Client Journey Mapping Improving the Investor Experience

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1 Client Journey Mapping Improving the Investor Experience Q Greenwich Associates research reveals that approximately 70% of an investor s perception of an asset manager is linked to investment performance. Without competitive investment performance, little else matters in the long run. The remaining 30% relates to service in the broadest sense all the other interactions that an investor has with an asset manager. As strong investment performance increasingly becomes a ticket to the game or table stakes, managers are looking to these service factors to differentiate themselves from the competition. Greenwich Associates research indicates that excellence in servicing leads to higher client retention, particularly during the inevitable periods of subpar investment performance, and also to higher levels of cross sales. IMPORTANCE OF HIGH-QUALITY RELATIONSHIP MANAGEMENT Client Retention AUM loss of managers with subpar performance by client service quality Cross-Sales Cross-sales win rates $1,000 $1,000 $ % 86% AUM $850 $700 $550 $860 $837 $705 $695 $543 75% 50% 25% 29% 56% 65% $400 Baseline Year 1 Year 2 Year 3 0% 4th quartile 3rd quartile 2nd quartile 1st quartile Top-tier service level Bottom-tier service level Client Service Quality Note: Good service is defined as the top one-third of managers in terms of the Greenwich Quality Index (GQI) for Client Service. Poor Service is defined as the bottom one-third of managers in terms of Client Service GQI. Managers had below benchmark performance for five straight years. Source: Greenwich Associates 2014 Competitive Challenges Study Best-in-class managers consider three steps to excel in servicing: JJ JJ JJ Everything Works Deliver across all investor interactions, ensuring there are no weak links. Basic service issues can sap investor perceptions and sour an otherwise positive perception. Moments of Truth Have a solid understanding of and focus on the service interactions which are most important to investors. These interactions have a disproportionate impact on client satisfaction, loyalty and retention. Service Differentiators These factors actively differentiate the firm on particular service interactions, in line with the manager s strategic focus. Differentiators can provide demonstrative evidence of a firm s value proposition. In order to accomplish these three things, a simple yet very effective tool that managers are adopting is client journey mapping. April 2015

2 What is CJM? Client journey mapping (CJM) is a compact visualization of the end-to-end experience that an investor has with an asset manager. It is comprised of all the different types of interactions that investors have with an asset manager, both as a prospect and a client. Here is a high-level view of a mock institutional CJM: CLIENT JOURNEY MAPPING: INVESTOR TOUCH POINTS Awareness Interest Decision Setup Service Relationship Strengthening Concern Leave from prospect Due diligence questionnaire kick-off Valuation report Market event communication Retention Website from consultant Sales pitch Client advice Notification of downgrade Notice of Events Prospect Fee negotiation Regulatory disclosures Breach Hospitality Fund manager Exit Social Pitch feedback IMA Query handling Client survey feedback Product s IMA Advertising proposal Mandate award Assets transfer Education & training Performance warnings Assets transferred out Press, Informal s Client advisory board Complaint valuation Outbound campaign Mandate Response to errors invoice Source: Greenwich Associates 2017 Invoicing Alumni club invitation Each box represents an investor touch point, an interaction that a prospect or client has with an asset manager (see side bar for further detail on touch points). Critically, a CJM is constructed from the investor s vantage point from the outside looking in and not from the asset manager s perspective. This approach recognizes that investors consider all of their interactions with a manager as connected, and investors form views of managers based on the sum of these interactions. 2 GREENWICH ASSOCIATES

3 INVESTOR TOUCH POINTS An investor touch point is an interaction between an asset manager and a client or prospect. It is something the client or prospect does. Touch points do not include activities that are internal-only, such as developing a thought- strategy, practicing for a sales pitch or creating a client plan, although these activities can improve the delivery of a touch point. These touch points are not all equal; some will be basic interactions (e.g., a query), some will be pain points (e.g., communicating an error) and others will be moments of truth for investors (e.g., a fund manager or a manager s reaction during an extreme financial event). A CJM can be used as the fundamental tool to address these three steps to service excellence to ensure that everything works, to identify and focus on moments of truth, and to enhance service differentiators. Step 1: Everything Works Investors view all their interactions with managers as connected, and their perceptions are the sum total of these client experiences. A weak link in the chain can sour an otherwise positive client experience. Best-in-class managers rigorously look across all the interactions they have with clients to proactively ensure that each client has the intended client experience. Creating a CJM requires a manager to: Identify all client interactions (investor touch points) This seems straightforward, but many managers are organized by function, deliver from different silos and don t have a comprehensive map or list of all their investor touch points. This step is completed most effectively by engaging a cross-functional group of employees to draft a CJM and then test it with some clients, to ensure that nothing is missed from the investor perspective. Ensure there are touch point owners and delivery standards It is hard to meet or exceed client expectations if there are no delivery standards in place, and if ownership for delivery is not crystal clear. Owners as well as delivery standards must be specified for each touch point. This is particularly important where there are multiple functions involved in a touch point, in order to ensure a shared understanding of the desired outcome. A classic example is client onboarding, where there is a need for alignment across the multiple functions involved. This same discipline should be applied to every investor touch point. Monitor the client experience Managers closely monitor investment performance versus benchmarks, but this robust monitoring often does not carry over to other aspects of the investor experience. Managers must monitor perceptions across investor touch points, gathering investor feedback through annual surveys, individual touchpoint surveys (for example, after a sales pitch, after client onboarding or after an investor uses the website), and by capturing day-to-day investor feedback in the CRM system. The CJM can be used as a dashboard to monitor delivery versus the standards set, ensuring a high level of internal visibility. 3 GREENWICH ASSOCIATES

4 CLIENT JOURNEY MAPPING: DASHBOARD TO MONITOR DELIVERY VS. THE STANDARDS SET Awareness Interest Decision Setup Service Relationship Strengthening Concern Leave from prospect Due diligence questionnaire kick-off Valuation report Market event communication Retention Website from consultant Sales pitch Client advice Notification of downgrade Notice of Events Prospect Fee negotiation Regulatory disclosures Breach Hospitality Fund manager Exit Social Pitch feedback IMA Query handling Client survey feedback Product s IMA Advertising proposal Mandate award Assets transfer Education & training Performance warnings Assets transferred out Press, Fully delivery standard Informal s Client advisory board Complaint valuation Outbound campaign Partially delivery standard Not delivery standard Mandate Response to errors invoice Source: Greenwich Associates 2017 Invoicing Alumni club invitation Having a consolidated house view of service is very powerful. As employees across functions gain an understanding of the client journey map including the desired investor experience and improvements required they are in a better position to break down internal silos and to help colleagues deliver a superior investor experience. For example, if someone on the risk team understands how an investment breach will be communicated to an investor, they are much more likely to be able to inform a more effective communication. CREATING A CLIENT-CENTRIC CULTURE The process of creating a CJM can be extremely helpful in building a broader clientcentric culture across the firm, as it brings together individuals from multiple functions (sales, service, consultant relations, marketing, products, investment, legal, operations, compliance, risk, etc.) to focus on clients. For many managers, getting a crossfunctional group together to view their firm from an investor s perspective can be a novel and illuminating experience. External facilitation can be helpful to develop a common view across functions. 4 GREENWICH ASSOCIATES

5 Step 2: Moments of Truth The next step is to identify the touch points that are most important to investors, called moments of truth (MOT), as these have a disproportionate impact on satisfaction and retention. To understand the relative importance of investor touch points, it is essential to have investor input to have facts rather than just internal opinions. DEFINITION OF A MOT It is important to note that MOT are defined from the investor perspective and not the manager s perspective. A sales pitch to a prospect may be critical from a manager s perspective but not be a MOT from an investor s perspective. Likewise, a fund-manager to an established and capable fund manager within the firm might not be a major issue for an asset manager, but it can be a MOT for an investor. The handling of this communication is proof of a manager s capacity to get in a client s shoes at a key moment. Failure on a MOT can result in a frayed relationship at best and, at worst, lead to. Some touch points are generally recognized as MOT, including client onboarding, formal investment s, communication of subpar investment performance, and fund manager s. Subpar performance on these investor touch points can have imte consequences or fester over time. A client who has had a poor onboarding experience may still be talking about it two years later when they terminate the relationship. Managers must excel at these interactions, which require careful planning and execution. Where managers have segmented their clients from a behavioral and needs-based perspective, such as Greenwich Associates persona client segmentation, they may need to take account of different MOT from one client segment to another. These can be incorporated into the firm s delivery standards. As investors share more readily, positive experiences can lead them to serve as advocates for a manager. On the flip-side, poor performance on MOT can lead to negative advocacy. 5 GREENWICH ASSOCIATES

6 UNDERESTIMATED INVESTOR TOUCH POINTS While delivery across all investor touch points is required, the impact of some touch points is typically underestimated and highlights the importance of getting factual feedback on what is important to investors. For example, Greenwich Associates research has identified that informal conversations with clients are a critical determinant of client satisfaction. Some firms manage these informal interactions such as regularly providing thought- topics for front-line staff to discuss with investors, while other firms let these informal client interactions simply happen. Managers that focus on the quality of these interactions and provide front-line staff with tools typically show higher levels of client satisfaction and retention. IMPORTANCE OF INFORMAL CONVERSATIONS Conversations outside of formal presentations are a key driver of client service satisfaction Investor Touch Point Expectations Focuses on long-term; builds trust and credibility Considers investors needs holistically Willing and able to serve as trusted advisor Emphasizes analytical/technical skills Source: Greenwich Associates 2017 Substantive and thoughtful Step 3: Service Differentiators A CJM provides two key opportunities to differentiate a manager s service. First, managers may prioritize touch points where they want to excel, in line with their strategic focus, to drive business results and to reinforce the firm s value proposition. A manager may want to differentiate itself from competitors in the provision of investment advice or thought, for instance, both of which can impact new business and client retention. Second, with a CJM in hand, managers can actively look for opportunities to add new touch points to deliver an enhanced investor experience. A manager might provide new investors with a CEO welcome, provide clients with flash of investment performance numbers as soon as they are available (and before client reports are prepared), or conduct an annual service check-up to ensure that investors servicing needs are being met. There may also be opportunities to consolidate or eliminate redundant investor touch points and to consider which touch points could be digitized. Deriving Value from a Client Journey Map With a CJM and a dashboard assessing performance across touch points, managers can develop a continuous improvement program to systematically improve the investor experience. They may prioritize MOT, other touch points where delivery is subpar and service differentiators. Over time, prioritization can also take account of changing investor expectations. 6 GREENWICH ASSOCIATES

7 Time and resources are required to create a CJM, but once in place, it is a simple yet effective tool to monitor the investor experience, prioritize required improvements and to create new value-added services. Conclusion The quality of the investor experience, above and beyond investment performance, has a significant impact on client retention and revenue generation. Many firms seek to deliver a positive investor experience where everything works. This is a good start, but in today s environment, this is a minimum standard. Those firms that are not delivering across all investor touch points are not investor expectations and are at risk competitively. Best-in-class firms are able to view the investor experience from the investor s perspective to deliver across the entire investor experience, exceling at touch points that are most important to investors, and differentiating the firm on particular touch points to drive business results and to reinforce the manager s value proposition. CJM is a simple yet effective tool to enable this, to create a more client-centric culture, and ultimately, to gain competitive advantage. Consultant Mark Buckley is the author of this paper. Mark Buckley, Parijat Banerjee, Christopher Dunn, Andrew McCollum, Markus Ohlig, Sara Sikes, Rodger Smith, and Davis Walmsley advise our investment management clients globally. The data reported in this document reflect solely the views reported to Greenwich Associates by the research participants. Interviewees may be asked about their use of and demand for financial products and services and about investment practices in relevant financial markets. Greenwich Associates compiles the data received, conducts statistical analysis and s for presentation purposes in order to produce the final results. Unless otherwise indicated, any opinions or market observations made are strictly our own Greenwich Associates, LLC. Javelin Strategy & Research is a division of Greenwich Associates. All rights reserved. No portion of these materials may be copied, reproduced, distributed or transmitted, electronically or otherwise, to external parties or publicly without the permission of Greenwich Associates, LLC. Greenwich Associates, Competitive Challenges, Greenwich Quality Index, Greenwich ACCESS, Greenwich AIM and Greenwich Reports are registered marks of Greenwich Associates, LLC. Greenwich Associates may also have rights in certain other marks used in these materials. greenwich.com ContactUs@greenwich.com Ph Doc ID