Futurist Edge: Technology insights

CRM solutions: productivity boosters or just expensive toys?

Futurist Edge's Technology Insights column seeks to get you up to speed with the latest insights and developments in the rapidly evolving space of technology applications for financial advisors. To be future ready, you need to embrace what looks like cutting edge thinking today, but which may well become common practice in future. You need to gain that edge - with the Futurist Edge.

Customer relationship management (CRM) software is a big buzz-phrase in the advisory fraternity these days, next only to perhaps online transaction execution platforms, in any conversations around technology for advisors. What exactly does a CRM solution do for you? What aspects of your customer relationship management will get automated with such solutions and how will they help you manage your client relationships better? What essential features must you look for, when evaluating CRM software in the market? How can you ensure that the CRM solution you wish to buy turns out to be a huge productivity booster and not just an expensive toy?

There are four functions within your advisory firm that engage your clients: marketing, sales, advisory and service. You either have a marketing team or use marketing initiatives to create awareness of your proposition, which in turn generate leads or prospects. You have a sales function that engages these prospects and looks to convert them into clients. You have an advisory function that engages on an ongoing basis with clients to advice them on the portfolios and financial plans. And you have a service function that engages clients on all service related issues relating to their portfolios. Whether you are a single advisor firm or have a team, all four functions are equally relevant. An automated CRM solution is one that automates certain aspects of each of these functions, and offers an integrated solution to enable you to manage client relationships more effectively and to manage more clients within the same time.

What should a CRM solution do for you?

Here are some of the features you should look for when evaluating CRM solutions. Some of these features may be more important than others in your business model - you may therefore want to rank these in order of your preference, which then gives you a good place to start your evaluation.

1. Email marketing: The solution should enable you to design marketing emailers, send them out to prospects, track responses and create leads based on responses. Analysis of your email campaigns should enable you to decide which prospects to drop and which ones to continue pursuing. Likewise, analysis of your email campaigns should enable you to understand what messages resonate more with prospects, which can then help you sharpen your communication strategy.

2. Lead management: The solution should allow you to track prospect inquiries and route qualified leads to specific team members. This ensures leads are never dropped because they got lost among the chaos. Detailed prospect profiles can help advisors identify which leads may need some nurturing, and which aren't worth pursuing. It allows advisors to handle challenges of adding new clients by better keeping track of the cycle time involved in processing and creating a new client account. If you have a sales team, the lead management module should provide you information on pipeline status of each of your sales persons, and analytics on average time to closure for each lead, conversion rates and other metrics that enable you to understand which team members need more support from you.

3. Contact management: The CRM solution should capture preferences of the client such as investment interests, literature requests, preferred mode of contact (email/phone/face-to-face), preferred frequency of contact - all of which gives useful insights to the relationship manager/advisor on how each client needs to be engaged. The solution should also track customer communication preferences ensuring that the right amount of communication is given and not alienating customers through unnecessary flood of marketing communication. Given the amount of spam that people receive, too much marketing can result in a lack of interest with customers resulting in not reading any materials sent. The software solution should also enable you to send automated responses to email inquiries or to route email inquiries based on predefined rules. It also enables advisors to give a personalized touch by setting email reminders to touch base with clients to wish them for holidays, birthdays and anniversaries.

4. Account management: The solution must enable you to capture all client interactions including meeting notes and action points for the advisor as well as service deliverables recorded by the service team, which will then trigger reminders for action due and also allow access to all client interactions, by all team members, in a single place. Just as clients appreciate a single account view of all their financial holdings in one place, an advisor needs a single account view for each client, where he can see the portfolio, transactions, interactions, advice rendered, service requests made and delivered, complaints received, leads referred - essentially, all forms of engagement with each client - all in one place. This is, in a sense, the heart of the CRM solution. If the heart is robust, many applications can be built around it.

5. Analytics: The first level of analytics is an account profitability, which will enable you to create an A-B-C analysis of accounts not by size, but by revenue. This in turn will help you understand whether you are directing your time and energy proportionately. For firms with a large amount of retail clients, CRM software with advanced analytics capabilities allow you to profile clients and prospects by markers such as demographics, type of assets, and size of portfolio. Based on the data, you can gain insights such as the most popular products, the average investment amount for clients within a specific income bracket and identify loyal and profitable clients. These insights can be translated into measures to formulate better marketing strategies such as the best time to send personalized content and target information that are better received by clients.

6. Benchmarking: With CRM software, key performance metrics like sales cycle time, productivity, or quality of service can be easily analyzed and this can be used to measure against competitors and industry leaders benchmarks to understand where the firm lies or is lacking. These insights can be used to identify problem areas and improve customer service like reducing the cycle time in addressing customer queries.

Choices aplenty

There are lots of product options available including: off-the-shelf, off-the-shelf that can be customized and specific CRM software for the financial advisors. The price of the product will depend on factors such as whether it is an enterprise (many offices) installation, number of users and standard/premium edition. There may be costs for transferring data but some CRM providers will transfer standard-format data at no charge. However, custom data, such as notes, portfolio information, policy values and statement history may require additional charges.

New frontiers

Two trends in CRM software are moving towards cloud-based application tools and integrating social media into CRM strategies. By using a web-based CRM application, advisors can access the central database using a smartphone or tablet whether they are in the office or engaging with the client in a coffee shop. Cloud-based applications allow advisors to easily enter client data and information directly onto the software thus reducing some of the process challenges associated with adding new clients. Since cloud-based applications are a service, the upgrade happens automatically and is the onus of the developers.

Social CRM tools can help advisors to view clients' online activities on social media like Linkedin and Twitter, and import details like bios and headshots to build better client profiles and give insight into offering products better suited to their lifestyle. The tools can also be used to gain leads and identify potential new clients.

Risks

With increased mobility, advisors should be aware of basic technology vulnerabilities. Password protection of the device is a must and it is recommended to change the password every six to eight weeks. Spam mail and viruses entering the device through USBs can be used by nefarious hackers to access information, resulting in loss of key client details. Logging into wifi at public spaces like coffee shops can result in vulnerabilities which make it easy for others to gain information.

Will you really use the power of CRM solutions?

Most people only use 10% of a software's features 90% of the time. For you to optimally harness the power of a CRM solution, you must buy the one that is most appropriate to your work flows and business processes. A useful way to get started in CRM software selection is to first consider the 6 points described above, rank them in order of importance for your firm, and then look at each solution to assess its ability to deliver against your most important requirements. That way, you make your own evaluation sheet, rather than getting confused with marketing claims made by competing products, each of which will obviously showcase their own strengths. If you choose a solution wisely and implement it across your firm, it can be a huge productivity booster for your firm and can enable you to significantly enhance your client engagement. An unwise purchase or a half-hearted attempt at installing and using it, will result in an expensive toy that sits idle on your computer, generating nothing but acidity, each time you look at its icon on your desktop.

Content is created by Wealth Forum and must not be construed as an opinion by DSP Blackrock MF.

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