1. • Consumer
view
• Behavioural
Economics
• Relationship
capital
Better to Best
• Experience &
value
Creating client relationships that
count
2. Now = Consumer View
• Consumer
view
• Behavioural
Economics
• Relationship
capital
• Experience &
value
3. Future
• Consumer
view
• Behavioural
Economics
• Relationship
capital
• Experience &
value
4. • Consumer
view
• Behavioural
Economics
• Relationship
capital
• Experience &
value
5. Evolution of financial service
• Consumer
view
• Behavioural Behavioural
Economics
• Relationship Technical
capital
• Experience & Consultancy
value Success is
Understanding your
clients and deliver to
Product Success was know their broader needs
your offering and
how to position it
1/26/2012 www.engage.uk.net
6. Standard Economics
„homo economicus’
• Consumer
view
• Behavioural
Economics
• Relationship
capital
What piece of work is man! How noble in
• Experience & reason! How infinite in faculty! In form
and moving how express and admirable!
value
In action how like an angel! In
apprehension how like a God!
William Shakespeare Hamlet
Act II scene II
1/26/2012 www.engage.uk.net
8. • Consumer
view
• Behavioural
Economics
• Relationship
capital
• Experience &
value
9.
10. • Consumer
view
• Behavioural • Bounded Rationality • Prospect Theory
Economics • Herbert Simon (Nobel • Daniel Kahnman (Nobel
• Relationship prize, 1978) prize 2002)
capital
• Experience & – Most decision-making – Decision-making is
value is less than rational. emotive
– The decisions made in – The decisions made
organisations conform through heuristics and
poorly with those framing.
predicted by theories – Anticipated memory
of "rational" decision- – Our aversion for loss is
making. a huge driver behind
– Our decision-making is decisions made.
constrained by
“bounded rationality”,
and we make decisions
not by “maximising”
but by “satisficing”.
11. Behavioural Economics
• Consumer
view
• Behavioural
Economics
• Relationship
capital
• Experience &
value
13. • Consumer
view
• Behavioural
Resist impulse
Economics to buy
• Relationship
capital Euphoria
• Experience & Excitement Anxiety “ I’d better get out
value of this now”
Optimism Denial
Scepticism Fear
Desperation
“ Everyone has been Panic
making great returns
Resist impulse
- I’d better get involved” “ it’s okay, I’m Scepticism
to sell
investing for
Capitulation Relief
the long term”
Despondency Hope
Depression
14. Behavioural Economics
Cognitive bias Industry example Every day example Influence norm strategy
• Consumer
view Overconfidence Underestimate risk/size Ability pay off 3rd party consultancy
• Behavioural of task loans/mistaking luck for
skill
Economics Inertia Credit cards Take path of least Transparency,
• Relationship resistance Simplification, auto-
pilot
capital
Status Quo Change aversion Short term gain Long term
• Experience & consequences
value
Dissonance Buyers remorse Emotional buy Counter-intuit: Sleep on
it
Loss/Regret Financial Crises Hold poor performers, Due diligence and
sell winners knowledge
Mental accounting Segment each part of Highlight Good & ignore Accounting, budget
wealth Bad investment planning best practice
Shortcuts Ignoring risk-return Using rules of thumb Business/wealth coach
decision making Ask healthy questions
Information Financial news Price anchoring Recognise emotional
laden judgments
Herding Copying others Investment tips Seek experts council
Narrow frame Investing without Placing your financial Diversification, consider
considering the eggs in one basket all options
15. Context
• Consumer
view
• Behavioural
Economics
• Relationship
capital
• Experience &
value
16. Solutions
• Consumer
view
• Behavioural
Economics
• Relationship 26m active users (42% of pop.)
capital
• Experience &
value
5m active users
17m active users
4m active users
17. Work with the right clients
• Consumer Revenue Profit / Value
•
view
Behavioural
Financial A simple division of clients on The amount of revenue a client
the basis of how much generates measured against
•
Economics
Relationship
Capital revenue they bring into the
business on a recurring basis
the time it takes to service.
Segmentation based on the
capital (trail or trail and commission) client’s value to the business
• Experience &
value
Revenue or Profit Potential
One of the above models but
also takes account of the
potential for the client to
provide new business i.e.
referrals
Relationship
Capital
18. Relationship Capital
“The value of all relationships that Social
all people within an organisation 1
bring to that organisation.”
T 60
A54
P
70
P70+
70 S68 70
1 1
Technical A50 T56 Ad-hoc
“Its about relationships that “The value of all relationships
deliver value, value to business that all people within a network
1/26/2012 www.engage.uk.net
and value to the consumer bring to that network.”
19. Impact of the sales process
• Consumer
view Percentage of contribution to customer loyalty 54%
• Behavioural N = 2,400
Economics
• Relationship
capital
• Experience &
value
19% 19%
9%
Source: Customer Experience Diagnostic:
Corporate Executive Board. 2010
1/26/2012 www.engage.uk.net
20. Outcomes not process
• Consumer
view
• Behavioural
Economics
• Relationship Successio
capital n planning
• Experience &
value
Risk
capacity
Financial
planning
21.
22. Future = Virtual Client
• Consumer
view
• Behavioural
Economics
• Relationship
capital
• Experience &
value
