The Peculiarities of Promotional Activity in the Sphere of Financial Services
Project
"The
Peculiarities of Promotional Activity in the Sphere of Financial Services"
Completed by: Stefan Dimitrijevic
,
2015
Table of Contents
Chapter I. General Promotion
1.1 Notion of Promotion
1.2 The Purpose of Promotion
1.3 DRIP Model
1.4 Promotional Mix
Chapter II. Promotion in the Sphere of Financial
Services
2.1 Overview and the Unique Aspects of Financial
Services Industry
2.2 Financial Services
2.3 Financial Promotion
2.4 Promotional Activity
2.5 Customer Trust
2.6 Customer Loyalty
2.7 Relationship Building
Conclusion
References
has been quite difficult to make a choice when it came to
establishing a proper topic, especially in the financial services sphere.
Nonetheless, there are still many areas that are worthy of proper exploration;
I have chosen to examine the peculiarities of promotional activity in the
context of financial service.topic itself covers several points together and is
relevant in its own right, independently. Marketing and promotion is often
overlooked in financial services industry, and little has been published and
brought up as an issue on the very matter. That is exactly the reason why it
has been chosen to delve deeper into marketing activities and explore the
degree of its importance for financial services companies, which heavily rely
on relationship building and trust. Here we can state that it is questionably
appropriate to apply such concepts as the Marketing Mix, including 4Ps, and
even the 7Ps concept, regardless of the fact that it is a service industry. It
is not a regular service industry, but one that is primarily about reciprocal
interaction of service providers and their respective clients.first chapter of
the course project will be devoted to the theory of general promotion, with
basic and general concepts examined. The nature of promotion and its objectives
will be examined, as well as the DRIP model, which is a communicational process
of promotion, along with the promotional mix and its key elements. The second
chapter of the project will be devoted to the analysis of the promotional
aspects that relate to the financial services sphere specifically. The
specificities of the industry itself will be analyzed, with some
characteristics that are unique to the sphere. Financial promotion, trust,
loyalty and the relationship process will be examined in the second chapter as
well. Afterwards, the conclusion will be drawn that will make an attempt to
summarize the overall work.
Chapter
I. General Promotion
1.1
Notion of Promotion
exploring the nature of promotion in financial services, the
term promotion must be analyzed as well, since financial promotion and
promotion in financial services is a derivative, a type of general promotion.is
an element of the marketing mix, being one of the 4Ps. The basic notion of
promotion refers to the activity of increasing the existing level of customers’
awareness, or actually building their awareness from the ground-up, in case it
is non-existent for a specific product or service. Companies primarily engage
in promotion because it generates sales, because of delivering the message to a
target market and can even create a sentimental bond with a brand, company or a
product known as brand loyalty.is also considered to be a device to communicate
the outstanding properties of different mixes to the customers and clients with
the intention to influence them. Promotion, therefore, can be well defined as a
managerial process to inform, sense, sensitize, persuade and transform the
potential customers to actual, existing and habitual (repeat) clients and
customers.
1.2 The Purpose of Promotion
as a process has three key objectives, and they can be
defined as follows:
1. To present (deliver) the information (message) to
customers, clients, or consumers in generalfirst stage is about communicating
the promotional message about a product or service typically to the target
market. It can be done with the help of various means, being print, television,
radio, direct mail or personal selling.
. To increase the level of demandobjective is about
boosting sales because of the recently-developed brand awareness in the minds
of customers.
. To differentiate a product or service
The third stage can be regarded as the most sophisticated
one, since it deals with decreasing existing competition in the industry by
providing a product or service that is different from the rest, and is not as
generic as those of the competitors.main points above demonstrate that the
concept of promotion has diverse objectives and primarily deals with sales
boosts, positioning, competitive relations through product acceptance and
differentiation as well as such aspects as bond development and even nostalgia
triggering by establishing brand awareness and maintaining brand’s image
consistency. Promotion is ultimately about increasing sales and solidifying the
brand, product or service in the minds of consumers in such a way that
differentiation can be achieved successfully and competition dealt with
accordingly.
promotion financial communication flow
1.3
DRIP Model
of promotion can also be the following: persuasion, informing,
reminding and reinforcing. The following goals are commonly abbreviated as the
DRIP model, which easily describes the main points that promotional activity
should cover. There are certain aims of the DRIP elements, it is a
"communication flow" model of promotion.
:first element deals with the product or service
differentiation from others in the same domain. Although it is difficult but it
can be done by understanding how a product is positioned in the market. The
goal here is to develop awareness and appeal, "liking" for the
product among our target group from the pool of other similar products.
Commonly 7P’s of service marketing and digital marketing are used for this. An
example would be a comparative advertisement, where one company claims that it
is better than the other one, thus differentiating itself from its competitor
in the process.:the aim can be as a reminder to consumers of the benefits of a
product or service, or persuading them to start a new transaction. A brand can
be described as an experience wrapped in a promise. The brand’s message needs
to be appropriately reinforced. Reinforcement can be achieved via demonstrating
experiences, since such demonstration should show why your product is superior
or why is it different from others. There may be cognitive dissonance in the
minds of consumers and that is exactly the reason why one should remind about
their product.(Inform):simple as its name, informing about a certain offering
or making the target group aware about it - that is informing - the process of
communicating and educating about your offering to your prospects. This usually
includes new features, benefits, availability, offers, value etc. This will
educate the consumer about your product. The customer will become informed.
:, in this context, means inducing your prospect (customer or
the client) to behave in a certain way. Audiences should be persuade in such a
way that they start behaving in a particular way; certain attitude within
customers should also be intrinsically evoked. At this point, it is essentially
about building a relationship with your customers, developing an emotional
connection with them, establishing a rapport. These days it is so easy to get
in touch with customers. Therefore, talking about the product on social media
websites, engaging with customers on social media, offering free trials to
encourage positive customer behavior is not a very difficult task to
accomplish.
1.4
Promotional Mix
is generically defined as one of five pieces of in the
promotional mix, which is also sometimes referred to as promotional plan. The
concept is actually a combination of promotional tools that are exploited by
the marketing department in order for the company to reach its goals and
objectives. Different sources indicate different promotional mix elements, but
the most acknowledge ones are the following: advertising, sales promotion,
public relations, corporate image campaigns, product placement, sponsorship,
personal selling, and direct marketing (as well as Guerilla marketing, which is
a form of innovative, unusual and generally unconventional way of promoting a
product or service). The figure to the right depicts only the basic elements of
the promotional mix, and they will be now briefly examined.:is widely described
as means of communication with the users of a product or service.
Advertisements are messages paid for by those who send them and are intended to
inform or influence people who receive them. Advertising is always present,
though people and target markets may not be aware of it. Nowadays, advertising
uses every possible media to get its message through. It does this via
television, print (newspapers, magazines, journals etc), radio, press,
internet, direct selling, hoardings, mailers, contests, sponsorships, posters,
clothes, events, colours, sounds, visuals and even people (endorsements, when
famous actors or activists advertise certain products).Promotion:promotion is
one level or type, element of the promotional mix aimed either at the consumer
or at the distribution channel (in the form of sales-incentives). It is applied
to introduce new product, clear out inventories, attract traffic, and to lift
sales temporarily. It is more closely associated with the marketing of products
than of services. The American Marketing Association (AMA), in its Web-based
"Dictionary of Marketing Terms," defines sales promotion as
"media and non-media marketing pressure applied for a predetermined,
limited period of time in order to stimulate trial, increase consumer demand,
or improve product availability."Selling:the language of sales and
marketing, "personal selling" singles out those situations in which
the actual salesperson is trying to sell something to another face-to-face.
Personal selling is a promotional method in which one party (e.g., salesperson)
uses skills and techniques for building personal relationships with another
party (e.g., those involved in a purchase decision) that results in both
parties obtaining value. In most cases the "value" for the
salesperson is realized through the financial rewards of the sale while the
customer’s "value" is realized from the benefits obtained by
consuming the product. However, getting a customer to purchase a product is not
always the objective of personal selling. For instance, selling may be used for
simply delivering information and the messsage. Because selling involves
personal contact, this promotional method often occurs through face-to-face
meetings or via a telephone conversation, though newer technologies allow
contact to take place over the Internet including using video conferencing or
text messaging (e.g., online chat).Relationsrelations (commonly abbreviated as
PR) is the way organizations, companies and individuals communicate with the
public and media. A Public Relations specialist (a PR specialist) communicates
with the target audience directly or indirectly through media with an aim to
create and maintain a positive image and create a strong relationship, even bond
with the audience. Examples include press releases, newsletters, public
appearances, etc. as well as utilization of the internet. (world wide web.)were
the basic and integral elements of the promotional mix. There are definitely
more to each one of them, but the basic idea should be clear from that and
tendencies do change over time, since trends are oftentimes altered by ever
changing people and the world around us. At this point, all of the general
points of promotional activity have been brought up and briefly discussed. Now
is the time to make a transition to the second chapter of the course project.
Chapter
II. Promotion in the Sphere of Financial Services
2.1
Overview and the Unique Aspects of Financial Services Industry
commencing the actual analysis of the promotional activity in
the sphere of financial services, the sphere itself should be described and
some of its peculiarities should be brought up and considered as well.term
"financial services" became more prevalent in the United States, partly
as a result of the Gramm-Leach-Bliley Act of the late 1990s, which gave an
opportunity to different types of companies operating in the U.S. financial
services industry at that time to merge. Financial services can be described as
the economic services provided by the finance industry, which encompasses a
wide range of organizations that manage money, including credit unions, banks,
credit card companies, insurance companies, accountancy companies, consumer
finance companies, stock brokerages, investment funds, real estate funds and
some government sponsored enterprises.unique aspect of financial services
marketing which differentiates it from other marketing and promotional
practices is the illusive notion of quality. In the traditional context of marketing
manufactured goods, quality is typically measured using standard quality
assessment methods and by assessing product defect rates on the production
line. However, unlike the traditional marketing manufactured goods, in the
context of financial services, the notion of quality is a highly subjective
phenomenon. Let us appeal to the following example: while the objective quality
of an insurance company might be reflected by the willingness of the company to
pay out customer claims, the average customer seldom knows this measure. In the
insurance business, the majority of policyholders do not utilize their policy
benefits since the events being insured typically have low probabilities of
occurrence. As a result, most policyholders never experience the process of
filing a claim, and for those that do, the outcome of their experience may not
be captured or recorded anywhere for others to examine and learn from. The net
effect is that the majority of consumers may never determine the most objective
aspect of the quality of an insurance company, which is the protection it
offers its policyholders in case of losses. Quality assessments in such a
context are therefore not objective and largely based on subjective factors
such as the customer’s recognition of the name of the company or suggestions
and advice provided by friends or insurance brokers, or even by their
subjective perception. In a similar fashion, in the context of securities
brokerage services, customers may not necessarily be able to determine whether
the broker is providing them with the most objective and informed advice. The
objective quality of a broker-recommended investment portfolio may not be
evident for many years until the securities within that portfolio have
exhibited their long-term characteristics. A similar issue can be identified in
the context of tax returns. While a tax accountant’s ability to secure the
highest tax refund is probably the most objective aspect of quality, a client
may never be certain of having received the highest possible refund. Such an
inquiry would require one to file taxes with multiple accountants as a means of
"testing," which is a highly impractical exercise. In all these
contexts, despite the important role that the financial services provider plays
in securing the financial well-being of the customer, quality assessments by
the customer may be driven by highly subjective aspects of the service
experience such as the friendliness of the service providers or perceptions of
the level of expertise portrayed in the service processprices of financial
services are intrinsically complex. For example, the lease price of an
automobile might consist of monthly payments, the number of payments and a down
payment, rather than the single sticker price used when purchasing the vehicle
with cash. Often the price consists of multiple numbers, some of which the
consumer may not even completely understand. This not only makes the task of
understanding the various prices available in the marketplace difficult for the
consumer, but it also creates scenarios that may lead to deceptive and, in some
cases, unethical practices by marketers and financial professionals as well as
salespeople in general.practice of marketing financial services is distinctly
different from other marketing practices due to the dozens of regulations that
rule the industry. For example, the type of content included in a financial
service advertisement is controlled and closely monitored by regulatory bodies,
such as the Securities and Exchange Commission, the Federal Trade Commission,
and the departments of insurance in individual countries along with the states
of the USA.of the other unique aspects of financial services marketing is the
fact that consumers’ needs for financial services vary significantly from one
customer to the other. As a result, the types of services that a financial
services organization introduces to the marketplace may be best suited for
specific groups of consumers rather than for the mass markets. Recognizing and
identifying individuals that a particular financial service is best suited for
is the task of the financial services marketer. Therefore, it is important to
not only understand the underlying technology that is used for segmenting and
grouping customers based on their needs, but also to have an accurate
understanding of consumer segments that are most relevant to a given financial
service. This is especially true in light of the abundance of customer data
available for segmentation analysis. For example, most financially active have
credit history records that can be purchased and used as the basis for
understanding each person’s credit behavior and financial needs. Financial
institutions also possess large 12 Marketing Financial Services amounts of
transaction-based data on their existing customers that can be effectively used
to target them with relevant financial services. Consumer Protection: Any
informed discussion of financial services marketing must also include issues
related to consumer protection and conflicts of interest, which have
historically characterized the industry. The human inability to make rational
financial decisions has fascinated researchers in psychology, economics,
finance and marketing for decades. Consumers can often make catastrophic
decisions related to financial services. Research in psychology has for example
established an array of human judgment errors that are persistent and highly
influential in consumers’ financial decisions (Chapters 2 and 3). It appears
that the human brain is simply not hardwired to respond rationally to financial
stimuli. This issue is further complicated by the fact that most financial
service offers are so complex that by making minor changes in the presentation
of the offer, one could make many otherwise unattractive products look highly
attractive. This can be a highly problematic concern from both an ethical and
regulatory perspective.
2.2
Financial Services
us give some examples of the actual financial services in
order to simply understand why promotion in this sphere should be delicate and
peculiar. Since there are certain limitations to the number of pages of this
project, let us narrow the scope of examination and simply refer to some
examples of the financial services (products) that financial consultancies
provide. Let us take a look at the most interesting and beneficial services
that international financial brokerages may offer to its clients:Fee
Planning:costs have been on the rise for years. This tendency is unlikely to
change in the near future. Still, the importance of the educational process and
its resulting benefits has not diminished and higher education is a must for
those who want to be successful in the future. In this case, financial advisors
persuade their clients by depicting the lives of their children with and
without higher education and with and without their help. The earlier the
start, the more efficient their saving will be as parents guarantee their young
ones the best gift they could ever give them.Pension (Retirement)
Planning:abroad and becoming an expatriate businessperson opens up a number of
investment opportunities, which would otherwise remain out of reach for such
people. This is one of the reasons why engaging in an international retirement
plan is becoming increasingly popular amongst those people who think about
their life when they stop working. Many international financial advisories
promote this very service and the idea that thinking about your future pension
is crucial. Using psychology, making them reflect on their current situation,
calculate what they have at the present moment and comparing that against their
needs in the future is a powerful tool when promoting your financial products,
and reaching out for new clients.Saving Plans:regular savings plan is an option
for a customer to invest a certain amount of money on a monthly basis and
accumulate it over a certain period of time (example: 1000$ a month over 15
years) and with an interest earned in the process. This type of the financial
service is one of the most popular among the clients as it is considered to be
one of the most reliable means of saving money for whatever the reason.given
services are a tiny part of what financial services companies truly offer and
were given merely to illustrate the nature of what clients usually get, should
they engage in the financial services interaction.
2.3
Financial Promotion
first aspect that should be noted is that the terms
"financial promotion" and "promotion" in financial services
are different things and encompass different activities. Unlike promotion in
financial services, which includes the implementation of the promotional mix
and marketing activities for selling financial services, financial promotions
can be defined as an "invitation or inducement to engage in investment
activity, communicated by a person in the course of business". Certain
restrictions can be applied to any form of interaction (communication), both
written and oral, meaning that there are certain limits and stipulations when
it comes to promotional activities in the sphere of financial services, due to
the subtle nature of the very process. To engage in financial promotions,
companies must either be authorized to issue or approve a financial promotion
or use an exclusion available for the particular promotion. Some of the
exclusions can only be used by a DPB licensed firm as described
below.promotions are a complex area. The Financial Services and Markets Act
2000 (Financial Promotion) Order 2005 (SI 2005 No 1529) (FPO) defines the
controlled activities and controlled investments for the purposes of section 21
of the Act. It also contains a large number of exemptions and only those of
particular interest to unauthorised firms (i.e. firms not authorised by the
FSA) are discussed here. If a firm is unsure about any promotion it is making,
it should seek external advice.Financial Promotions Order, an act that controls
and establishes regulations for financial promotions, includes a number of
specific terms that describe the process of communication. The types described
in the table below are integral when it comes to understanding the financial
promotion regime and are described in the following table.
Real Time
|
Telephone calls (cold calls and
warm calls), personal meetings, visits.
|
Non-real time
|
Solicited
|
A communication (interaction) that
is initiated in response to a request from the recipient or that is
altogether initiated by the recipient.
|
Unsolicited
|
A communication (interaction) that
occurs without express invitation
|
2.4
Promotional Activity
can be said that no matter the area, financial promotion or
promotion, the financial services are most commonly sold and communicated using
the means of direct marketing, namely, cold calling and warm calling (which
applies to existing clients.) What usually happens is companies develop a
"sales pitch" and then deploy it for persuading the customer that
they offer something he truly needs and desires. Effectively, for promoting
financial services, companies do not heavily advertise their services and
financial products, they rarely engage in sales promotions and the key focus is
on the direct marketing and selling, while PR is still used frequently.
However, oftentimes, financial services companies suffer from jeopardy and
lawsuits, and they brand images tend to be tarnished easily. Therefore, the
main promotional tools that financial services enterprises have at their
disposal are intangible, emotional factors. The presence of the factors most
likely drive the sales, while their absence can become a start of a perilous
journey for the company. Below, the key aspects will be discussed, when it
comes to dealing with financial services.
2.5
Customer Trust
and securing a sense of mutual and reciprocal trust between
the financial institution (financial services company) and its respective
clients has, at certain times, been a challenging process in financial services
markets. The presence of distrust or simple lack of trust influence both the
clients and the companies, since both parties may get a sense of uncertainty
when it comes to the underlying needs and intentions of the other party. Let us
refer to the following example: a recent consumer survey indicated that one in
every four consumers (or existing clients, even) would not hesitate to cheat
their financial services and investment providers, should they get a chance to
do so, that is. Such clients may, for example, opt to misinform their providers
about their personal risk characteristics when signing up for an insurance
policy, they might as well misrepresent the reason why and how exactly they
were lead to file a claim, or even go as far as neglecting to disclose crucial
information that could potentially render their insurance policies
invalid.issues of distrust can be found in clients’ and regulators’ opinions
about financial services providers’ true intentions in various marketing
contexts in categories that range from credit cards and home mortgages to
securities brokerage services and insurance. The recent increase in lawsuits
and punitive measures imposed by the Securities and Exchange Commission and
various other regulatory bodies against major insurance companies has resulted
in strengthened client distrust in the financial services community. A study
conducted by the Gallup Inc. regarding consumer attitude towards various
professions shows that consumers generally have a mixed picture and opinion
about financial services professionals (consultants). Therefore, we can argue
that lack of trust appears to be an inherent characteristic of many financial
services companies and related transactions, meaning that it is a continuing
challenge to the practice of marketing financial services in general.reason why
there is a case of distrust could be the fact that we are talking about
financial assets here. The very nature of people is strongly dependent upon
money, and, on a subconscious level, clients start doubting whether their
providers are truly sincere, while providers take that into account and
question their clients’ intentions as well, thus creating the existing
discrepancy of trust and healthy relationship. Other reasons may include the
fact that financial services are a service industry and therefore there is a
case of low tangibility, indicating that sometimes companies should rely on
physical evidence, which is not frequently effective. The lawsuits and numerous
companies that underwent brand jeopardy also triggered the status quo we can
see today. Still, it is not the case for every single company operating in the
field of financial services, and trust could be gained through appropriate
relationship building and management.financial services company should
understand completely that trust is the key to successful business conduction
and is the driver of marketing and promotional activity in the industry.
Without it, the services lose their primary function - to help people achieve
financial security. We cannot talk about security without trust and
reciprocity. There are certain ways to build relationship with clients and
shortly the ways will be explored.
2.6
Customer Loyalty
has been well established that in the vast majority of
financial services categories, customer and client defection rates are
substantially lower than they are compared to most other markets. The tendency
of customers to remain with their existing financial services provider has
traditionally and, as the practice has shown, been quite strong. It is
important to note though that defection patterns differ significantly by the
financial service category. For instance, life insurance policyholders have an
intrinsic interest in staying with the same insurance provider, since changing
insurance carriers may lead to the reassessment of the application, a need for
new health exams, and potential higher rates and lower coverage levels. Credit
cards accountholders, on the other hand, may feel less obligated to stay with
the same company because the negative impact of switching is limited, the
switching cost itself is generally low, and changing credit card companies may
in fact considerably lower borrowing costs due to intense competition within a
certain category. The incentives offered by competitors in the credit card
markets often outweigh any potential switching costs, resulting in lower rates
of customer retention. However, this is to be expected, since such behavior is
simple psychology and occurs frequently in other industries, simply because low
switching costs or any other competitor with more alluring services can and do
take customers away.though there are certain benefits that low customer
defection rates present to financial services marketers, this does necessarily
reflect customers’ true preferences for their existing financial services
providers. Still, this behavioral pattern may limit financial services
providers willingness to improve their current offerings and service provision
and thus become more competitive. Customer retention in financial services may
oftentimes simply tell us that many customers and existing clients alike lack
initiative to find the most competitive offerings, which means that they are
not necessarily attracted by the very best offering, and may, in reality, fail
to take into account all possible competing options available to them. Even
with the knowledgeof competitive offerings, clients may still choose to remain
with the current financial services provider once considering the possible
inconveniences associated with switching. Such inconveniences in switching may
happen to be in transactions that often have to occur, billing arrangements
that may have to be rearranged, and contracts and paperwork that would have to
be redrafted, negotiated, and, signed, as well as other related administrative
formalities and procedures that could be regarded as nuisances by the
clients.traditional resistance that consumers have towards switching financial
services providers has over time resulted in creation of a non-competitive
environment or in an environment with an unhealthy level of competition. Since
clients tend to remain with their current provider, they may seek very little
information on competing offers and the chances of them terminating their
relationship with their current financial services provider has been minimal
thus far. The end-result is that financial services organizations may lack
motivation for self-improvement, offering their customers sub-standard products
and services, which are ultimately not as appealing and useful as they could
have been. The harmful impact of this on the management and leadership of
today’s financial organizations is to be noted. For instance, a research
conducted by the American Bankers Association has revealed that the prevailing
number (more than 50%) of all CEOs do not have formal plans to guide their
short-term and long-term marketing and promotional activities. Even though this
figure is troubling, it happens to be a peculiarity of the industry, which is
caused by a highly regulated market environment and lack of healthy
competition. The companies have not bee forced to develop strategies to better
market its products and subsequently serve their customers. This relaxation of
the industry regulations will however challenge the mode of conduct and the
need for strategic marketing in the sphere should and most probably experience
a significant increase in the coming years.shape of the financial services
sector in the coming, let us say, ten years, is also likely to be significantly
different from its current states, largely due to the rapid integration of new
technologies into financial services and changing consumer base preferences,
underlying needs and tastes. Moreover, consumers’ growing level of education
and awareness on financial decision-making and a marketplace that is becoming
overly fragmented will demand thoughtful approaches to the marketing practice
and promotion itself. An example of that would be the growing number of
consumers who engage in online banking who start doubting whether it is a wise
and rational approach to managing and earning money or not. In the meantime,
the number of checks that customers write and issue is decreasing on a steady
basis, while the number of prepaid debit cards being issued and used in
transactions is growing exponentially. Such trends illustrate that our
marketplace is rapidly evolving, and consumer preferences are most likely to
alter the way financial services providers compete in the future.should be
noted that trust and loyalty go together, since those clients who experience a
certain lack of trust they cannot really be loyal to your company, thus meaning
that it would be challenging to expect word of mouth activities or any other
positive feedback about your company. At this point, having discussed the
issues of customer trust and loyalty, we can now talk about relationship
building process.
2.7
Relationship Building
mentioned earlier, no trust and loyalty means no effective
and efficient business. Therefore, it is a prudent decision to approach the
process of relationship building strategically. Financial services companies
generally engage in customer relationship building in the following
way:reputation and networking:professional and consultants can benefit from
appropriate networking, whilst attending special events and promoting their
company in a subtle, inexplicit way. Building rapport prior to conducting cold
calls is a very effective tool, since the potential acquaintance could become
potential clients. Other examples could be professional acquaintances, prospective
and existing customers, referrals through clients that are satisfied with the
services provided. In fact, some clients may introduce many names to financial
advisers to take care of. It is also essential to add value to the
relationship, since hoping that someone will remember you just like that
because you engaged in a conversation during a networking event is ultimately
pointless. Professionals usually send a "nice to meet you" e-mail to
let the other party know that they are well remembered; it is also crucial to
reinforce yourself, by elaborating on the discussion you had had during the
event. Hence, the more value added, the bigger the chance that the contact will
pay off. It should be noted that oftentimes how you begin interacting with your
potential client would define the future of your professional relationship.
Networking is a long-term investment, after all.communication:peculiar aspect
to take into account when making acquaintances and potential clients is the
fact that they are seldom and rarely interested or experience a need in what
financial professionals could potentially offer them. Needless to say, that is
the reason why it is imperative to keep a connection warm from the very start
and financial advisors should and usually do remind about themselves since it
would be already irrational to remind of their presence when the trail becomes
cold once again. That way the communication is kept in a professional fashion,
and once prospects experience a need in securing their finances - they will
most likely remember about the financial professional, which is also one
important stage in healthy relationship building process.mail marketing and
telephone calls, and face-to-face meetings:of the most frequently used tools in
financial services is E-mail marketing and telephone calls. Coherent and
intelligent, you-oriented e-mails keep relationships strong and сan even make them flourish. Giving
away some free insight on latest services or financial products as well as
general pieces of advice is a way to show your professionalism in a genuine
way. Regular e-mails to both prospective and existing clients about novelties
and relevant things that are related to their personal situation will show them
how caring financial professionals are and is a solid way to establish rapport.
E-mail marketing is a cost-effective and easy way to stay on customers' minds,
build their confidence in your expertise, and retain them. E-mail marketing is
also a cost-effective solution. Should it be done appropriately, it can even be
viral: contacts, customers and existing clients who find what their providers
do is interesting, valuable, and useful and are generally content with the
services will forward their e-mail messages or newsletters to other people,
just like word of mouth marketing, albeit in the virtual context.for the
telephone calls, when it comes to relationship building, that should be warm
calls. Cold calls are appropriate when building up a client base from scratch,
which is not the case for sustaining healthy business relationship. Sometimes,
such telephone calls are made for informing existing clients on the new
beneficial plans and financial products (the message contains similar content
to that of the e-mails, only in a verbal way). Calling clients with no specific
reason to make sure that everything is running just fine and simply checking up
on them from time to time to see whether they are content with the service
provision or not is an effective way of building and sustaining healthy
relationship with the client. It does not mean that one type of calls should be
omitted; the main point is that companies should find the golden middle between
promoting new services, topping up their sales and the general client
relationship management. Both of them affect clients’ perception positively. In
the former, clients feel that they are looked after in the way that the
provider would like to choose something more reasonable for them, while the
latter makes clients truly secure about their situation, when they are really asked
how they feel about their plans and whether something should be changed or
improved.is also necessary to organize face-to-face review meetings with
clients every once in a while (once in every three months) simply to ensure
that their financial plans are operating correctly, with no unexpected lapses.
Such meetings can make clients feel appreciated and that they are priority
clients, which is a very positive aspect when building a healthy relationship.
It is more than reasonable to say that e-mails and phone calls are sometimes
insufficient for client maintenance. The key is being able to do it in a
reasonable succession - not too frequently and not too rarely. Frequent e-mails
and calls can make clients annoyed and distracted, while rare signals of your
presence and care may result in suspicion and, ultimately, lack of trust and
loyalty.loyal customers:financial services company should undoubtedly award
those customers and clients who remain loyal, stable and reliable in a certain
way. Bain & Co., a management consulting company conducted a research and
according to the results, it identified that a 5% increase in retention rate
yields respective profit increase equal to 25-100%. It had also been revealed
that repeat customersto global management consulting firm Bain and Co., a 5
percent increase in retention yields profit increases of 25 to 100 percent. In
addition, on average, repeat customers spend more than 65% more than new
customers in any industry; in the context of financial services it cannot be
regarded as a mere increase in sales, but rather an increase in the willingness
to engage in the investment activity. Thus, those clients who bring you most of
your profit are the existing ones. In financial services, existing clients may
decide to invest more, an example being a monthly increase from $500 to $1000
over 10 years in the regular service plan; having established trust can
customers become loyal. Financial services companies should encourage their
clients to maintain a working relationship, rather than make them doubt their
attitude and overall expertise. As mentioned earlier, the companies should stay
in touch, and give their clients something of value in exchange for their time,
attention and business. It does not necessarily mean that is should be too
much; a special savings plan, for instance, available solely to existing
clients, a notice of an upcoming event, helpful insights and advice, or news
they can use are all effective ways of rewarding loyal customers. One thing
that companies should not forget is that if they are not those who are
rewarding customers, then their competitors are likely to lure them and award
them eventually.complaints and feedback gathering:should never avoid dealing
with customer complaints and should at all times consider their customer
feedback. The subtlety of the financial services industry drives around the
notion of intangibility, and miscommunication should be put away. If a client
has a complaint, then the professionals should meet with him and help him in the
best way possible. Otherwise, the client may become disappointed and become
disloyal. This might also result in clients sharing their negative experiences
with colleagues and, in turn, companies’ potential clients. Of course, the
motivation to help clients should not only be caused by possible negative
outcomes, but there are more than enough reasons to listen to them, since they
are the drivers of the business. Their feedback, suggestions and advice on
existing services and their potential improvement should also be taken into
account and even partially implemented, rather than ignored. For more than
enough reasons, dissatisfied and angry clients are deadly for financial
services companies.referrals and understanding the benefits of relationship
buildingis important to implement the above-mentioned aspects of relationship
building, especially for financial services companies. Most financial
institutions and consultancies get more than 50% of their clients not out of
cold calls and direct marketing, but rather from introductions and referrals.
Referrals and introductions are those people whose names are passed to
financial providers’ professionals by their clients in case they are satisfied
with their services. People feel a need to share with something useful if they
believe is. The better financial professionals and consultants perform at their
meeting with clients, the likelier the outcome that they will receive several
"warm" referrals. Hence, this helps us draw a conclusion that not
only clients make our business, but also they are ultimate salespeople in the
process. Word of mouth is one of the most effective tools, especially in the
service industry. It should not be underestimated. Stable inflow or referrals
from existing clients are also an indicator of well-established trust and
loyalty.are numerous other ways of building customer relationship, yet the
methods vary in different industries, and the above-mentioned way of sustaining
solid retention rate and loyalty is a general way how financial services
companies operate and build relationship with their both existing and potential
customers.
Conclusion
we can see, financial services do have certain peculiarities
when dealing with the promotional activity, thanks to specific pricing aspects,
regulations and other things that differentiate the sphere from others. The
overall essence of intangible interaction between the client and the company is
one that should be dealt with appropriately and importance of which should not
be underestimated. The conventional tools of the promotional mix can only be
partially applied in the financial services sphere, due to its specific nature.
The subjectivity of perception of quality by the customers is a very subtle
process and many companies do manipulate with their potential and existing
clients, by simply putting an emphasis on their brand image, corporate
identity, reputation etc. yet that does not truly mean that high quality is
what clients get. In fact, oftentimes, they are treated in a mediocre way and
they fail to undertake any serious actions partly because they are in doubt
whether everything is done correctly and whether they are treated nicely (due
to the fact that they are frequently unaware of trends and are thus
misinformed) and partly because there are high switching costs for certain
financial plans or products that require time, money and patience to be
improved and/or changed. Here, we come to the notion of trust, loyalty, and
relationship building. Since customers do not fully trust their respective
financial services providers, because they have their identity jeopardy or
other factors, being the lack of information provided, we can conclude that
companies should engage in adequate relationship building, with healthy
motivation being intact. It should not be done solely to increase profits and
drive sales, but because clients are your bread and they should be maintained,
taken care of and informed on novelties and special offers. Loyal customers
should awarded and trust should be established, while potential customers must
imperatively be lured in an intelligent fashion, with proper relationship
building, which is the result of solid networking. Referrals in introductions
given by existing clients also happen to be a good indicator of the overall situation
of your company.financial services promotion mostly communicates its services
using the means of direct marketing - telephone calls and e-mail marketing for
giving its clients insights on new information and checking up on them, simply
to see how they are doing and whether a meeting should be arranged. Overall,
for promoting financial services, companies do not heavily rely on advertising,
they seldom engage in sales promotions and primary focus is on the direct
marketing and selling, while PR is still used frequently so that they can
improve and create an appropriate image in the minds of customers. However,
oftentimes, financial services companies suffer from jeopardy and lawsuits, and
they brand images tend to be tarnished easily. Therefore, the main promotional
tools that financial services enterprises have at their disposal are
intangible, emotional factors, which, in fact, are trust and loyalty. Only
having developed and established a healthy relationship and interaction with
the client, can the company feel successful and go in the right
direction.ultimate conclusion is that financial services companies should focus
on relationship building, and should never put the trust that their customers
exude at risk, because not only can they seize being their customers, but they
might as well generate a wave of negative word-of-mouth, which could, in the
long run, destroy the business. Clients should be taken care of, and this is a
case for every sphere and, where financial services sphere should orchestrate
everything in the way most personal.
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