Participants:
Steve Wershing
Julie Littlechild
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Welcome to Becoming Referable, the podcast that shows you how to become the kind of advisor people can’t stop talking about. I’m Steve Wershing. The survival of your firm depends on innovation, but innovation is hard and risky. Invest in the wrong thing, and you’ll have wasted time and money at the least, possibly even compromising your business at the worst. How can you know what kind of innovation to pursue? And how? One way to get critical guidance is to check with clients. Clients are the ultimate experts in what they’re willing to buy and what they value, but it’s not as simple as asking them what services to introduce or how to change your processes. They don’t know.
In this episode, Julie and I discuss how to enlist clients in co-creating that innovation in your business. We talk about what kind of feedback to seek and productive ways of asking for it. The future of your business in this fast changing industry depends on smart innovation. This discussion will give you valuable insights on how to uncover the guidance to take your business in the right direction. Here now is my conversation with Julie on how to get client feedback to guide successful innovation. Hey Julie. So today we’re going to talk about innovation.
Well, that’s a small concept.
All right. Exactly-
We can probably tackle that in half an hour or less.
Yeah, right. Let’s talk about the future. We can knock that out in 30 minutes, but I know that you and I wanted to talk specifically about innovation and even more specifically about how client feedback ties into that, how you can essentially engage your clients to co-create that future including what kinds of things you innovate with. But let’s just start with the idea of innovation. So as we were just joking, it’s a pretty big idea. So what more specifically does innovation mean to you?
When I think about innovation, I tend to go to the design process and one of the things that jumps out for me is that there’s a big difference between improvement and innovation. And sometimes we talk about them kind of in the same breath. I think they’re both critical, obviously they’re both important, but they’re different. And so typically when I’m thinking about innovation, I think about it as a design or development process. So it’s like you’re building in an innovative way so the result is more innovative rather than it’s this strategy or it’s this tactic. So I think when you look at some of the companies that we think of as innovative, they have a process in place to really think through design and that sort of thing.
So the example I always use is a Starbucks, which is entirely not at all creative, but having said that, we use them for good reason often. And just to walk through that thinking, I guess is at the end of the day they provide coffee, they sell coffee. And if we went into their boardroom and they had an improvement mindset, they would probably be thinking about how do we make it taste better, make it hotter, or what have you. But they like so many, I think take more of an innovation approach and say… Yes, it’s about the products, but more importantly, it’s about understanding how this product fits into the lives of our clients.
And I think when you start asking those questions, when you start really thinking about the entire client journey. And in Starbucks case, it’s clear that they looked at why people go to Starbucks, how long they stay, where they sit, what they’re doing while they’re there, all of that. And so the environment ends up being one of their innovations clearly among other things. So to me it’s a bit like Dyson, right? The innovation is in the design. And when you take this kind of approach, you end up being very innovative. And what do you think about it when you think about innovation?
Well, I think you’re bringing up a whole lot of really interesting points and I think it’s useful to think about what kinds of innovation there are. So for example, you can innovate by coming up with a new service.
Yep.
So if Dyson came up with some way to clean that wasn’t a vacuum cleaner, that would be an innovation. So when we say innovation, some advisors might think, “Oh, well, there’s a new service I could do.” Or, “There’s some new thing I could do.” Or there innovation could be how you do it, but in a better way, which is like you were talking about Dyson, they build their vacuum cleaners differently. And the idea is it sucks up dirt better so that’s a kind of innovation. Or I think more interestingly is what you were talking about in terms of Starbucks, which is you can innovate in how your client experiences you. And so where Dunkin Donuts and Tim Hortons and lots of places, might think about how we do coffee differently. But Howard Schultz sat down and said, “Let’s not talk about coffee. Let’s talk about the experience. Let’s talk about a space that is somewhere between work and home, that involves coffee.”
Right. Yeah, exactly. And I think it’s a bit of a trap sometimes, because as you said, an improvement can be an innovation technically, but I think it’s a trap to believe that just because you do something a little better, it’s like the better mouse trap trap, if you will, that somehow that’s innovative. Because sometimes we do hear that and I question it where a firm might say, “Well, we truly care about our clients, or we have a six step planning process.” As if that’s somehow an innovation when clearly it’s not, and they may do it better than anyone else, but it’s not a recognizable innovation in that sense.
Yeah. And you’re also suggesting another aspect of this that’s really important, which is an innovation is not necessarily valuable in itself. It’s valuable to the extent that it improves or enhances the client experience. And we saw this a lot early on when advisors began talking about things like client portals like, “Oh, we’re going to have a website. We’re going to open up a portal on the website.” And so we’re going to innovate by rolling out these portals. And then they would find that 1% of their clients would take advantage of it because it was clearly an innovation and it was clearly something new and potentially useful, but the clients didn’t see it as something that was valuable to them.
Well, Yeah. So maybe categorizing is helpful to say, well, there’s innovation that makes us more efficient, but let’s be real about that. It’s about you and your business and operating more efficiently. And that’s great, but that doesn’t mean that the client’s going to recognize it, like you say, and there’s innovation on both sides, but if we’re talking about becoming referable, for example, as we sometimes do.
As we once in a while talk about.
Yep. Then I think we need to think more about the client experience.
Exactly. Exactly. So I think talking about how you might use your CRM in a different way, or if you go from physical files to digital files, that we’re not going to talk about that. We’re going to talk about the kind of innovation that affects the client.
Yeah, exactly. Exactly. So I know we both think about client feedback or client input and how that plays into it. And I think you could also think about Starbucks here because I think they are like a lot of progressive firms very good at co-creating the experience, you mentioned that word at the outset and that’s another form of innovation, I think. It’s a necessary part of this, and it’s the scope of that co-creation that interests me with Starbucks because yes, they invite input on, I don’t know the strength of the coffee or whatever it is that they… And a lot of people have opinions on that I’ve noticed, but they also get input on things like the social causes that they support. And what they’re doing at a local level versus at a national level. So it’s almost co-creating how they show up in the world to some extent, which is a much broader definition of co-creation. So I think that role of input is really critical to this. Do you see that in the work that you do?
Well, I do. And I totally agree with you that just like we were suggesting before, innovation is not necessarily valuable. And like the example with the client portals, if you’re going to innovate in terms of how you interact with clients or the services that you provide, or the causes you support, or what role your advisory firm plays in the community, really I mean, you and I are both on the same page about the importance of the client’s role in that, because unless you consult with them, you might innovate, but it may not add value. And if you’re not adding value, then what are you investing for? What’s going to be the return on that investment?
Yeah. And it’s so easy to try to fix problems that we think exist with innovation, but we’re leading with assumption and it’s not a great place to be. And I think that’s the role of, you know I always like to differentiate between feedback and input. I’m thinking more of input here, but if we can understand the problems that our clients are facing, the challenges, the concerns, the aspirations, all of that in a formal way, then that’s the seed of innovation, right? That’s telling us something about what kind of problems that we can solve. And frankly, problems that if you went out right now and said to your clients, “How should we innovate?” I’ll guarantee you, you’ll get virtually nothing back that you have used because that’s not their job. It’s not what they need to be doing.
And also it’s not fair because first of all, that’s hard work and you need to train to do it well. And Steve Jobs was fond of pointing out that it’s our job to have the good ideas and bring them to people to anticipate what people need before they understand that they need it. So that might argue in the direction of what is client feedback. But I think what you were sort of just alluding to and what I’m totally committed to is the idea that we have to do that investigative work. We have to do that creative work, because that’s our job. It’s not just our jobs to come up with new ideas and try new things out. It’s our job to figure out what new ideas will add value. And I love repeating this story about Henry Ford all the time. It’s certainly not true, but it’s too good a story not to tell. And that he was reputed to have said, “If I’d asked my customers what they wanted, they would’ve said faster horses.”
Yeah. Yeah. And that’s at the base of all of this. Right? And it’s very true. It’s very true. And yet-
And so…
Go ahead. Sorry.
Yeah. So part of our job and part of the kinds of things that you do and that I do, can go out there and unearth clues? You’re looking for sort of what kinds of things does this feedback suggest? So that sort of informs our innovation work.
Yeah, precisely. And you don’t go to a doctor and say, “How can I help you better?” I mean, they’re going to ask you how you’re feeling, and I think those are the types of questions that start to unearth or provide those clues. As you said, it’s what are your big concerns? Where are you challenged? What gets in the way? How are you feeling? All of those things start to, and I would argue, I mean, those are quite broad based forms of input, but you can tie this into client journey mapping, and really start getting quite precise about different stages of the client journey and what they’re thinking and feeling and doing it at all of those stays. That’s definitely another form of this.
Right. Right. So we can think about a couple of different categories. We can think a little bit about what new things can we do for clients. And so that’s where we might ask them questions like, what’s got your attention? And what are you concerned about? And those things, or we can talk about how can we do it better and provide a better experience. So we might ask about what parts of our process do you find most valuable? What parts do you really look forward to? If we could change something, what would make the biggest difference? Those kinds of things to find clues about how you can improve that client journey you were talking about?
Well, yeah, and sometimes it’s straight up asking, and sometimes, like you said, it’s being a bit more creative because you get a lot of blank stares or in our quantitative work blank forms, just blanks about what can we do differently? Because people will almost always tend towards simple transactional components. They’re not thinking in terms of the bigger picture, but we go through a client journey mapping with a number of our clients. And I’m just a firm believer in the exercise where you map out the stages that clients go through, and then you determine effectively what they’re thinking and feeling and doing at each stage.
Now, the problem is you can’t actually determine what they’re thinking, feeling, and doing each day, each grade we’ve got to ask them. And one of the traps I think we fall into is if you think about a client journey map, and you think about say five or six stages, let’s say onboarding is one of those. Our tendency is to focus on that stage. So what’s working with onboarding? What did you find frustrating? And that’s important valuable work. Where I think some of the innovation comes as between the stages, it’s like the space between the stages, if you will. So what’s going on when clients are getting ready to come in for a review meeting with you? What’s going on between the time they sign up and the time the money is actually transferred, into a different account? And that’s where often the emotion and the anxiety and the concern, and the questions often never asked, start to emerge. And all of a sudden innovation big or small starts to become apparent.
One of the examples I often use, although my husband would kill me if he could hear how often I use this, but this idea that if we’re going in for a review meeting at some subconscious level, it will unearth anxiety. And that could come out in the form of, I don’t know, at aloud discussion, for example, however if an advisor knew that, if they understood that space between the stages, they could easily reach out and say, look, “Here’s three questions for you guys to talk about that are designed to put you on the same page.” Here’s what would be helpful for you as a couple to do together to make sure that you get rid of that. So that’s what I mean, where it feels small, but it’s still an innovation and process because you actually looked not just at the stage, but before and after that.
Right. And it may look small, but it can end up being very significant. So if there is an issue, for example, between a married couple regarding some financial issue, and you might look at your financial planning process and you might say, “Well, they’re going to have to come to some decision one way or the other, and then we can move forward.” And so that might look like a fairly small thing when it comes to your financial planning process. But if you can help them overcome that, that might be revolutionary. I mean, they might feel totally different about their relationship with money. So it may look small, but it could be a really big thing.
Absolutely. Hi, it’s Julie here and I hope you’re enjoying today’s discussion. Hi, it is Julie here. I just wanted to jump in and let you know about a resource that I thought you might find interesting. We’ve long believed that one of the best ways to drive more referrals is to bridge the referral gap. And that’s the gap between the referrals your clients are making and those that you’re actually meeting. The opportunity is significant. And I’ve more than once said that advisors are sitting on a mountain of untapped referral potential. So if you’ve ever wondered about what that means for your business, we’ve created a free tool that you might find helpful. You can use our referral potential calculator by going to referralcalculator.com. Simply enter four numbers for your business. And we’ll generate a personalized report just for you. It’s as easy as that.
And so that’s what I think the face of innovation can be small, but it can be incredibly impactful, but we’ve got to approach it in a different way. It can’t all be about efficiency. It can’t be what tactics other people are using. We’ve got to do that hard work. And I guess that can come in different forms. It can be through a survey process of asking very creative questions, designed to unearth that. I think you and I both have recommended the idea of interviewing clients about their greatest experience or the experience that’s had the most impact. And I think that’s another way of unearthing innovative ideas, but don’t ask, how am I doing? Ask tell me about some other experience that was extraordinary for you.
Right.
And you start to see trends. And that’s where I think these ideas come from.
Yep. Yep. Another thing that I like to do with advisors is to suggest… Because we can’t expect the clients to come up with the best ideas is to you’ve alluded to this before either suggest something and see what their response to it is. We do this in advisory boards all the time. If you’ve gotten clues and you think you could improve your process, somehow put it out in front of your board. What if we did this, rip it apart for me, tell me what’s good and what’s bad, or you can try something. And I like to look at the pandemic as sort of what an economist would call a natural experiment where it’s one thing to go to all of your clients, let’s think specifically about your retired clients and to say, “What would you think about meeting virtually instead of coming into the office?”
And when we did that before the pandemic overwhelming, “Nope, no. I like seeing you in person.” Now that we’ve been forced to do it for a while, we asked that same profile, that question, they’re like, “No, that’s pretty good. We like this.” And so you can do that in little ways. You can try something little, you can just put it out there, try it a couple of times and then go out and ask, “How was that? Is that something you’d like us to keep doing?”
Yeah. Yeah, absolutely. I mean, it’s like all great design, it’s iterative. And it’s built from small experiments where you if you start to think of your business, like a living lab, right? Try things. It’s never going to go horribly wrong if you ask someone, if they want a meeting or you send a different communication, or what have you. If you’re thinking about full pivots at some data, and I can share some examples of clients that we’ve worked with who’ve truly innovated in big ways, but mostly it’s just experimentation.
Well, can you share one of those examples about a big one? Because it’d be interesting to pull that apart.
Well, yeah. I mean, gosh, as I was thinking about this topic, there was a number of things that came to mind and I’ll actually share something because just this morning, something came to mind. I was meeting with a woman that I know who has just started a new business called Next Chapter Lifestyle Advisors. And she was an advisor, but their goal is working through advisors with clients to help them think about the non-financial aspects of retirement. And I’m paraphrasing here. But to me, that’s an example of innovation. So if you kind of tease that apart, an advisor would need to A be working with a certain target market. Pre-retirees are moving into retirement. They would need to have a sense from their clients of where the struggles were. And it’s not always financial.
What are the fears? What are the anxieties? What’s keeping them up at night? And then the innovation becomes providing some support. So a group like that, or there’s other ways to do it. And what really struck me as she was talking about the fact that they will help couples think about the impact on relationships in retirement. I mean, some topics that frankly advisors are scared to go there because it opens up. But that’s an innovation just because you listened to what clients were really feeling going into retirement, this isn’t about their plan. You’re going to have the money. That’s fine. So something like that. I mean, some of the bigger ones though, we’ve worked with one organization last year as it was pre pandemic, but it came to fruition during the pandemic where they’d been thinking long and hard about expanding their offer, sort of going into the non-financial not directly, but through a series of partners.
And so the input there was very much about what are your big challenges? How do you find answers to these challenges today? Where do the solutions come from? Would you even be interested in talking to us if we had some solution? There’s a whole series of questions that you have to get down to in order to say, we can actually support. So they built a whole curated offer. Another client offered a full legal of support program based on some deeper analysis of their high net worth clients and their business owner clients. So that’s where I’m seeing a lot of the innovation, I think is that you mentioned it earlier on the services side, but you’re not going to just jump in without some real data on that kind of stuff.
Yeah. And I have an example on the other side of that, an advisor that I know came out with a service and he thought it was a great idea, and I thought it was a great idea. And he ran full charge into it, invested tens of thousands of dollars building it and was able to deploy it to a whole bunch of people and what he found was that nobody renewed. And after all of that investment, it just stopped after the first annual subscription was up because he didn’t go out into the market and test it. He didn’t ask those clients. He thought it was a good idea. And he got real excited about it and he built the entire thing out without any feedback. And it’s not around anymore because as it turns out, he was a little off the mark, but it’s like shooting for the moon. If you’re off by a half a degree, you’re going to miss it by tens of thousands of miles.
Yeah. Yeah. Well, we fall in love with our own ideas. Every day I do that. So I understand the dilemma. The other area I think that insight becomes critical and I know this is an area you talk to clients about is being able to deliver a segmented client experience based on different client personas or different target audiences. So just the fundamental idea that if you’re dealing with younger clients versus older clients, that the experience needs to be different but how? It’s so easy to make assumptions about that kind of thing. So I do think that just understanding the fundamentals of what they’re interested in, what they need, what they expect can be really critical if you’re going down that path as well.
Right. And even what you call it. I know that some firms have come out with segmented offers for the next generation, for example. And so the next generation, their needs are not as complex. They don’t have as much money, so they’re simpler. And so they could offer a scaled down offering and whether or not that’s a good idea is a whole separate argument, but part of the issue is what do you call that? And I’ve heard firms call things like that like our small client solutions. Well, who wants to be part of that?
No, no, not that.
So even just figuring out how to describe it and how to talk about it, there’s a critical client feedback element to that as well.
Well, yeah. And I think you and I have talked about this idea that there’s… At a certain age, nobody uses the word retirement or cares about retirement, and yet they need to plan for that next phase. And I’m seeing a lot of creativity for better, for worse trying to package that up. But I think again, we’ve just made this assumption that the fundamental words we’re using are actually resonating and they may not.
Well, exactly. And to use sort of a dramatic example of that. You and I know that if you can get somebody in their twenties to start saving meaningfully for retirement. There retirement’s going to be way easier because of the time value of money and the cumulative effects of all that. But try to sit a 20 something down and talk about retirement. They don’t have any goals there, so we know they need to do it. I believe that you can get them really excited about doing that, but you can’t call it retirement because that’s just so far away that they just have no interest in that word.
Yeah, absolutely. Yeah. So again, I think the most creativity that we’re seeing, the most innovative things that we’re seeing are when advisors are really digging into the emotional side and what clients are experiencing and feeling more than just the practical side, was that easy. It’s interesting, I don’t know what firm this comes from, but one of the metrics that is touted as one of the most correlated stats with things like net promoter score is it’s easy to work with my advisor. And funny, we just did a big study where that absolutely came up as one of the most stated importance was really high. The problem is it’s when you really dig into it, it’s not the thing that’s driving satisfaction and the depth of the relationship and engagement it’s table stakes, really. So we can get caught up in table stakes and think it’s innovative when it’s really not.
Oh, interesting. An idea that’s related to that. And this too could be an interesting area of innovation is getting to that effortless experience kind of idea is anticipating the next problem. So if you watch how clients interact with your firm, and if you look at it closely, you might discover that a meaningful proportion, if a client needs to do something, they need to add to their account, they need to pull money from their account. They want to call you up and have them have you wire money to them, something like that, and if you look and measure it, you might find that 20% or 25% or some proportion of those clients end up getting hung up.
Send me a thousand dollars to my account. There’s no connection between your bank and your account yet. That’s going to take us two days to set up or if they ask you how to do something and they go to do it and a meaningful proportion of them, do it wrong, what kind of innovation can you bring in to anticipate and head off that next problem. So that when you have that first interaction, it goes away, it’s all done. And they’re happy that you could take care of it so efficiently. Even if when the mistake happens, your staff is fabulous and they just rush to the rescue and you still have that extra interaction you didn’t necessarily need to have.
Yeah, absolutely. And to that extent, I think creating a truly effortless experience can be innovative. So I don’t want to dismiss that. I just think it’s understanding the difference between what’s innovative and what’s expected. And so it doesn’t have the emotional connection, but look, if you can help people be more organized and make it easy, and even as you say that, I’m thinking about some discussions we’re having about the next level of analysis, which is input and feedback is largely either point in time or it’s looking back. How did we do? And I’m particularly interested in more, what can we learn that actually becomes predictive, when you can marry different points of input with behaviors, and now you’re really anticipating what they’re going to need.
So I think there’s so much more to come on this, but that’s big data kind of stuff. I think for individual advisors or small teams, just really locking in, on that client journey, truly asking what your clients are experiencing and asking them what they experienced, not just in the moment, but before it happened, after it happened, what words they’d use, I think that’s going to create all sorts of opportunities to innovate, to stand out.
Yep. I totally agree. It’s a big area and it’s a lot of different ways.
Yeah, absolutely. So that’s 30 minutes on innovation. I think we tackled every possible… We could talk about that all day, but it was good to have this chat. Absolutely.
Yep. Yep. Very good. Thanks.
Take care.
Hey folks, Steve, again, thanks for joining us on Becoming Referable. If you like what you’ve been hearing, please do us a favor and rate us on iTunes, it really helps. You can get all the links, show notes and other tidbits from these episodes at becomingreferable.com. You can also get our free report, three referral myths that limit your growth and connect with our blogs and other resources. So until next time so long.