Good to Great, published in 2001, is considered one of the best business books of all time, selling more than four million copies and cited by many CEOs as the greatest management book ever written. In it, author James Collins profiles 11 companies that, in his estimation, made the leap to greatness and explained how they did it (Cliff Note version: They focused on “core competency”).
But “greatness,” apparently, is fickle. As Freakonomics author Steven Levitt has pointed out, the companies’ collective stock prices likely underperformed the S&P 500 in the years since publication. Of the eleven companies profiled, one was Phillip Morris, a manufacturer of cigarettes. Another, Circuit City, went bankrupt. Yet another “great” company was Fannie Mae.
“Clearly, great isn’t good enough to grow your business,” said Scott McKain, a motivational speaker and business book author, to some 900 retirement plan advisors during a keynote session of the National Association of Plan Advisors’ annual summit. “Great today doesn’t mean great tomorrow. If all you’re doing is what you did yesterday, it’s a recipe for failure.”
McKain’s message for advisors was simple: To grow in an increasingly commoditized business, like the investment advisory industry, you have to ensure that how you articulate your difference is clear, consistent and meaningful.
Very few firms do that, he said. Even the members of an advisory firms’ team, principals and employees alike, cannot articulate a firm’s real value proposition. “Seventy percent of the members of your team can’t explain why what you do is better than what your competitors do,” McKain said, citing a survey.
For McKain, truly differentiating a practice is built on four pillars:
It’s crucial that your value statement goes beyond clichés like “we focus on customer service.” In McKain’s survey of advisors, 80 percent said customer service was what makes their practice different from others. “Eighty percent of advisors said the exact same thing when asked what makes them different.”
Instead, advisors need to define their difference with great specificity. “You can’t differentiate what you can’t define,” he said. “But most advisors are afraid to put that flag in the ground, because it also means defining what you don’t do.” McKain says advisors should create a “clarity statement” articulating the definition, but be ruthless. “If it takes more than six seconds to say, it’s too long.”
Consider rental car companies. Nothing distinguished one from the other, until Enterprise Rental Car came along. What did they do? Posted every point of contact a customer had with a rental car company on a wall and made a decision to radically transform the customer experience around just one of those touch points. They were the first rental car company to pick up customers.
“All you have to do is think of the one thing you can do uniquely,” he said. The takeaway: Create a different client experience that will set a firm apart from its peers.
Communicate with clients according to their preferences, not yours.
Increasingly, that means online, mobile, and on demand. Clients want information when they want it, not when it’s convenient for the advisor. Digital tools, client portals and pushing the client experience out to the end customer is vital to connect with clients. Advisors who won’t adapt to new ways of communicating with clients simply won’t grow.
Think of Indiana Jones, and you think of a swashbuckling archaeologist with a hat and a whip. You don’t think about director Steven Spielberg, George Lucas and the rest of the creative team that came up with the character.
A client’s experience of an advisory firm shares something in common, McKain said. What they experience is not the principal advisor sitting at a desk articulating an ideal client experience. What they do experience is every single interaction with that advisors’ firm, including every phone call, every website visit, every message received, and every interaction with people who work there. “Everyone who works with you is the embodiment of the experience,” he said.
It’s worth making the investment to train those employees to ensure the quality of those interactions. “I hear people say ‘what if I train them and they leave?’” McKain said. “The better question is what if you don’t train them, and they stay?”