Case study. Business transformation – can it work?
Six months ago, we took on a new client. He is typical of most advisers: he cares about his clients, was trained to sell products and is worried about the future. A particularly big clawback that nearly finished his business was the trigger for change.
The first thing we did was to look at his business, and we discovered the initial hurdle was a lack of data.
There was no system to manage revenues and he was reliant on data from product providers. This is a common problem in South Africa and we enlisted external help from our friends at Linktank to get the data.
Realisation
When we got it, what we found shocked him: out of 110 clients, 11 were responsible for 90% of his regular business revenue (excluding initial commissions) and only four were generating enough to cover his costs.
Clawback liabilities on 79 clients showed he was still ‘unpaid’ for the work he’d already done. I call this the ‘transaction treadmill’ – and most brokers are trapped on it.
The next three months involved unpacking what his clients really wanted and valued, and what he wanted to deliver, and he then put together a series of documented services.
We discussed pricing options and he set some fee levels. I have cut corners here but he will say this was hard work. He stuck with it and had faith but he did not always have confidence.
Then came the tough bit, which was articulating it all to new prospects and existing clients. This is where theory meets reality, and we spent a lot of time crafting an entirely new conversation.
Breakthrough
A breakthrough came during the very first conversation. For the first time ever, he pitched and won a direct fee. How much? ZAR 2,500 (£115, €160, $174). Don’t mistake this as a failure. It is a massive step and I felt proud of him.
Fast forward six weeks, much practice and some pressure from me to “just keep having the conversation”.
He now quotes (and is winning) fees of between R9,500 and R17,500 for initial advice, and he has set retainer fees at between R10,000 and R30,000 a year. What is really interesting is that at no point during those conversations did he talk about policies or products.
Go and tell him that clients will not pay fees for advice. Tell him that South Africa is not ready. He’ll smile and politely disagree.
Pllease click here for Part 2 and Part 3 of this series.
