I’ve been taught in my sales career that if you provide good service, provide excellent value for the product or service that you are selling, you will retain customers forever.
Sadly, I have to tell you that it works. You can hold on to customers for a long time, but it is normally never forever.
I have heard this probably most often in the financial planning or professional investment community.
I have a brother-in-law who is very successful. He is in the top 1% in the country for what he does at a large banking and brokerage firm.
He told me that the biggest complaints he receives from his customers is that they are questioning why they were not kept in the market when the market went up and why they did not exit the market before the market went down.
He has outperformed a lot of portfolios doing what he does and he still has had his top accounts leave him based on what they have heard on the news or another competing brokerage firm taking them from him.
It’s Not a Matter of If, But When…
I also have a friend in Naples who went to college with me who is very successful in the financial industry and who is very conservative with his programs for long-term growth for accounts. He primarily provides performance of a good clip for growing money for pension funds.
He does pension funds for schools, for municipalities, and for wealth management for people in Naples. He called me recently and he told me that he had an account that he has had for 10 years, $40,000,000 worth of assets that performed at a 13% growth rate over 10 years. It was a family trust and the dad died.
Well, he was close with one of the sons in the family and there was a second son in the family that has control of the trust now and he was not engaged. He was not in the know or on the radar screen of this son. In any event this alpha son, who was not influenced by my friend Larry, moved the account.
Again, it was not based on performance, it was based on not having a relationship in place, which probably could not have occurred because this son was in a different part of the country, had his own stable of investment planners, and had no idea that my friend existed.
I heard this story from him and then he reminded himself. He said earlier in his career, he has been doing this since 1981, his manager told him that honestly we are all renting our clients and customers and there will be a day, no matter how well you do your job, that you will be replaced and it may have nothing to do with your performance.
His advice was, make sure that you have a marketing plan that is working all the time that is recruiting and developing new territories and clients for you to acquire and minimize the weight of your account base.
Get it away from a 20% rule to try to level it off to more of a 40% to 50% bucket so that when the time comes for you to lose that major account you will not be devastated and you will be able to continue and prosper.
In Joe’s Words