The term ‘value’ has many meanings. In business, it often refers to a product’s monetary worth.
An alternative meaning of the word 'value', as it relates to the importance or usefulness of something, is quickly gaining ground in business as the most important way to grow client loyalty, share of wallet and drive business profitability.
Recent Macquarie research shows how this notion of value is taking off among accounting and financial planning practices.
According to Macquarie’s 2015/16 Accounting and Financial Services Benchmarking Report, 79 per cent of firms that earned above-average profits last year said “adding value” for existing clients was their main driver of profitability.
Head of Client Strategy for Macquarie Wealth Management, Sherise Mercer, says the research highlights a new trend among high-performing practices.
“We know from our past research there is a direct link between a client’s level of satisfaction and their propensity to recommend the firm, to buy additional services, or to stay with the business long-term.”
“The new benchmarking data tells us that high-performing firms are looking at those drivers of satisfaction to power their business growth.”
She says when it comes to creating value, there are two sides to the coin.
“The first is driving up client satisfaction through valuable interactions and experiences. The second is extracting value for the business, in the form of financial return and other business benefits,” Mercer says.
The benchmarking report reveals the most successful businesses are adding value in a number of ways.
One third (32 per cent) of above-average profit firms added services which, in turn, increased the number of services per client, and lifted fee levels across the business.
Another way firms are driving value is through client referrals. Almost three-quarters (71 per cent) of high-performing firms rely on referrals from their existing clients as their primary source of new leads, highlighting the criticality of a loyal client base.
Three steps to creating value in your business
While many firms struggle with the idea of creating value, Mercer says it doesn’t have to be hard. She distills the process into three steps:
1. Understand the issue
The first step is to understand the issue. What problem or need are you are solving for your clients and why?
“This is about clearly articulating your value proposition. Our past research shows that clients who feel highly satisfied with their adviser are those who feel valued beyond the business or advice transaction. Clients want their adviser to understand them and their needs, and will feel most valued when their needs are being met, not when you are merely effecting a transaction,” Mercer says.