Turning water into wine

A classic question asked of any business is: 'How many clients do you have?' The most frequent answer to this question is '3,000 ' I think.' But how many of these are really clients and how many have bought a product from you in the last 12 months? For many firms, it is less than 500.

So, what is the difference between a customer and a client? A smart answer is the second sale. In other words, when a customer is prepared to trust you again.

How do we make it happen? Let us take those aforementioned 3,000 clients. Many will have had maturing policies that you did not service and how many could have benefited from the recent dramatic fall in term assurance rates?

Data mining

The real value of a service business is its client base and much value can be gained by data mining this lucrative source of information. Take, for example, an IFA client who specialises in investments and pensions. They rarely mentioned protection contracts in reports. When they were alerted to the potential problem with this, they got to work contacting all clients where no protection had been mentioned, offering them a review. The initial result was that they had to stop ' there was too much interest and they could not cope with the demand. Much of this was not, in fact, protection based, but investment clients who had acquired additional funds, wanted extra advice and were more than happy to be contacted.

The fact is, that as IFAs we live in a different world than we did five years ago. Our value to the client is no longer as the 'gatekeeper' to the product providers. Many products are available 'direct' for those that care to look. In the days of the 1% charge, this may even be the best way to buy basic products. Our value must be to identify with clients' areas where action is required, and then help them source a solution from the market.

To do this effectively, we need to become much more aware of our clients position. For a start, when was the last time you looked at a client fact find of two or three years ago? Most of this carefully garnered information simply sits in a paper file.

Making a proposal

What would it be worth it if you could simply 'interrogate' your client base to find out which clients, who took out life assurance between 1990 and 1997, are still under 50? With that list (produced in seconds) a staff member could access the CTP and re-quote on a client specific basis. You could then send clients a mail-merged letter suggesting that they could save some money. Then, perhaps, ask respondents for an updated Fact Find by enclosing a pre-printed form with the letter. Also, do not forget to ask 'is there anything else we can do for you?'

This is an exercise that could generate not only substantial immediate income, but also increased customer loyalty.

We have used life assurance as an example, but critical illness (CI) is another area crying out for this approach. How about a mailshot to all clients under 45 who have a mortgage of over £50,000? Also, think about income protection (IP). The list goes on, how many firms could do with sending a hand-holding, 'do not panic' letter to all those with endowment mortgages?

However, we must be realistic. This type of pro-active marketing will never come from a paper-based system. A proper back office/database system is required which can:

Process new cases.

Track commissions.

Produce compliance reports.

Data mine in the way outlined above.

Interact with a scanned document system.

Send mass emails to clients when required.

These systems are now available and new ones are coming online. However, the main mistake being made at present is that these systems are seen as either tools for managing 'compliance' or 'commissions' or 'new business' or 'marketing'. In fact, they can usually do all the above, and more ' they just need to be used properly.

Of course there is concern about cost. A proper system is not free and a good one is not even cheap. However, let us not pretend that non-action does not have a price. What about the potential for increased future complaints and lost sales? A good, clean, active client database can add capital value to your business or database. Ultimately, you must choose, but ensure you consider all the facts first.