My comments on customer surveys seem to have struck a nerve

Just to set the record straight, let me say again that Customer Surveys are an important ingredient to any Customer Satisfaction or Customer Loyalty program. That said, I think that customer surveys do have significant gaps and not considering or addressing those gaps, could send you and your company down the wrong path.

Based on the amount of e-mail I have received that has been quite polarized (nearly 50-50 for and against), it is time I provide more context and specifics to my generalization. Just to be perfectly clear, I respect and admire those that administer customer surveys. In fact, I am one of your biggest fans. Unfortunately, many times, your company is not giving you the resources to make your insights more valuable so that you can have a stronger impact on the bottom line. In other words, I am on your side.

These gaps are the result of limitations or constraints in the survey or the supporting mechanisms. These limitations consist of, but are not limited to:

• Cost of the survey, the analysis, and the action plan
• Timing Delays: Experience to survey and survey to reporting
• Unintended filtering by the way questions are worded and captured
• Context missing from the survey results
• Ability to connect to pre- and post-customer behavior from the experience
• Selection bias by agent
• Follow-up actions by the company and with the customer

Costs

To reach a critical mass and collect a relevant sample of surveys requires a lot of time and money. One company that performs customer surveys for their clients charges $42/completed survey. With low response rates, it can take 1-2 hours of outbound calls to capture a handful of surveys. Companies have different plans and frequency for data collection, but you are looking at $20,000+ just for 5000 surveys. Once those surveys are complete, report compilation and analysis requires more time and often, this is not a full-time job, but rather an ad hoc collateral duty. As a result, one often looks at trends of aggregated data that isn't actionable. This penny-wise mindset, leads to a lackadaisical and less than comprehensive approvach that fails to provide the full potential insights that can build improvements that the customer values.

Timing Delays: Experience to survey and survey to reporting

The process behind customer surveys, introduces timing delays that can destroy data integrity and value.

Experience to Survey: Imagine a customer calling in on the 9th for one reason and has a good experience and has a less than desireable experience on the 10th for another reason, and then receives a survey on the 11th, regarding the experience on the 9th. Does the customer know the survey is for his actions on the 9th? How can his experience on the 10th not influence his rating for the 9th?

Survey to Reporting: Survey results are often compiled and reported monthly. If a survey from an experience on the 1st is collected on the 3rd, but then isn't reported until the Monthly Business Review that occurs on the 12th business day of the following month, you are looking at feedback that is about 45 days old. This highlights an opportunity to improve the process by which surveys are synthesized and acted upon, by cycle time and report dissemination. The information within surveys should reach the hands of call center managers and respective product managers as soon as possible after the survey has been rendered.

Filtering

Filtering comes in many disguises. Filtering can come by the way the question is worded to "lead the witness". Filtering can also be the result of the way data is collected. For example, I spent some time analyzing the process behind outbound Net Promoter collection for a major telecomm company. I discovered that the outsourcer left 36% of the customer feedback on the cutting room floor, based on the constraints of the data collection. This data would have been useful for performing correlation, detecting cause-and-effect and issues that create other issues.

Filtering also happens through reporting where data is over-aggregated so that it fits on a PowerPoint slide. A monthly scorecard could show a Net Promoter score of +2 one month, and +4 the next month, but there is typically little information on why it changed, which takes us to our next point.

Context

Context is an important ingredient to understanding your customer and the result provided on your survey. There will be times when a customer gives a negative rating where the customer was already lost or may not be worth salvaging. Conversely, there may be times where a customer gives you a positive rating, but it is because an agent did not follow policies. There will be other times when a customer will be "satisfied", but not necessarily "loyal". A customer may have thought the agent was professional and said "no" gracefully, but that doesn't resolve their frustration with your processes, policies, and product. Having that context is critical to making improvements that the customer values.

Context can also be important in terms of length of the call, time on hold, number of transfers, and the number of times a customer had to repeat information. Context is also critical in terms of reporting and your subsequent action plan.

Customer Behavior - Before and After

Any survey, any Net Promoter score, or an other activity involving customer satisfaction or loyalty that doesn't include customer behavior analysis is missing the mark if they don't have the ability to look at account level detail and how customers responded to an experience in terms of spending frequency and share of wallet. Unfortunately, this hapens more often than it doesn't. Having the ability to find the accounts and the experience quickly to expedite the customer behavior analysis (most likely with speech analytics that has the metadata available) is something that would facilitate greater use of this approach.

Selection bias by the Agent

When agents have the ability to direct a customer to an IVR survey, agents have a tendency to drive positive selection - in other words - select customers that are likely to provide positive feedback. For one company we found that agents selected customers for a post-call survey after their request was fulfilled 89% of the time (compared to 67% of the time for the control group). This could cause you to pat yourself on the back, when it is unwarranted.

After Action

If a customer takes the time to answer a survey, hopefully your company is committed to (i) act on constructive feedback, and (ii) acknowledge the customer's feedback. If the company is not in a position to do both, then question your commitment to your survey program by your senior management. The after action is really the most important part. It is the ends to the means.

Addressing these gaps can transform the line of bearing into a fix.

Companies put a lot of time and expenses into gathering intelligence on their customers psyche. However, a gap remains between the company's perception and the customer's reality, that can often be exacerbated by customer surveys. The more one knows about their customr, the more likely that their $10 choice can be the result of a company's $10 million decision. The more one knows about how the customer thinks and about their experiences, the more confident companies will be with those decisions.

Left-brained financial advisors with right-brained clients

Any intelligent fool can make things bigger and more complex...it takes a touch of genius - and a lot of courage to move in the opposite direction. - Albert Einstein

If you can't explain it simply, you don't understand it well enough. - Albert Einstein

Imagination is everything. It is the preview of life's coming attractions. - Albert Einstein

When you look at the typical relationship between the financial advisor and the mass affluent, you find that advisors have worked more on being liked than they have on any other part of their professional development. For an industry where commissions and assets under management are the lifeblood, this is understandable, but not excusable. For an industry where it is so difficult to transfer funds based on the paperwork and effort, getting people signed on is a huge accomplishment and thanks to regulations, that relationship becomes that much more inelastic. As a result, you find that advisors spend 80% of their time getting you in the door and 20% of their time with you for the rest of the relationship. Cadence, tempo, frequency aren't rewarded, unless you have money in other places. Why does customer experience appear to have a lower threshold for financial advisors?

As much emphasis as there is on customer experience within other areas of financial services, why is this a lost art within the wealth management community? When a customer reaches out to a typical company, they usually call for one of three reasons: (1) They want to get something accomplished, (2) they want to get something fixed, or (3) they want to improve the quality of their life. When a new or existing client reaches out to a financial advisor, it is because they approach the relationship from a transaction standpoint rather than an experience standpoint. They think about their money and not a lifetime of experiences that money can create. They have generally been broken by an industry and a culture and they have stopped thinking differently.

Why do financial advisors seem to have immunity from delivering a valuable customer experience? They answer is, they don't. Why aren't the reasons the same? Or are they the same, but they are implicit and buried underneath a relationship paradigm that advisors have defined for decades? One reason this exists is because it is easy for a consumer to comapre Wal-Mart with Target, but it is virtually impossible for a consumer to compare two advisors. Another reason is that a Wal-Mart or Target customer experience is easy to define a start and an end, where with an advisor it is a continuous relationship with various frequency and depth of touch points.

Advisors and clients have grown to accept this relationship, because the paradigm is so strong, it have become part of our culture. Neither side has imagined the possibilities. As a result, the desired experience is the iceberg beneath the water surface. What's more disappointing is that it is easier to ignore the adverse impact on your life than it is to imagine the possibilities. The question is, do advisors have a fiduciary, ethical, and personal responsibility to challenge and quantify the cost of status quo, both tangible and intangible, to improve their practices and the lives of their clients?

The tangible and intangible costs of status quo is high for both parties. Both are sacrificing in the relationship under today's paradigm of the relationship in the form of:

• Unnecessary costs
• Non-value add complexity and effort
• Lack of control

Unnecessary costs

From an advisor perspective, there is no greater cost than acquisition costs. So delivering a customer experience that just drips of loyalty would make referrals the rule rather than the exception. However, advisors tend to not be able to get out of their way of industry paradigms and this adversely affects the relationship in terms of loyalty, but not necessarily satisfaction. One thing that may be causing this distinction is that customers recall the amount of effort to set up the last account and they aren't dis-satisfied to the point of re-creating that effort.

Meanwhile, consumers are paying a huge tangible price that adversely affects their quality of life. In David Loeper's book, "Stop the Investing Rip-off", he illustrated how a couple investing $7000 a year into their 401(k) - including employer match - with a 7.5% return, would have $2.5MM after 40 years. That sounds great, but if your fees were 2.5%, $1.7MM would go to financial services. Oh, and in 40 years, $2.5MM will be closer to $800,000.

2.5% may sound unrealistic, but when you consider that financial services contributed $1.1T to GDP in 2006, and there was $44T in U.S. financial assets, it comes to 2.5%.

What is the cost to the quality of your life, even to have that number 1% lower? 1% could mean retiring five years earlier, or having that much more to invest in your present or future lifestyle. 1% could be the difference between dream and reality with your experiences and your most audacious goals.

Non-value add complexity and effort

Advisors by the nature of the business and the nurture of their training introduce a lot of complexity to a relationship that doesn't require it. From the language they use, to the amount of documentation they require, financial planners introduce effort on their own behalf and on behalf of the client that is not valued and does not differentiate. This complexity also adds to the cost of the service.

Consumers are looking for a low-effort relationship and they will seek high and low to find it and maintain it, but the second their relationship with a company becomes higher maintenance, that is when they consider leaving and often do.

Lack of control

Control takes many forms in the investing space: control of the investments, control in your portfolio performance assumptions, and control of your life.

Advisors like to have control of your investments and make decisions on posturing your investments. Actually, you are losing control. You are losing control in the investment choices. You have no control over the companies that your portfolio is invested in. You add another layer if you are investing in targeted mutual funds in terms of what they charge, what they invest in, and how they invest.

When all this happens, you no longer have rational confidence in your portfolio performance assumptions. You introduce uncertainty. You introduce the risk of underperforming the market, but more importantly, you have placed your lifetime aspirations in jeopardy simply because you don't know what to expect out of your portfolio. Thus, you are now out of control of what you can and want to do with your most audacious plan and whether you can achieve that.

Transitioning to and Delivering an Appreciated and Valued Experience

This traditional experience that advisors have been delivering for years, it has been built upon the concept that many associate with the left-side of the brain. Advisors tend to introduce concrete recommendations, analytical concepts, built on past performance, and what they "know". Question is, what do they know, especially when they place the "past performance is not an indicator of future results" on everything they tell you?

Now, contast this concept with clients and their thinking on the right-side of the brain. Clients have abstract ideas and dreams that they want fulfilled, they are filled with creativity and uniqueness in their own lives that can't be set to an equation. Unique clients want to be treated uniquely. They are thinking about their future and what they believe....quite a difference from the advisors line of thinking.

In Frank Luntz'a new book, What Americans Really Want...Really, he talks about his experience consulting with Merrill Lynch and changing their titles from "financial advisors" to "investment specialists". I would argue that Americans don't want "investment specialists" either. They want "Experience Enablers", but we have a long way to make that vision a reality.