational resources. However, if a smaller client seeks frequent personal phone calls, you’ll have to decide if it’s worth devoting that much of your time.
Personalization does not always mean you must provide a totally unique solution per client. Use personalization that is rational for groups of clients, whenever possible, so clients feel they are receiving unique attention.
For example, less-sophisticated investors may appreciate basic financial literacy courses. Other clients may see a real value-add if you offer them access to in-depth market research and advanced portfolio analytic tools and invite them to expert roundtables.
Business owners may highly value business-valuation services and succession-planning assistance. W-2 pre-retirees would find these offerings irrelevant but might appreciate retirement-income planning, Social Security optimization strategies and healthcare cost projections. My white paper “Personalization Strategy Planning” includes more examples.
Additional Thoughts
When you consider that a “truly” personalized relationship could involve relationships with multiple generations of a family, you can see that it can be time consuming and hard to keep track of. Technology can help with maintaining information and delivering content.
Customer relationship management (CRM) systems can be used to keep track of observed habits, preferences and other interactions. AI can also help you generate communication to clients. I have used Claude.ai to personalize unique responses to CEOs vs. individual advisors with whom I have connected on LinkedIn because it’s different offering coaching services to an individual versus a CEO and their firm.
Customized or one-to-one marketing is almost as old as commerce itself. The proprietors of general stores remembered the details about each customer to provide better service. With the right tools and some practice, you, too, can use one-to-one marketing to provide the personal touch absent from many modern business interactions. My motto is to be curious and always learning.
David Leo is founder of Street Smart Research Group LLC. He is an author, speaker, coach, consultant, and trainer to financial professionals. David has worked in the financial services industry for decades, originally as an engagement manager and certified business process reengineering consultant with IBM and then with UBS/Paine Webber working with financial advisors to improve their productivity before starting his own firm. If you would like more information about his services, including his “Personalization Strategic Planning” white paper, contact him at David@CoachDavidLeo.com or visit www.CoachDavidLeo.com.
