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Customer Relationships Can Increase Mutual Fund Retention
Customer relationship management (CRM) seems to be the buzzterm of the millennium. Companies across most industries are implementing CRM programs. The face of customer relationships is changing due to expectations shaped by the interactive nature of the internet.
CRM is the process of interacting with intermediary and end-user customers, and developing personalized relationships based on their needs. To implement CRM, you must give your customers choices, make it easy for them to conduct business, store all collected information in the customer database, and treat customers differently based on their values. In short, develop a customer focus.
CRM is the process of interacting with intermediary and end-user customers, and developing personalized relationships based on their needs. To implement CRM, you must give your customers choices, make it easy for them to conduct business, store all collected information in the customer database, and treat customers differently based on their values. In short, develop a customer focus.
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This attention to the customer can increase customer loyalty and retention as the customer feels respected and has invested time explaining their preferences and needs to you.
No-load mutual fund companies are better positioned to implement CRM programs because of the fact that they have just one customer group to deal with. CRM is more difficult for fund groups sold through intermediaries. The primary customer is the intermediary, and clearly the most important relationship to be managed is that with the intermediary. But what about shareholder relationships? Across all industries, intermediaries have tried to prevent interaction between suppliers and end users. This has become difficult to do in the digital age, as consumers have grown to expect internet interaction with their suppliers, at a minimum.
Intermediary Relationships
This is the area of relationship management that is receiving the most attention from load mutual fund companies. It is meant to guarantee loyalty of your intermediary customers. Relationships are being strengthened by offering value added services in three main areas:
Customer Business Development - Assist intermediaries with identification of new customers and cross-selling, or provide them with customized marketing materials. For example, Fidelity Institutional Investment has implemented a program whereby prospect lists are developed for financial advisors based on the characteristics and neighborhood of their best existing clients. Putnam provides personalized e-mail content for intermediaries to use with their clients. There is always the risk that this type of information will be used to develop business with other mutual fund providers. But the goodwill generated will go a long way toward improving the loyalty of your intermediary clients. Their participation in the project planning can increase their buy-in.
Sales Force Efficiency - Use of technology to link all departments that interact with customers. AIM has reported the implementation of such a system using Siebel's Enterprise Service solution to provide more efficient service to brokers and shareholders integrated across retail marketing, wholesaling and client servicing.
Customer Handling - Make account set-up and servicing more efficient for your intermediaries with electronic order processing, payments, confirmations, and document delivery. The recent passing of the Digital Signature Law allows electronic application, with customer consent. Having a website that answers most frequently asked questions is helpful because it is estimated that 80% of servicing calls regard the top five to ten questions. Online account access also reduces the servicing burdens of your intermediaries.
Shareholder Relationships
A supplier can develop an understanding of the shareholder to assist intermediaries in attracting new clients and servicing existing clients. Shareholder understanding can be used by the supplier for advertising effectiveness and product development. It can be used to increase end-user retention for the supplier, and shared with the intermediary to increase their end-user retention as well.
There are two factors which make shareholder relationships inevitable for those mutual fund companies sold through intermediaries. First, consumers expect to interact with their financial product suppliers through an internet site. The website interaction leads to expectations of enhanced interaction and relationship. This is particularly true for those companies that are building brand awareness. When a company is building an image of confidence and trust, the customer wants evidence and confirmation of that trust. Second, as the commission structure for brokers moves further away from commission-based to fee-based, financial intermediaries will look more to their suppliers for assistance in customer servicing efficiency.
A major impediment to shareholder relationships is that many mutual fund companies do not know the identity of their customers sold through certain brokers and fund supermarkets. You can begin the relationship building process with those customers that are identifiable. As long as the intermediary's relationship with the customer is respected, customer identification and understanding can be managed collaboratively by supplier and intermediary so that both parties, and the customer, benefit.
Retention and Loyalty
Mutual fund assets have grown so dramatically over the last two decades, that inflows seemed like a never-ending tide. With the current industry maturity, hypercompetition, market saturation, and stock market volatility, the tide is ebbing. It is getting difficult to find new markets, and new customers are coming increasingly from competitor defections. It is more costly to acquire a new customer than to retain an existing customer. Therefore, many mutual fund companies are focusing on customer retention. Customer relationship management is found to increase customer loyalty and retention. In fact, loyalty and retention are the metrics of CRM. Companies serious about CRM guarantee results by basing employee performance on increasing customer retention and value.
Performance has to be way below average in order to be the driving force for defection. There are other factors at play. To retain your customers, understand and respond to their investment and servicing needs. Treat your best customers with special care - and appreciation, proactively elicit complaints, and find out why defectors leave. Then measure loyalty and retention regularly to ascertain the results of your retention efforts. If information is collected on the end-user, share it with the intermediaries in a useful, non-threatening fashion that will improve retention for them as well.
Shareholder Servicing
Transfer agents must also adjust to the new realities of the digital age in servicing shareholders. One of the immediate challenges is to integrate online servicing with call center servicing. It is estimated that there is a 10 to 1 cost saving in responding to questions via e-mail or online chats than through the call center. Decisions must be made on whether one call center will handle voice, email and chat, or separate call centers. TA's must be set up to handle electronic order processing, payments, confirmations, and document delivery. Various types of E-mail requests must be integrated into the work management system.
CRM involves giving customers choice on how they want to be serviced, and receive documents. Transfer agents must maintain these shareholder options. CRM also treats customers differently based on value - often by providing varying levels of service. This information must also be maintained by the TA. In the digital age, as customers are growing to expect enhanced service and interaction, TA's must be ready for the task.
No-load mutual fund companies are better positioned to implement CRM programs because of the fact that they have just one customer group to deal with. CRM is more difficult for fund groups sold through intermediaries. The primary customer is the intermediary, and clearly the most important relationship to be managed is that with the intermediary. But what about shareholder relationships? Across all industries, intermediaries have tried to prevent interaction between suppliers and end users. This has become difficult to do in the digital age, as consumers have grown to expect internet interaction with their suppliers, at a minimum.
Intermediary Relationships
This is the area of relationship management that is receiving the most attention from load mutual fund companies. It is meant to guarantee loyalty of your intermediary customers. Relationships are being strengthened by offering value added services in three main areas:
Customer Business Development - Assist intermediaries with identification of new customers and cross-selling, or provide them with customized marketing materials. For example, Fidelity Institutional Investment has implemented a program whereby prospect lists are developed for financial advisors based on the characteristics and neighborhood of their best existing clients. Putnam provides personalized e-mail content for intermediaries to use with their clients. There is always the risk that this type of information will be used to develop business with other mutual fund providers. But the goodwill generated will go a long way toward improving the loyalty of your intermediary clients. Their participation in the project planning can increase their buy-in.
Sales Force Efficiency - Use of technology to link all departments that interact with customers. AIM has reported the implementation of such a system using Siebel's Enterprise Service solution to provide more efficient service to brokers and shareholders integrated across retail marketing, wholesaling and client servicing.
Customer Handling - Make account set-up and servicing more efficient for your intermediaries with electronic order processing, payments, confirmations, and document delivery. The recent passing of the Digital Signature Law allows electronic application, with customer consent. Having a website that answers most frequently asked questions is helpful because it is estimated that 80% of servicing calls regard the top five to ten questions. Online account access also reduces the servicing burdens of your intermediaries.
Shareholder Relationships
A supplier can develop an understanding of the shareholder to assist intermediaries in attracting new clients and servicing existing clients. Shareholder understanding can be used by the supplier for advertising effectiveness and product development. It can be used to increase end-user retention for the supplier, and shared with the intermediary to increase their end-user retention as well.
There are two factors which make shareholder relationships inevitable for those mutual fund companies sold through intermediaries. First, consumers expect to interact with their financial product suppliers through an internet site. The website interaction leads to expectations of enhanced interaction and relationship. This is particularly true for those companies that are building brand awareness. When a company is building an image of confidence and trust, the customer wants evidence and confirmation of that trust. Second, as the commission structure for brokers moves further away from commission-based to fee-based, financial intermediaries will look more to their suppliers for assistance in customer servicing efficiency.
A major impediment to shareholder relationships is that many mutual fund companies do not know the identity of their customers sold through certain brokers and fund supermarkets. You can begin the relationship building process with those customers that are identifiable. As long as the intermediary's relationship with the customer is respected, customer identification and understanding can be managed collaboratively by supplier and intermediary so that both parties, and the customer, benefit.
Retention and Loyalty
Mutual fund assets have grown so dramatically over the last two decades, that inflows seemed like a never-ending tide. With the current industry maturity, hypercompetition, market saturation, and stock market volatility, the tide is ebbing. It is getting difficult to find new markets, and new customers are coming increasingly from competitor defections. It is more costly to acquire a new customer than to retain an existing customer. Therefore, many mutual fund companies are focusing on customer retention. Customer relationship management is found to increase customer loyalty and retention. In fact, loyalty and retention are the metrics of CRM. Companies serious about CRM guarantee results by basing employee performance on increasing customer retention and value.
Performance has to be way below average in order to be the driving force for defection. There are other factors at play. To retain your customers, understand and respond to their investment and servicing needs. Treat your best customers with special care - and appreciation, proactively elicit complaints, and find out why defectors leave. Then measure loyalty and retention regularly to ascertain the results of your retention efforts. If information is collected on the end-user, share it with the intermediaries in a useful, non-threatening fashion that will improve retention for them as well.
Shareholder Servicing
Transfer agents must also adjust to the new realities of the digital age in servicing shareholders. One of the immediate challenges is to integrate online servicing with call center servicing. It is estimated that there is a 10 to 1 cost saving in responding to questions via e-mail or online chats than through the call center. Decisions must be made on whether one call center will handle voice, email and chat, or separate call centers. TA's must be set up to handle electronic order processing, payments, confirmations, and document delivery. Various types of E-mail requests must be integrated into the work management system.
CRM involves giving customers choice on how they want to be serviced, and receive documents. Transfer agents must maintain these shareholder options. CRM also treats customers differently based on value - often by providing varying levels of service. This information must also be maintained by the TA. In the digital age, as customers are growing to expect enhanced service and interaction, TA's must be ready for the task.
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