Your business success boils down to three things: 1) the right people, 2) building, selling and servicing the right product, 3) at the right price and cost structure to generate acceptable profits. In other words, it’s about people, product, and profits.
The great auto executive and commercial pitchman Lee Iacocca got it right when he said:
In the end, all business operations can be reduced to three words: people, product and profits. Unless you’ve got a good team, you can’t do much with the other two.
80’s Flashback: Watch This Commercial From Lee Iacocca
(Digressing for a moment, I find it fascinating that Iacocca starts off this 1984 commercial by saying, “A lot of people think America can’t cut the mustard anymore.” Funny how Donald Trump says he wants to make America great again. Has America not been great at all in the past 32 years?)
Okay, where do you stand on people, products, and profits? Let’s take a closer look at each one.
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In my coaching conversations and trips around the country for speaking gigs and conferences, I am continually reminded of the importance of having the right people. I know, it sounds like a platitude. Your eyes may be glazing over right now. But do me a favor, rate your staff and determine if you really do have the right people on board.
If you’re like most advisors I meet, you have one or more people on your team who shouldn’t be there.
To determine if you’ve got the right people on your team, answer the following question for each person.
With the benefit of knowing what I know now about this person’s work ethic, skill set, cultural fit, and ability to get results, would I enthusiastically hire them if they applied for a job at my firm today?
I’ll pause for a minute while you do this exercise in your head…
What’s the result? Is there anyone you would NOT rehire?
Invariably, every new coaching client I work with has one or more weak links on their team that we end up replacing. I know, it’s hard, especially if that weak link is someone who has been with you for a long time and “the clients love her.”
If you keep a bad apple on the team you may end up like an advisor I worked with years ago. This advisor had to call me from home because she couldn’t stand to go into her office and face the toxic environment created by one of her employees.
I cannot stress enough how important it is to always have the right people on the team. Believe me, having the right people will make your job immeasurably more enjoyable and profitable.
When I say “products,” I’m referring to the overall service and experience you deliver to your clients. This includes the products you offer, such as mutual funds, the service you offer, which includes your financial guidance, and how you wrap all that up into the client experience.
Now, take out a pad of paper. I want you to role play for a moment. Pretend you are a new prospect at your firm and you’ve been referred to your firm by one of your best clients. With that setup, start writing down everything that happens (or is supposed to happen) to you from the moment you (as the prospect) reach out to your firm through 12 months after you become a client.
This might take a few minutes. I’ll wait.
How was the experience? Was it as pleasing as getting a massage at a world-class spa or was it more like having a dental assistant floss your teeth?
Take a look at what you wrote down on your paper. I’m certain there are steps along the way that you know you could improve. Here are a few questions to get you started.
- Were you treated differently based on whether you were referred in, a website lead, or part of a proactive marketing campaign?
- Were you pre-screened to see if you were part of the firm’s ideal client profile?
- Were the first, second, and third meetings enjoyable?
- Did you have to do a lot of the work yourself for these meetings, such as organizing your financial records or linking your accounts in an online portal?
- Did the firm follow up with you in a timely manner when you had questions?
- Did you feel like the firm cared about you as a person instead of as an account size?
- Was it such a positive experience after 12 months that you would refer your friends and colleagues to the firm?
Use this process to reimagine every step of the client journey with your firm. Technology such as Uber and Airbnb are spoiling consumers with a rich and pleasing experience. Your business should be no different.
Having great people and a terrific product should lead to healthy profits. But profits don’t just magically appear. You must have a business model, operational efficiency, and appropriate pricing to ensure you achieve an acceptable ROI.
What is your business model? Is it simply growing by passive referrals and charging a fee for assets under management? That’s not sustainable. Instead, think about the “formula” for your business.
One of my clients is a highly effective online marketer who generates a tremendous amount of leads each month. He knows the “formula” for his business and it involves a combination of online advertising, closing a certain percentage of qualified leads, and offering financial planning and money management services in a team setting. He has a spreadsheet that details the metrics of his business and cost of sales so he can effectively “pull the levers” of his business and see how changes in one area will affect his bottom line.
Your formula doesn’t have to be as sophisticated, but you still need to know the “formula” that makes your business work.
How about your operational efficiency? Are you effectively using technology to automate back-office processes and workflows? To enhance the client experience? Now might be a good time for you to do an operational audit and ask your team where the bottlenecks are. With today’s technology, there’s no reason for any advisor to remain stuck in the 90s.
Is your pricing appropriate for the service, experience, and results you deliver? This is an interesting area because I see some advisors who charge huge fees and others who are selling themselves woefully short. I can’t tell you what to charge but I do encourage you to look at your fee structure and see if it really makes sense.
The rise of Robo Advisors and the increasing transparency in the world brought about by technology is causing advisors to revisit how they price their services. The AUM model is still prevalent and likely will be for the foreseeable future but several other models will exist, too. Just make sure that whatever you charge is commensurate with the value you deliver to your clients.
People, products, and profits are three key things that determine the success and long-term viability of your business. Make the effort now to improve each area so you can separate yourself from the pack and ensure you thrive in the years ahead.
If you want help to improve your people, product, and profits, click here.
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