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“If you build it, they will come.” The slogan, whispered into Kevin Costner’s ear by the spirits in the cornfield, worked out pretty well in the movie.
But what if they didn’t come? What if nobody had actually been hoping for a chance to watch a baseball game played by guys who were famous long ago? (Granted, it’s hard to imagine anyone not wanting one more chance to see Stan Musial stepping up to the plate with Whitey Ford on the mound, but still…)
The point is, just because someone builds a better mousetrap, that’s no guarantee that the product will be successful, unless there’s a real demand for an improved way to catch mice. And this is where the importance of market research comes into play.
If you need more proof, talk to the people who came up with the marketing plan for New Coke – that is, if you can find them. Let’s face it, we’d be hard-pressed to find any brand anywhere in the world with better or more durable consumer recognition than Coca-Cola. And yet, in the late 1970s and early ’80s, faced with a downturn in sales, the company made the marketing mistake of assuming that the taste of the drink was the problem.
Even though taste tests had confirmed that participants preferred the taste of New Coke, when presented with the reality of no longer having traditional Coke available anymore, consumers turned away from New Coke in droves. The company simply miscalculated the value of the emotional connection consumers had with the original product – a vital factor that didn’t show up in the taste tests. Ultimately, Coke salvaged the situation by reintroducing the traditional product as “Coke Classic,” and all was well.
I’ve written previously about the importance of connecting your firm’s marketing to the client experience, both in terms of personalizing the delivery of information and services, and also leveraging marketing efforts so that they continuously build upon each other. It all points back to the time-honored axiom of financial services: “Know your client.” When you know what your clients really want – what drove them to seek financial advice in the first place, and what they desire to gain from the relationship – you’ll have the blueprint for your better mousetrap.
Learning this information is the goal of market research. Here are four steps to what might be called “lean market research” that doesn’t require expensive surveys, consultants, focus groups, or other complicated apparatus. But the information you can obtain by using them can be priceless.
Step 1. Client persona
I can’t say it enough: Successful RIAs know who they need to spend the most time with in order to generate maximum benefit, both for the client and for the firm. Chances are, you already have a good idea of who these people are. They’re probably the clients you most enjoy spending time with; the ones who tend to provide the best referrals; the ones who seem to most appreciate the results of your work together. Make a list of those people and figure out what they have in common.
Step 2. Observation
This step can be incorporated into your daily routine as you conduct your business. As you work with your ideal clients, develop a greater sensitivity to the kinds of questions they ask, the requests they make, and the concerns they express. Get in the habit of keeping notes on what you observe. Over time, you will begin to see themes developing; these are vital data points for refining and improving your delivery of services.
Step 3. Feedback
This is where you ask questions, then listen carefully to the answers. The key here is not to provide information or to sell your firm to the client. Rather, you want to gather the client’s thoughts. Keep your queries simple and open-ended, and avoid loaded, “salesy” questions like “What do you like best about our service?” Instead, your goal should be to obtain your clients’ honest opinions and concerns. Another thing to avoid: asking clients to predict future decisions or behaviors. Because of certain cognitive biases, most of us are much less likely to accurately predict our own future behavior.
Keep the questions focused on the past and present: “What financial challenges have you faced in the last couple of years?” “Is there an investing topic that you wish you knew more about?” Here’s another question that can be really effective for sussing out your client’s key motivations and concerns: “Think about the first day you decided you needed a financial advisor. What was going on that day?”
Step 4. Reflect and analyze. By now you have accumulated a supply of notes, quotes, observations, and comments. Take some time to spread it all out in front of you and start making connections. You may want to construct a flow model with linear connections, or you may simply want to arrange the date in thematic columns. However you do it, give yourself time and space to assimilate what you’ve learned from your conversations with your best clients.
It may be true that “if you build it, they will come,” but you’ve got to be sure that what you’re building is what they want. Incorporating some simple market research practices into your regular workflow can help you make sure you’re using the right blueprints.
Gretchen Halpin is the co-founder of Beyond AUM, which provides growth, client experience, and advisor experience support to financial advisors to drive business success. Over the course of her 25-year career, Gretchen has founded more than five businesses in addition to serving as the chief strategy officer for one of the financial services industry’s leading wealth management firms. She has been featured in Advisor Perspectives, Financial Advisor Magazine, and Forbes for her insights and has served as a speaker at numerous industry conferences, including NAPFA, Financial Planning, and Invest in Women. She also serves as a facilitator in Financial Planning Association’s Women and Finance Knowledge Circle community.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.