Probably the most important marketing channel for financial planners doesn’t involve formal communication at all: it’s all about referrals. The power of word of mouth, referrals and testimonials is something that many planners have cottoned on to. The reason for this comes back to the ‘perceived risk’ issue about buying services, and particularly financial services. As the service can’t be evaluated before purchase – as, say, a television can be – buyers have to look for other methods to reassure themselves that they are making the right choice. A strong brand is a key way of doing this: ‘social validation’, seeking the views of trusted others, is another. Research also bears this out: according to a McKinsey Quarterly report, word of mouth is the primary factor for between 20% and 50% of all purchasing decisions.
One way of doing this is by building relationships with other professionals – brokers, accountants, solicitors and so on – who will refer business, usually for a small fee.
The second, more prized referral method is recommendations from previous customers, who effectively act as ‘advocates’ for a business in a social situation.
However, the best way to recruit a ‘brand advocate’ is to simply provide a superlative customer experience: if you do that, they’ll want to tell their friends about you.
While face-to-face recommendations are still the most common form of referrals – the classic ‘chat over the barbecue’ – social media is also opening this up to a much wider audience. Think consumers using customer reviews (eg, on Amazon or iTunes) prior to purchase, or by asking for peer views via social networks.
Admittedly, managing the new world of two-way online conversation can be a bugbear to many marketers previously used to ‘one-way’ communication. There is a degree of maturity coming into this aspect of marketing communications: it is increasingly being looked at as a cost of doing business.
It’s a growing channel, too. According to Kirrily Dear, founder of marketing and management consultancy, Eyes Wide Open, the amount of social validation being carried out online is significant.
“Selling any type of service online, and financial advice in particular, isn’t necessarily happening on the corporate website anymore,” she argues. “It’s happening within social networks. Any firm serious about their marketing needs to work that out.”
All this online and offline social validation adds up to one thing: your reputation is crucial.
How do you manage that reputation? Know your value proposition; know your target market; ensure your marketing messages and brand are targeted and consistent; and recruit ‘brand advocates’ through providing value and, above all, superlative customer service.
Financial advice is also all about trust – a client who is helped by their adviser in their time of need is likely to tell several others about how they were there for them.