What financial advisers do is valuable, but it is often not compelling. To creating more compelling offers we need to bring the long term into short term focus, and the secret to that is defining short term gain.
Becvause retirement is so far away…there’s plenty of time to do stuff, right? Insurance is important, but I’m probably not going to actually need it for a few years yet, right? And on it goes…we battle a lack of urgency on the part of consumers, and struggle to make what it is that we can do compelling for them.
The challenge then in marketing our services is creating an immediate perception of value, and a reason to do something now. We need to therefore make “offers” that have high perceived value but which do not actually cost us an enormous amount, and which create some immediacy.
These are the ingredients for compelling offers.
At its simplest level you can add extra products or services (such as seats to seminars, market intelligence reports, strategy papers, additional levels of service, etc) to your existing offering as an extra inducement for people to choose to act in the short term. Generally these additional services or products are things that you are already producing or paying for, but have limited the access to. Opening up additional market access can create additional opportunities for your business.
To be truly effective though there must be relatively high perceived value. The prospective customers must be able to se the additional benefits as being genuine benefits for this tactic to generate interest. If the concept of scarcity can be genuinely introduced as well – this offer is only available in limited amounts or for a limited time – then a compelling offer is created that will motivate people to act.
There is additional benefit for many customers – or higher perceived value – from packaging products, services or offers, or the bundling of products and services together. Rather than having to work through menus of choices, or put together the ideal suite of financial products and ongoing service, bundling service with product can create higher perceived value. General insurance brokers and platform managers have built entire businesses around this concept by linking product and service into a composite package that creates maximum convenience for customers.
As more pricing pressure occurs in professional services (either in the form of capping plan fees or hourly rates, or in discounting commissions and product prices), there are some lessons from the retail sector that are also worth considering.
For example, retailers worked out a long time ago that discounts are nowhere near as powerful a motivator for customers as providing bonuses. Apart from the maths involved, as a price discount will have a consequent impact on profitability immediately whereas providing a bonus offer usually costs less actual money, there is a difference in perceived value in the customers mind more often than not.
Providing a 10% discount on the price of a plan or service is simply not as strong as providing something for free after customers have purchased a number of products or services. In financial services this might take the form of providing several “free” books with a retail value of $100 after the first annual review of the new customers plan. That has a higher perceived value than discounting a plan or monitoring fee by $100 and creates an incentive to participate in the review process as there is a “reward” component.
Providing such rewards at the front end of an engagement are excellent ways of creating compelling reasons to act in the short term too. “Free” initial consultations are not particularly strong offers in reality, and are increasingly considered a standard opening approach anyway. However, “free” books, information guides, seats to seminars or shows, and the like are often higher perceived value and as well as a catalyst to action. If you doubt that then consider the Timeshare sales business: that is almost entirely how they build audiences of prospective customers. They keep doing it because it keeps working.
The keys to creating compelling offers that move prospective customers to action is creative packaging of existing goods and services into combinations that present higher perceived value, and introducing an element of “scarcity”. If there are only 50 seats to a high quality seminar, or 50 sets of books to give away, or if there is only a short window of time in which to act to receive the benefits, then scarcity has been successfully introduced into the equation.
Humans are wired to want more of something which is scarce – its very scarcity is the attraction. This is one of the 6 Principles of Influence outlined by Cialdini, and its power is often underutilized in marketing of professional services.
Combining the power of the principle of scarcity together with packaging products and services together to create higher perceived value is the key to creating compelling offers for prospective customers.