The Lifetime Value of a Broker’s Client
When you’re running a client-facing business, a couple of adages seem to endure. One: 80% of your business comes from 20% of your clients, and two: recurring revenue is the golden ticket. Both adages are underpinned by the principle of lifetime value – aka, the best clients are those who return. The principle of lifetime value certainly rings true for retail stores, coffee shops, gyms and apps, but the link is a little less obvious for those who are intermediaries – like brokers, for example.
As a broker, some clients – especially smaller ones like SMEs – can appear as a less of a priority. However, investing in building a positive, loyal relationship with clients like small businesses is important – today’s SME loan could be tomorrow’s big mortgage deal. This article will explain how you can fully appreciate the lifetime value of your next client.
Lifetime value: why it’s important
We all know the struggle of getting new clients. It takes work: marketing, promotion, engagement, negotiation… It’s an investment of your time and money. Retaining clients is cheaper than obtaining new ones, which is why it’s important to frame your thinking around a lifetime relationship.
Building long-term relationships with your clients should be at the forefront of your business strategy. After all, recurring revenue trumps one-time revenue – even if the latter is numerically larger. The case is particularly interesting when it comes to SME clients. While commission on small business loans may be smaller than larger deals, small businesses – especially those now armed with finance – have real growth potential. A positive relationship means that when they return as larger companies, they are a great revenue stream.
How to maintain a lifetime relationship
Historically, traditional institutions have neglected using online channels to reach their existing and potential clients – often relying on impersonal letters and phonecalls. Brokers are uniquely positioned to develop personal relationships with their client base. Do it well by using email, mobile and text message to keep in touch.
Provide an exceptional service
Part of a delivering a great service is having a thorough knowledge of all of the options and solutions available for your client. This means keeping on top of an ever-changing financial landscape. Financial technology, for example, has exploded in recent years, fundamentally changing how many of us manage our personal finances. A client will probably need a variety of products over their lifetime, so it’s essential that you can meet their needs with different solutions.
Alleviate pain points
Particularly for small businesses, a real pain point is how time poor they tend to be. Applications to traditional institutions can be long and cumbersome – so endeavouring to reduce your client’s administrative headache will go a long way.
A personal touch
Don’t just send your clients a card and a bottle of wine at Christmas. Make a note of their birthday. Find out about their interests or hobbies. If you see something in the paper or on a website or you can send it on as a ‘saw this and thought of you’. This will help build a bond outside work – an emotional connection. This is an especially good way of taking care of your SME clients – their businesses are often underpinned by personal relationships, so they’ll appreciate the thought.
Ultimately, fully appreciating the lifetime value of your clients will benefit both you and them. For you, it will reduce the cost of obtaining new business and provide recurring revenue. By understanding the ingredients of fruitful, long-term relationships, your clients will enjoy a better service, and one that can offer solutions to their changing business needs. Keep abreast of the financial landscape and add personal touches – your clients will appreciate it.