Advisers who ask their clients for feedback generate much higher profits for their business, according to practice management group, Business Health.
Detailed in Business Health’s Future Ready IV Report, the firm highlights the importance and value to the adviser of:
- Seeking feedback from clients
- Regular contact with A class clients
… less than one third of Australian advice practices say they have a structured approach to asking for client feedback
According to Business Health, less than one third of Australian advice practices say they have a structured approach to asking for client feedback. But those practices that do have a mechanism for formally seeking client feedback generate, on average, a 74% increase in bottom line profit.
In dollar terms, this increase equates to an average annual profit per principal leaping from just under $300,000 for those practices who do not formally seek client feedback to more than $520,000 per principal for those who do.
In addition to the financial benefit associated with seeking client feedback, Business Health also reports a clear link between bottom line profits and the frequency of contact with A class clients.
By examining the profitability of advice firms in its Australian HealthCheck database, Business Health has shown that those practices who contact their best clients more than ten times each year can earn, on average, almost four times more profit.
Business Health notes that ‘contact’ can be:
- Written
- Electronic
- Telephone
- Group functions
- Face to face interviews
Practices who report less than five contacts with A class clients each year experience an average profit per principal of around $115,000, contrasted with an average profit of almost $444,000 for advice firms that contact their A class clients more than ten times in a year.
Business Health also reports a direct link between client communication and referral business. It says that where clients give the communication they receive from their adviser a high rating, they are in turn far more likely to have already referred new clients to the business and are much more likely to do so again in future.
