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Module 7: Grow the practice
FNSPRM603 – Grow the Practice
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Module 7: FNSPRM603 Grow the Practice
Section Description 1 Unit Overview 1.1 Index 1.2 Unit Purpose & Application 1.3 Competencies, Elements & Performance Criteria 2 Developing a marketing plan for a financial practice 2.1 Vision, values and mission statement 2.2 Marketing Audit 2.3 SWOT Analysis 2.4 Assumptions 2.5 Marketing Objectives Strategies & Expected Results 2.6 Action Plans 3 Developing a Promotion Plan for a Financial Practice 3.1 Develop a Practice Brand and Identify Benefits of the Practice and Services 3.2 Select and Develop Appropriate Promotion Tools 3.3 Develop an Implementation plan in consultation with all relevant stakeholders 4 Developing a Growth Plan for a Financial Practice 4.1 Develop Plans to Add New Clients and Increase Yield per Existing Client 4.2 Rank Proposed Plans According to an Agreed Criteria 4.3 Develop an Action Plan to Implement the Top Ranked Plans 4.4 Review Practice Work Practices to Ensure They Support Growth Plans 5 Implementing and Monitoring Plans 5.1 Monitor Implementation Plans against Agreed Indicators 5.2 Adjust Implementation Plans As required to Meet Objectives 6 Writing the Plan
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Module 7: Grow the Practice FNSPRM603
1.2 Unit Purpose and Application
Unit Purpose
This workbook will work through the process of strategic planning and the principles of marketing planning so that you will be able to develop plans for marketing, promoting and growing a financial practice. It will also cover how you go about implementing and monitoring these plans.
This unit is relevant to those running a financial practice or having responsibility for developing and overseeing promotion and growth strategies for a financial practice. This is one of the elective units that make up the FNS50315 Diploma of Finance Mortgage Broking Management.
The workbook takes a structured approach to growing a financial business and applies the learning content using your considerable experience and knowledge.
The workbook is organised in four sections: Developing marketing plan for a financial practice Developing a promotion plan for a financial practice Developing growth plans for a financial practice Implementing and monitoring a plan Writing the plan. Application
At the conclusion of your training you will be asked to complete an assessment for this unit of competency. The information contained in this workbook will assist you to complete the assessment task.
On successful completion of the assessment, you will have demonstrated your competency and ability to promote and grow a financial practice.
Additional Reading
Whilst much of the content in this workbook is self contained, students may at times be required to undertake their own research in order to successfully complete a task and additional reading may be required
The following assessment methods are required to complete this unit:-
o Project o Knowledge Questions
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Learning Outcomes
At the end of each section of this module, you will be able to: Section 1: Develop a marketing plan for a financial practice Develop and/or review the practice vision statement objectives Identify and/or refine target markets based on research and experience Obtain market research data and develop a competitor analysis Develop the practice market position based on the research findings and analysis Develop an implementation plan in consultation with all relevant stakeholders.
Section 2: Develop a promotion plan for a financial practice Develop a practice brand and identify benefits of the practice and services Select and develop appropriate promotion tools Develop an implementation plan in consultation with all relevant stakeholders.
Section 3: Develop growth plans for a financial practice Develop plans to add new clients and increase yield per existing client Rank proposed plans according to an agreed criteria Develop an action plan to implement the top ranked plans Review practice work practices to ensure they support growth plans. Section 4: Implement and monitor plans Monitor implementation plans against agreed indicators Adjust implementation plans as required to meet objectives. Section 5: Writing the plan
Write up a marketing and promotions plan.
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Introduction
Planning
“If you fail to plan, you are planning to fail”.
Planning is integral to the successful running of any business including financial practices. A strategic plan ensures that the assets of a business, be they services or products, are managed so as to maximize financial return. It is an essential process directed towards “making today’s decisions with tomorrow in mind and a means of preparing for future decisions so that they may be made rapidly, economically and with as little disruption to the business as possible” (S.C. Jain). Planning is an on-going process and involves developing the objectives to be achieved during a certain period of time, establishing an action plan and monitoring the results so that an evaluation can be made as to whether modifications are required to the objectives and action plan.
A marketing plan is a key input to a strategic plan as it will highlight business opportunities and outline how to penetrate, capture and maintain a position in a market. It makes sense therefore for managers and owners of financial practices to schedule time to think and consider what has happened, what is happening and what might happen within and external to their practices.
The strategic planning process is similar to the process undertaken by a financial planner when establishing goals and objectives for their clients. Financial planning is generally viewed as a “holistic process whereby a client’s total position, both financial and non-financial, is examined and a set of actions or a plan is put in place which, once implemented will assist in meeting the client’s goals and objectives” (Taylor, Juchau and Houterman).
This first section in the workbook focuses on the importance of strategic planning and how the practices vision, values and mission statement sets the direction for all plans including a marketing and growth plan. It also looks at identifying target markets and gaining market research data so that a market position for the practice can be developed or reviewed.
Marketing
McDonald sees the central idea of marketing as “matching between a business’s capabilities and the wants of clients in order to achieve the objectives of both parties”. Successful marketing involves having the right service or product available in the right place at the right time and making sure that the client is aware of the product or service. Marketing should not consist of offering the same thing to many –clients can have any service they like as long as it is the one they offer. Henry Ford’s first clients could have any coloured car they wanted as long as it was black.
Section 2: Developing a Marketing Plan for a Financial Practice
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Marketing is a process that brings together the ability of the business and the requirements of the client. To successfully achieve this balance between the client and the business, flexibility is required on the part of the business. This may mean new or changed services, products or new markets. Being able to read clients and the marketplace is essential and this requires a continual monitoring of the marketing environment.
In summary marketing involves marrying the: abilities of the business requirements of the client marketing environment.
Types of financial practices
2 types of financial practices can be distinguished in the current environment and will inform what is discussed in this workbook. These include:
1. Independent practices who seek their own clients. They may have developed their business plan around actual revenue gained through fees and commissions. However these independent financial practices see themselves as primarily providing a service through the provision of financial advice to meet the goals and objectives that they set with the client, and in some instances, as part of the strategy to achieve these goals they may sell a financial product. 2. Practices whose client base is tied to an existing client base. For example an accountancy firm who also offers financial advice may market to their current clients and a bank offering financial advice will market to their existing clients. These practices are often more focused on the product than on the expectations of clients and can be seen as providing advice that is less independent than the wholly independent practice. They have developed their business plan around the achievement of profit through sales of these products. A practice will reflect their focus in their business plan and clearly outline the practices vision, mission and goals and objectives which we will now examine in the context of marketing planning.
Marketing planning
Marketing planning fits within the context of the strategic plan of the financial business. The strategic plan shows the long term direction of a business, it defines the scope of the business activities, matches these activities to the environment in which it operates and the activities to its resources capacity.
To deliver a service or product in the most profitable way means achieving a sustainable competitive advantage based on superior performance relative to the competition and the strategic plan is integral to achieving this advantage. A strategic plan will outline the major objectives, purposes or goals and essential policies and plans for achieving goals and is stated in such a way as to define what the business is to be.
A financial practice or business requires a vision, values and mission statement so as to develop clear and measureable objectives to be achieved during a certain period. This sets the plan of action.
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The success of a business in the long run depends on: 1. An excellent core product or service 2. Excellent operations 3. A culture that allows employees to be creative and entrepreneurial 4. Professional marketing planning and marketing. Marketing makes a significant contribution to the achievement of the objectives of a business. As the marketing environment is dynamic, it is one that must be constantly monitored so that planning and practices can be reviewed and adjusted on a regular basis. Factors a financial practice should keep their eye on include legislative changes. An example of legislative changes that had a major impact on financial practices was the changes to superannuation introduced by the Keating government. Financial practices should be vigilant of changes to laws, economic changes and especially changes to client wants and aspirations. These factors present a practice with both opportunities and threats in a hostile and complex environment so keeping a finger on the pulse of the environment is essential for the successful practice. Uses of the marketing plan A marketing plan has many uses and will also inform not only those responsible for the marketing of the practice but: managers, directors non-marketing functions employees identifying sources of competitive advantage providing an organised approach developing specificity ensuring consistency informing gaining resources gaining support and commitment setting objectives and strategies. The marketing plan places emphasis on scanning the external environment so as to identify forces and developing a strategic response to these. Developing a marketing plan uses a strategic approach involving a series of activities that lead to setting marketing objectives and formulating plans for achieving them which may cover three to five year period. Based on this strategic approach, an operational or tactical plan will result outlining detailed scheduling and costing. A strategic approach Marketing planning describes how marketing resources are allocated to achieve the marketing objectives. This can be a complex process as objectives and resources change with time and in many cases the plan will be reviewed and updated as it is implemented. The process Our focus begins with the strategic planning process which sets the fundamental beliefs of the business and from which the marketing plan arises. The market planning process commences after the business vision, values and mission, goals and objectives have been set as shown in Table 1 below.
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Table: 1
1. Set business vision, values & mission
2. Set business goals and objectives
3. Conduct marketing audit – external & internal
4. Conduct SWOT analysis
5. Make assumptions
6. Develop marketing objectives, strategies & expected results
7. Develop action plans
8. Implement plans
9. Review & update
Based on Mc Donald, M. Marketing Plans.
In smaller practices the marketing planning process may be a less formal process and consist of:
1. a situation review 2. the formulation of some basic assumptions 3. setting objectives 4. deciding on how the objectives are to be achieved 5. scheduling and costing out the necessary implementation actions. So as to provide a broad overview we will follow the more formal strategic approach.
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2.1 Vision, Values and Mission Statement
A vision, values and mission statement provides the basis for the strategic plan of the business and is also a guide for day to day activities and a reference for decision-making. For a financial practice the statements will set the broad, long term direction and outline the financial service to be provided, they will define your business in terms of needs to be satisfied, and provide indications of what the practice will, might or never do.
a. A vision statement outlines what everyone is aiming to achieve and is a document that unifies and gives a sense of purpose. In order to be successful you must determine the unique service you propose to provide. What will be the one thing that sets you apart from everyone else and for what will you be known? b. The core values are the fundamental beliefs underlying the philosophy and policies of your company. They are your personal and business principles. A core values statement may include statements such as: put the client first working together honesty and integrity care and respect for all people excellence - do the best you can do treat everyone with fairness empower our employees contribute to the profession make a profit.
c. You next need a description of how you wish your practice to look which is your mission statement, a statement that ensures everyone is focused on the same goals. It is a broad plan of action to help you overtake your target market. Your mission statement should answer these questions: Who do you want to be? What do you expect to do? For whom will you do it? What needs do you want to fulfil? Practices need to be able to communicate the mission, values and mission to their clients, staff and prospective clients as it demonstrates that all who work in the practice have a common belief and vision and that the practice is not comprised of people who have their own separate enterprises.
Practices that share and are able to communicate the agreed vision, values and mission to their clients will see their clients showing trust in them when purchasing their service. Deena Katz in her book explains that she firmly believes her services “consist of helping client’s sleep well at night while they achieve their goals. I don’t promise performance …. to beat any market ………. my main responsibility is to get that message across as I believe that it will improve their lives”. Trust and confidence, maintaining personal relationships and providing superior personal service to clients underpins a vision, values and mission statement for many financial practices.
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2.2 Goals and Objectives
Once a practice has agreed on the vision, values and mission statement you are able to set the goals and objectives for your practice. Your goals will describe what is to be achieved overall in the longer term and your objectives are shorter-term and are more specific. Objectives provide the measuring posts as you work towards achieving the goal.
A target is even more specific than a goal and more short-term. Targets can be expressed in the following ways: percentages time frequency of occurrence averages Table 2 below shows how the vision, values and mission, and goals and objectives link together.
Table: 2
Trust Us Financial Services - Mission and goal statements
Vision - By 2015 Trust Us Financial Services will have a presence interstate with a strategic relationship with certified mortgage brokers in at least 3 states of Australia.
Values – Honesty and professionalism and an unrelenting pursuit of excellence.
Mission statement - To provide an excellent financial service to our clients, to be recognized as true professionals in our field, to enjoy what we are doing and to provide such value to our clients that they recommend us to their friends.
Client related goals Client related objectives
To provide excellent financial solutions and advice
1. To achieve a 20% growth rate in investments for all clients over a 12 month period. 2. To organise review meetings with all client twice per year.
To provide well researched and timely advice based on the most current financial data available.
1. To schedule 2 days per month to undertake market research. 2. To email a monthly newsletter to clients that includes current data. If a practice does not have in place a vision and mission statement or goals and objectives, these should be developed so as to provide a basis and direction for the marketing and growth plans.
If plans are already in place, a review should be undertaken as often the same goals and objectives are used year by year ignoring new conditions in the market and strategies that are no longer effective. Obviously there has been no new thinking occurring.
For strategic planning to be effective and relevant, the top management people must play a central role in the development and review of plans and to consider how things ought to be.
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Activity 1 ()
1. What will be the one thing that sets you part from everyone else and for what will you be known? Outline the vision, values and mission of your financial practice or an intended practice. 2. Develop goals and objectives specific to your clients.
Marketing plan process
2.3 Marketing Audit
The purpose of a marketing audit is to understand how a business relates to the environment in which it operates and to identify the strengths and weaknesses of that business as they relate to the external opportunities and threats.
There are 2 parts to any audit: 1. External audit 2. Internal audit. An external audit will focus on examining specifically the market, clients, competitors and overall economic and political environment. These are the uncontrollable variables.
Whereas the internal audit will be concerned with the controllable variables such as operational processes and the resources of the business as they relate to the environment. It is often a good idea to commence your audit with an analysis of the in-house data as you will identify the market sectors that you need to look at externally to identify data that requires further investigation.
Processing through a systematic, unbiased and critical review and appraisal of the environment and of the business operations the audit will identify where the business is at the current time. External market audit
The market research for your marketing plan will consist of both market information and product information.
Market information needs to tell you the size, characteristics and state of the market, how well other businesses are doing, communication methods, the financial and legal situations and market developments.
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You will need to analyse market and product information and to do this you need to gather both primary and secondary data. Primary data is obtained directly from the marketplace through field research such as via telephone surveys, personal interviews or mail surveys. Secondary data or desk research is data from existing sources such as: government statistics – Australian Bureau of Statistics (ABS) company information – Australian Stock Exchange (ASX) trade directories trade associations and journals Financial Planning Association (FPA) CPA Australia Institute of Chartered Accountants in Australia (ICAA) libraries Chamber of Commerce surveys client surveys ready-made industry reports - private marketing research companies, small business surveys internet – industry specific web sites, patent information, competitor’s websites.
Internal market audit
The historical data of your business is also relevant to preparing your marketing plan and will include service and product sales data. This data will need to be analysed.
The following Table 3 can be used as a guide as to what internal business data you should examine and the questions you should ask in your analysis.
Table 3
Potential clients
Who are they? Where are they located? Who are the market leaders?
Your own business
Do existing services and products meet client needs? Is product development necessary? Are new products required? What would be the potential of a new product? What is the sales history of the last 3 years?
Your competitors
Who are they? How do they compare with the size of your business? Where are they located? Do they operate in the same market sectors? What products do they sell? How does their pricing compare with your own? What sales channels do they use? Have they recently introduced new products?
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You should also examine the marketing procedures of your business to gain answers to the following questions: Are your current marketing objectives clear and consistent with business objectives? Is there a strategy for achieving these objectives? Are sufficient resources available to achieve these objectives?
Recording and presenting data Use a spreadsheet to present your figures. Examples are shown in Table 4 and Table 5. Firstly you must decide how you will split your tables –where referrals came from, revenue per client, product sales, number of clients and margin information. Table 4
Trust Us Financial Services
2008 – 2010 – Mortgage sales size, client numbers
Actual
Forecast Year 2008 2009 2010 2010 2008 2009 2010
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Table 5
Trust Us Financial Services
2008 – 2010 - Portfolio size, client numbers
Data analysis
Once the market research is complete and you have gathered the historical data about your business a situation analysis needs to be conducted.
This situation analysis will provide you with: a review of the current the economic and business climate a picture of where the business stands in the financial services market and the services being sold the strengths and weaknesses of the business relating to organisation, performance, the service provided and the financial products a comparison of the business with its competitors the opportunities and threats to the business the trends and developments that will affect the business.
The results of your analysis will influence your marketing plan and be included under the following headings: assumptions sales key products key sales areas.
0 20 40 60 80 100 120
Over $2m
Over $1m
Under $ 1m
2010
2009
2008
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Activity 2 ()
Conduct an internal and external marketing audit of a business of your choice and present your data using a spreadsheet depicting data in graphical form.
2.4 SWOT Analysis
SWOT stands for Strengths and Weaknesses as they relate to your Opportunities and Threats in the marketplace.
The strengths and weaknesses refer to the business, its services and products and the competitive advantages and other competencies that a business can exert in the marketplace.
The opportunities are usually taken to be external factors over which the business has no control and are seen as constraints that hinder the movement in certain directions. The service – speed, efficiency, and personal attention – offered by a financial practice alongside make a crucial difference in gaining leverage and financial practices that score higher than their rivals have a real competitive strength.
This analysis of the businesses strengths and weaknesses and the identification of any threats and opportunities in the marketplace will assist in: Exploiting the strengths Overcoming the weaknesses Grasping the opportunities Defending against threats. The audit will indicate what a business’s marketing objectives and strategies should be so it is useful to summarise the major findings. Table 6 provides an example of a SWOT analysis for Trust Us Financial Services.
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Table 6
Trust Us Financial Services SWOT analysis
STRENGTHS
Part of a financial services group Good image Good financial base Adequate resources – staff and office equipment Healthy number of clients Knowledge and education of brokers
WEAKNESSES
Low sales in 2 out of 4 financial products Seen as old fashioned and conservative No marketing planning Web site not professional.
OPPORTUNITIES
Discussion within services group of establishing a marketing support arm To link with ABC financial products To identify centres of influence and existing networks
THREATS
2 new mortgage practices have opened in the area Lease ending on office space and may not be available for renewal Legislation changes Investment markets
It is a good idea to carry out a SWOT analysis on your main competitor, your service and products, geographical areas and the market segments covered by the marketing plan.
Activity 3 ()
Conduct a SWOT analysis on your financial practice or current place of work.
Assess each opportunity in terms of success probability.
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2.5 Assumptions
Following the marketing planning process you now have a completed marketing audit and SWOT analysis. Assumptions or educated guesses now need to be made about the future and some of the factors that will affect the business such as government economic policy, and financial crises. Most of the assumptions will deal with environment or marketing trends and are critical to achieving marketing objectives and strategies. The assumptions should be few in number and assume things such as the % increase or decrease in client numbers, financial product sales and maybe new products if relevant.
2.6 Marketing Objectives Strategies & Expected Results
Objectives
You are now ready to think about what you want to achieve and to develop your objectives, remembering that an objective is shorter-term than a goal and more specific.
Specific marketing objectives are about services, products and markets - objectives that will lead to meeting the financial goals of the business – the type of service you want to provide or which product you want to sell. A business may be focusing on servicing the ageing population so their advertising, pricing and service levels are the means or strategies by which they might succeed in doing this.
Your marketing objective should contain three elements: 1. the particular attribute that is chosen as a measure of efficiency 2. the yardstick or scale by which the attribute is measured 3. the particular value on the scale which the practice seeks to attain. The Ansoff matrix is a logical framework in which marketing objectives can be developed using these four headings: 1. selling existing services and/or products into existing markets 2. selling new services and/or products into existing markets 3. selling existing services and/or products into new markets 4. selling new services and/or products into new markets. The marketing objectives you write must be able to be measured otherwise they are not objectives. Be careful of using words that cannot be quantifiably measured such as maximize, minimize, increase – these are the specific targets. Measurement should be in terms of sales, volume, sales value, profit, percentage.
Note that the service you provide does not have the same dimensions that can be measured as a product you may sell. However the principles of marketing apply to both services and sales in the same way, but care needs to be taken when developing marketing objectives concerned with the service to make sure they are measureable.
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Strategy
To achieve your marketing objective you need a strategy which will tell you how you are going to get there. Marketing strategies are broad methods chosen to achieve specific objectives and targets and describe the means of achieving objectives in the timescale required.
McCarthy in the early 1960’s proposed a marketing framework consisting of the four P’s with each P covering several activities. They are a useful guide when deciding on strategies for your business and ensure all areas of a business are covered.
Table 7
Product Service or product deletions, modifications, additions, design, branding, positioning etc
Price Changing price for service and product groups
Promotion Communicating with clients via advertising, salesforce, sales promotion, public relations, exhibitions, direct mail etc
Place Improving service location and convenience
How to write a marketing plan. John Westwood
There are different types of marketing strategies: Defensive strategies – designed to prevent loss of existing clients Developing strategies – designed to offer existing clients a wider range of products and services Attacking strategies – designed to generate business through new clients.
Table 8 gives an example of a definable and quantifiable marketing objective and a broad strategy. Table 8
Objective Strategy
To increase sales of mortgages and client numbers by 10% per year over the next 2 years
To develop a promotions plan aimed at the over 30 year old age group
Activity 4 ()
1. List the assumptions that you will include in your marketing plan. 2. List the key objectives for you marketing plan. 3. Develop strategies for: products price promotion place.
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2.7 Action Plans
Broad plans
Now that you have outlined your marketing strategies to achieve your objectives, you need to turn these into broad action plans which will give a broad overview of where you are now, what you want to achieve, and what you need to do to get there.
This simple planning format can be used to outline your broad action plan.
Current position – where you are now
Aim – what to do/where do you want to go
Action – what you need to do to get there
Start Date Finish date Budgeted cost
Functional plans
After scheduling your activities into action plans you should now combine the individual action plans into larger functional plan or a master schedule showing the program for the implementation of the action plans.
Include each action plan for the functions of product/service, pricing, promotion or place.
These functional plans will show the what, when, where and how and can be used for controlling the implementation of the plan.
This planning format can be used to outline your functional plan.
What is to be done (targets)
When it is to be done (target date)
Where will it be done
How will it be done (tasks involved, stages/key points)
Who will do it
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Activity 5 ()
1. Prepare a master schedule for your own plan.
Section Summary:
In this section you have learnt about the importance of marketing planning in the financial services environment and you have examined the 7 step strategic process required to achieve a marketing plan including how to conduct a marketing audit and undertake a SWOT analysis so as to establish objectives and targets and action plans.
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Notes
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Promotion
A business needs to get the message across to client so any promotion activity needs to inform, persuade and reinforce. Katz believes that “the financial advisory profession is changing rapidly and conventional marketing techniques may not be enough to ensure growth and can even be counterproductive if you are selling the wrong features. Subtle positioning of your practice as well as effective use of promotional tools can poise your business for dynamic growth”.
Clarify your practice offering
The majority of today’s financial practices are based on sales, service and professionalism models but there is an increasing trend towards service and professional practices. No longer is a financial practice just about sales and products, it is increasingly about the provision of advice. A financial practice of the future may focus on providing “comprehensive wealth management” consulting on mortgage advice, sales, financial, tax, estate planning, budgeting, life insurance, investments or debt management.
The selected area(s) become the product. A financial practice needs to be clear about their choice of offering – will it be based on a sales model, a service model or a professional mode or a combination of these?
The sales model is typically used by practices who are agents of major financial services firms and works well for the middle-income market with a net worth under $250,000.
The services model are generally independent entrepreneurs and who also maintain a relationship with a financial services firm that provides services related to commission-based products. The difference between this model and the sales model is that there is increased flexibility in the choice of compensation structure offered to clients and fewer restrictions with regard to the product available to clients. They are client oriented and best suited to those who want to service a limited market of middle and upper – middle income clients.
The professional model is usually a fee only practice and is a very client oriented and service intensive and most appropriate for a client base consisting of clients with very high incomes and or significant net worth.
Section 3: Developing a Promotion Plan for a Financial Practice
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3.1 Develop a Practice Brand and Identify Benefits of the Practice and Services
Marketing Mix
Your financial practice needs to consider activities that will influence the client to use your services. A pharmaceutical company can influence physician prescribing by writing journal articles, placing journal ads and sponsoring medical conferences. All of these activities constitute a “marketing mix” and are planned for maximum impact. The choice of marketing mix tools should be determined on the basis of what is going to be the most cost-effective in terms of achieving the objectives and should formulate the most profit-maximising marketing mix.
McCarthy’s 4 P’s framework requires you to decide on your service and its characteristics, set the price of your service and choose methods of promoting the service Product Price Place Promotion
It should be noted that the framework takes the seller’s view, not the buyers. Kotler suggests that the four P’s can be described as the four C’s from the customer’s point of view: Product- customer value Price- cost to customer Place- convenience Promotion- communication
A financial practice may be wise to consider the customer focus four C’s and then build the four P’s on that platform.
All 4 P’s and C’s should be considered when deciding on the marketing mix for your practice. Product
The basis of a business is an offering or product which the business aims to make different or better than its competitors so that the target market will favour it. The challenge is to create relevant and distinctive product differentiation. This differentiation for a financial business selling a service may be price, image or service differences.
Price
Price produces revenue where as the other three P’s produce costs. Setting your price means considering how you charge for your advice. Examples being an asset management fee or retainer, a fee based on net worth, fee only planning or a fee on performance.
Place
Place is a relevant consideration for financial practices to consider in their marketing activities. A practice may focus on being different to other businesses through the look they offer or some quirkiness to their location or identity.
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3.2 Select and Develop Appropriate Promotion Tools
Promotion
Promotion tools fall into 5 broad categories: Advertising Sales promotion Public relations Sales force Direct marketing. In this section we are concerned with developing a practice promotion plan for a financial business. Some tools will therefore be more applicable than others, but we will examine each of the tools so as to provide you with an overview of the options available for inclusion in a marketing mix.
Advertising
Advertising is the most powerful tool for building awareness of a business, product or service. If the advertising is creative, the advertising campaign can build image and to some degree preference or brand acceptability. It does not however address issues of the reputation or status.
Advertising has its downsides as most ads are not creative and are costly, particularly TV ads, and they do not allow a lot of time to absorb the message, there are many other ads causing clutter, they tend to broadcast a message to everyone and not target a specific audience and people use their remote controls to switch channels when ads appear.
Advertising is most effective when it is narrowly targeted such as a placement in a financial magazine. The best measurement of the success of the advertising is the sales or client increase impact resulting from the exposure to the ad campaign. Advertising programs should be reviewed and evaluated periodically.
Advertising’s purpose is to get the message across to the client and it operates on 3 levels – it informs, it persuades and it reinforces. Advertising to inform relates to the promotion of new products and services as well as informing of existing products and services. Advertising to persuade is what people understands as advertising.
There are many advertising based objectives that may relate to your financial practices promotion plan:
Education and information - To create awareness of the practice and its services - To inform clients of the services and product - To get enquiries about services and products Branding and image building - To create a practice image Loyalty and reminding - Reduce service costs - Achieve sales of financial products.
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Questions you should ask yourself if looking to include advertising in your marketing mix:
Mission Is the ad campaign’s aim to inform, persuade or remind target clients? Are the ads designed to create Awareness, Interest, Desire or Action (AIDA)? Message
The message is shaped by the earlier decisions on the practices intended target market and value proposition. How best can the value proposition be presented creatively? Media
What creative approaches are best used for the different medium even though the message remains the same? Money
If too little is spent on advertising, companies may be spending too much, since the ads won’t draw much attention. The most effective approach is to set an advertising budget on an objectives and task basis. How many people do you want to reach in the target market? With what frequency? With what media qualitative impact? Answering these questions makes it easier to calculate the budget so as to deliver the desired reach, frequency and impact. Be clear about your purpose.
Sales promotion
Sales promotion includes a number of wide-ranging incentives and works on behaviour whereas advertising works mostly on the mind, an example of working on behaviour being when a client hears of a sale or an offer of two for the price of one and they act.
This type of promotion may not be relevant to small financial practices as it brings in switchers and deal-prone clients who are “here today and gone tomorrow” and who are generally not reflective of the clients of a financial practice. Public relations
Not all financial practices may choose to spend time courting the media – this approach is an individual practice decision. A practice may have a stable client base and you believe you can attract new clients without establishing a media presence.
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However public relations can be very powerful if used wisely. A small financial advisor business has to compete with larger companies so by developing relationships with the media you can create credibility and visibility and is much cheaper than paying for advertising. Approaches that have been used by financial practices include writing to the media. This might include letters to specific journalists, column comments, compliments on an article with additional information to demonstrate knowledge of the subject. This relationship may result in receiving calls from the media for comment and becoming a source for journalists.
The public relations tools that you might consider using include: Publications – client brochures, newsletters Events – sponsorship of art events, athletic group, trade show News – favorable media stories by and about the financial practice, its people and products Community – contributing time and money to local community needs Identity media – stationery, business cards, corporate dress code Lobbying activity – efforts to influence legislation and rulings social responsibility – building a reputation for corporate social responsibility. Be prepared – a few suggestions as to how to act and react to the media when called: Be aware Be available and prompt Be professional Be prepared Be honest Be clear and concise Be controversial Be interesting Be confidential Be circumspect Be respectful Be realistic Be responsive. “While advertising is what you pay for, public relations is what you pray for”
A favourable article in a newspaper of magazine is worth much more than thousands of dollars spent in advertising. Sales force
An outside sales force is an expensive marketing communication tool. Having a sales force out in the field, travelling a lot and hunting for prospects and keeping existing clients satisfied may not generally be an option for small financial practices or one that appeals to the principals of the business to include in their marketing mix..
Outside salespeople however have the advantage of being much more effective than a series of ads or direct mail pieces.
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The advantages of a sales force: allow for two-way communication between the buyer and seller enable the salesperson to tailor the presentation to the individual needs of the client enable the salesperson to know and be known by the clients enables the salesperson to negotiate directly on price, delivery discounts enables the sales person to close the sale allows the salesperson to monitor client satisfaction levels. Increasing the inside sales force is one way businesses can reduce sales force size and cost through the use of telemarketing or to sell through distributors. Laptop computers with appropriate software and mobile phones have enabled sales people to work from home. This also reduces costs and made sales people more productive. Direct marketing
More specialised media are appearing and there is an explosion of magazines designed to deliver ads and editorial material to a specific client group. Internet TV is expanding and niches and segments will more efficiently reach clients as will “segments of one” as a result of database marketing.
Direct marketing includes mail order business and the use of mailshots which involves sending information on a specific product or service to potential clients on a mailing list. The accuracy of the list is important and a small return rate is considered normal. An advantage is that technical analysis enables clients on databases to be grouped into various client groupings which better defines market targets and improves response rates.
Table 9 provides a summary of promotional tools that can be used to deliver a message to a target audience. You need to send a consistent message so it is important to proportionally balance and blend your chosen promotion tools to achieve your marketing objectives. All the four P’s must be integrated which means they are in a competing and a complementary relationship, for example you cannot charge a high price for your financial products but provide a poor financial service.
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Table 9
Examples of promotional tools
Advertising Sales Promotion Public Relations Sales Force Direct Marketing
Print and broadcast ads Packaging – outer Packaging insets Motion pictures Brochures and booklets Posters and leaflets Directories Reprint of ads Billboards Display signs Point-ofpurchase displays Audio-visual material Symbols and logos Videotapes.
Contests, games, lotteries Premiums and gifts Sampling Fairs and trade shows Exhibits Demonstrations Coupons Rebates Low-interest financing Entertainment Trade-in allowance Continuity programs Tie-ins
Press kits Speeches Seminars Annual reports Charitable donations Sponsorships Publications Community relations Lobbying Identity media Company magazine Events
Sales presentation Sales meetings Incentive programs Samples Fairs and trade shows
Catalogues Mailings Telemarketing Electronic shopping TV shopping Fax mail E-mail Voice mail
Activity 6 ()
1. Develop promotional objectives and select an appropriate marketing mix for each.
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Promoting a financial practice – one approach
Successful financial practices have worked out that they are not just in the finance business and that they cannot segregate a client’s financial needs and wants from the rest of their life. They have found ways to incorporate that concept into their practices by promoting not only their core business but the supplementary services they provide as well. We now see some financial practices calling themselves lifestyle consultants, client coaches and even counsellors.
Katz uses Table 10 to describe the supplementary services offered by Federal Express and to highlight that a practice should promote more than just its core services as it is not the only thing you do.
Table 10
Activity 7 ()
1. Using the above diagram shape, include your core business in the centre circle. Around the outer circle list the supplementary services you provide. 2. Devise a statement that focuses on these supplementary services.
Overnight transportation & delivery of packages
Advice & information
Order taking
Problem solving
Billing statements Supplies
Insurance
Tracing
Documentation
Pickup
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Promotional approaches
Independent practices may use their centre of influence and undertake activities such as visiting and presenting to other financial organisation’s who have members or clients that need mortgage solutions. These may be organisations such as accounting, legal firms and financial planners who do not currently provide mortgage services or products. This is an opportunity for you to present your value proposition.
Once you have identified your target market it is a good idea to brainstorm different types of nonfinance related clubs and associations that might benefit from mortgage advice. Consider sporting clubs and groups such as Lions. For example if a financial business focuses on providing mortgage options they might develop relationships with local groups or associations that include couples in their 30s.
A third approach is to use the direct marketing avenues available such as magazines, newspapers, a website or a cinema. Select the avenues that fit the type of client you have identified as your target market. If you offer services in estate planning maybe you might advertise in magazines that relate to the over 50’s group or a baby magazine if you specialise in mortgage options, budgeting and life insurance. The use of social networking is a developing market but be aware of the risks associated with these avenues. For example Facebook allows people to add comments and you do not want people to read any negatives.
Family and friends and your own personal networks is a rich source of contacts and some practices find that the majority of their client base is sourced via word of mouth via friends and family. A helpful tip is to give more than one business card to friends or family so that they can pass your practice information on to others.
The purchase of a business with an existing client base is another way of gaining clients as you can market to the client base.
Building a proposition
To develop a brand is a good starting point for building a broad proposition.
1. To assist in identifying your proposition, Treacy and Wiseman propose three value disciplines based on there being three types of clients: Product leader - clients favor companies that are advancing the technology frontier Operationally excellent – clients want the reliability and dependable performance Client intimate – client who prefer a responsive and flexible business that meets their individual needs. Your financial practice would find it difficult to be best at all three or even two of these, or be able to fund all three ways. Operationally excellent companies like McDonald’s have highly efficient systems that are difficult to alter and if requested to cook a hamburger well done you would see a slow down of their systems and the introduction of a new product would cause disruption.
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So when considering what will be successful for your practice, Treacy and Wiseman suggest the following rules be followed: Become best at one of the three value disciplines Achieve an adequate performance level in the other two disciplines Keep improving one’s superior position in the chosen discipline so as to not lose out to competitors Keep becoming more adequate in the other two disciplines, since competitors keep raising clients’ expectations about what is adequate. 2. Now that you have a broad proposition, you need to express a more concrete benefit and reason for a client to buy your service. You need to consider the following possible positioning source as described by Kotler: Attribute positioning – position yourself on some attribute or feature. Maybe you could look at positioning your practice in a different way or through the eyes of the client. Referring back to Table 10 may spark some ideas. Benefit positioning – the product promises a benefit e.g. financial growth Use/application positioning – the product is positioned as the best in a certain application Competitor positioning – the product is positioned in terms of the target user e.g. baby boomers Category positioning – the business may describe itself as the category leader Quality/pricing positioning – the product is positioned at a certain quality and price level Having selected one or more specific benefits that your brand will advertise you now need to examine how your brand will be priced. To do this there are five value positions you need to consider:
1. More for more – luxury goods or services with a high price to cover their higher costs which have a vulnerability as they can invite imitators at a lower price and at risk during economic downturns when buyers are more cautious in their spending 2. More for the same – introducing a brand claiming comparable quality and performance but priced much lower 3. The same for less – ability to purchase a typical product at less than the normal price 4. Less for much less – providing goods with basic offerings and without unnecessary features 5. More for less – offering large selections at lowest prices. Why should your clients buy your financial service?
To answer this question you need to identify your total offering which outlines the set of benefits and features of your brand. Keep in mind that a client will consider the total cost of your financial service, the difference between your costs and those of your competitors and the most attractive total value proposition which for a financial practice may include reduced commission or fees or a service linked to your total offering that goes the extra mile. Once these are identified you are able to describe why your total offering is superior to a competitor’s total offering.
Now you are ready to build a strong brand identity that delivers a picture of the value that the potential client could expect to receive.
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Activity 8 ()
1. Outline the reasons for a client to buy your service. 2. Develop your specific positioning? 3. What is included in your total offering? 4. Based on your response to questions 1 and 2, what is your total value proposition? 5. What are the specific costs that your clients consider or incur when thinking about whether to buy your service?
Building a brand
The business’s stationery, business cards and brochures all create an impression and deliver a positive image to the target market and is less blatantly perceived as self-serving than advertising campaigns. Your brand can then be based on this proposition. Choosing a brand name
The name you choose must be consistent with the value propositioning of the brand. A “more for more” offering must carry a brand name suggestive of high quality.
The many possibilities include: name of a person e.g. Calvin Klein, Honda location – e.g. Kentucky Fried Chicken quality – Duracell batteries lifestyle – Weight Watchers artificial name – Kodak. Your brand name should suggest something about your service’s benefits and qualities; it should be easy to pronounce, recognise and remember, be distinctive and should not carry poor meanings in other countries and language. Building positive associations
What association do these words create for you? Golden arches Kids Value meal Big Mac Paper waste Fun High calories Happy meal Consistency
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To build rich and positive associations for a brand, Kotler suggests considering five dimensions that communicate meaning:
1. Attributes – a strong brand should trigger certain attributes in the buyer’s mind e.g. Mercedes cars trigger a well-engineered, durable, rugged and expensive car 2. Benefits - a strong brand should suggest benefits, not just features e.g. Mercedes is well-performing and enjoyable to drive 3. Business values - a strong brand should connote values that the business holds dear e.g. being a German company Mercedes adds more pictures in the buyers mind about the character and culture of the brand 4. Personality - a strong brand should exhibit personality traits e.g. Mercedes if a person reminds us of someone middle of the road, serious, well organised and somewhat authoritarian 5. Users - a strong brand should suggest the kinds of people who buy the brand e.g. Mercedes would draw buyers who are older, affluent and professional. These may not always be easy to include in the name of a financial services practice but these dimensions will be a good guide when creating a brand identity.
Tools for building the brand identity
Owned word – a strong brand name should trigger another favorable word.
What word do each of these business’s trigger?
Company Word
Kodak
Apple computer
Mercedes
Slogan - a strong brand name often uses a slogan or tag line to their company or brand name which is repeated in every ad.
What company does each of these slogan’s trigger?
Slogan Company
“Oh what a feeling”
"Do you have the bunny inside?"
"It's the real thing"
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Colors - use a consistent set of colours to aid in brand recognition.
Symbols and logos – use a symbol or logo to use in your communications. The way a brand name is written can make a difference in its recognition and memorability.
A set of stories can be of benefit if favourable and interesting. For example The Body Shop has stories told about its founder Anita Roddick who supports social and political causes that add to the personality of the business.
When developing a brand for your financial practice be guided by these tools, as a brand implies a relationship between service and a client and suggests a set of qualities and services that the client can expect. The tools have the same significance whether a business is larger small. Brand loyalty is built by meeting the client expectations, or even exceeding them to deliver client delight.
Activity 9 ()
1. What word or words might your brand own? 2. What associations are unique to your brand? 3. Is your current slogan working? Is your current symbol working? What would be a better slogan and symbol?
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3.3 Develop an Implementation plan in Consultation with All Relevant Stakeholders
Developing the promotion plan
Promotion takes time and developing a plan will lead to growth. Include the answers to the following questions in your plan: Who are you and what sets you apart? How do you want to influence public opinion? How much and what type of exposure do you have now? What exposure do you want to have specifically? Who are you trying to reach? What steps will you take to accomplish this plan? Establish your promotion objectives and strategies as explained in Section 1. If you are considering a public relations campaign as one of your objectives consider the following activities before developing your promotion plan: Assess your oral and written skills Design a media package that includes your biographical overview, business brochure and the names of the practice principals Develop a media list Join a local community or service organisation Contribute time and talent to professional associations at the local and national levels Develop your speaking abilities by conducting seminars and lectures.
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Activity 10 ()
1. Answer the above questions to provide a basis for your plan. 2. Develop a public relations objective, set strategies and how you will monitor your objectives.
Section Summary:
In this section you have learnt the importance of clarifying your practice offering before agreeing on a marketing mix and being informed by the 4 P’s platform. Promotion tools and approaches to promotion were discussed and you have learnt about the importance of building a proposition and a brand leading to the development of a promotions plan.
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Notes
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In Section 2 we discussed ways of getting clients and developing your practice and the types of promotion tools that might be used to promote and add clients to your business. We now examine putting a growth plan for a financial practice into place.
Growing the business requires decisions to be made about the future direction of the practice. This will require consideration of the numbers of clients that can be serviced with the existing staff and resource levels, the client sizes and range currently in the practice and the client size required to provide profitability. Packaging fees, raising charge out fees and selling more services to existing clients are also considerations. Analysing your current client base will assist you to make these decisions. It is a good idea to consider involving all employees in the development of growth plans as the implementation and achievement of these plans will ultimately affect everyone working in the practice.
4.1 Develop Plans to Add New Clients and Increase Yield per Existing Client
Analysing your client base
In a financial practice not all clients will receive the same level of service and not all clients provide the same revenue to the practice. So an analysis of the demographics of your clients will provide you with a picture of the service based upon the revenues.
An analysis of your client base will provide you with a picture of the actual cost of services delivered to each customer so that the true customer profitability can be determined. It will also highlight whether you are delivering a service based around your practice philosophy and capability or delivering services based on client request.
An approach taken by Katz who has a financial planning business provides a good example. The approach she took was to divide the existing clients into ages, identify the assets under management, and identify the specific client needs or services and the types of clients such as widow, divorcee or couple. This provided a picture of the majority of client needs and a pattern emerged - the clients were mainly over 50 and wanting retirement preparation advice. Katz next examined the quality of the relationships with each of the clients. What was highlighted was her newer minimum clients were more concerned with estate preservation and had little in common with the early clients.
The analysis raised the following questions: What types of relationships were profitable, rewarding, or both? How would the practice be serving clients’ needs into the future? What types of clients do you want to be serving in the future?
Section 4: Developing a Growth Plan for a Financial Practice
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Determining profitability
To be profitable a practice needs direction and planned and controlled growth. Unplanned increased growth will result in more staff, harder work and less profit.
Activity-based costing (ABC)
Practices are starting to apply activity-based costing (ABC) to measure client profitability. ABC is determining the actual cost of services delivered to each customer so that the true customer profitability can be determined. It is a special costing model that identifies activities in an organisation and assigns the cost of each activity with resources to all products and services according to the actual consumption by each. This model assigns more indirect costs into direct costs compared to conventional costing models.
For a financial practice ABC can soundly estimate the cost elements of services so that they can decide whether to eliminate the services that are unprofitable and lower the prices of those that are overpriced or identify and eliminate service processes that are ineffective and develop processes that lead to the very same product at a better yield.
In a business organisation, the ABC methodology assigns an organisation's resource costs through activities to the services provided to its customers.
Activity 11 ()
1. Apply activity-based costing to measure your client profitability to identify the percentage of clients who are unprofitable.
Case study – A client base analysis
At the time of the analysis of the practices client base, the practice averaged 40 clients for each of the three brokers over a year. The average size of the mortgages for these clients was approximately $300,000. It was estimated that another 20 clients with this same average of $300,000 per partner could be taken on with existing staff and facilities – a total of 60 new clients and this would generate $3,000 in new fees and provide an additional income of $180,000.
Re-thinking this decision, it was realized that if the minimum mortage level was left at $300,000, the capacity would be reached very quickly. If the minimum was raised to $500,000 it would take longer to reach but the profit would be larger as greater revenues would be obtained without adding staff.
What occurred was the pace of clients increased and the higher the minimum mortgage, the more professional the practice looked to prospects.
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4.2 Rank Proposed Plans According to an Agreed Criteria Growth paths and establishing criteria to develop growth plans A business must be cautious about making growth itself an objective – it must be profitable growth. Growth should not divert you from providing an excellent service, take your eye off your target client group, reduce your image or dilute your resources. The following table depicts Igor Ansoff’s framework of possible growth paths that can be applied to a financial practice. This framework provides a basis for the business to commence looking at opportunities facing their practice.
Market
Service
Existing
Modified
New
Provide more services to existing clients
Modify our current service and provide more of them to existing clients
Re-design/expand services which will appeal to existing clients
Enter and provide more services in another geographical area
Provide modified service to new geographical markets
Design and offer new services for potential clients in new geographical area
Provide more services to new types of clients
Provide modified service to new types of customers
Design new service to new type of customer
What this means for the financial practice is that decisions must be made as to whether to broaden the services offered. It may also mean looking at the service levels and fees of the practice and examining the relationships with the clients.
Establishing criteria will guide your choice of direction as it will screen out what might be other interesting ideas and focus on ones that best fit the scope of the business. It is a good idea to confine your criteria to no more than 5 for 6.
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Criteria might look like these: The new service would be ready to deliver in 6 months The changed service would see a 40% increase in profitability to the practice at the end of 2 years The extra number of clients would not require additional resources or employees The new service would add to the professionalism for clients The new service would meet the needs of all existing and future clients The new service will allow getting rid of clients where the relationship is not satisfying The new service would align with the cost of services delivered to each customer.
Activity 12 ()
1. Establish criteria against which your growth plans can be assessed.
4.3 Develop an Action Plan to Implement the Top Ranked Plans
Low minimums
Establishing minimum criteria does not necessarily have to translate into a dollar figure. It is good business practice to restrict advice to those clients with whom you have an affinity and whose problems you’re interested in solving.
An example of minimum criteria that does not involve minimum investable assets are: They want to do the planning themselves They recognise that they need help They are willing to be guided and educated. Minimums need to be addressed when planning the future of your practice. Refer back to the case study that shows that increasing the minimum still sees clients approaching the business. As referrals tend to come from existing clients, and friends of existing clients these clients are usually in the same financial situation. 4.4 Review Practice Work Practices to Ensure They Support Growth Plans
Developing growth plans
The next step is to develop a number of plans. Firstly we will look at three areas that may influence your growth plans - service levels and fees, whether all clients are worth keeping and some approaches to consider relating to retaining your clients.
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Service levels and fees
As all clients do not necessarily want to receive the same services it is a good idea to determine appropriate levels of service based on revenue, categorise your client base by fees to the practice and outline the types of service that you will provide for each category.
Table 11 gives an example of service levels, fees and services developed for a financial planning practice in response to questions raised after measuring client profitability.
Table 11
Service level Annual fee Services
Copper Fees below $7,500 Semiannual review, newsletter
Silver Fees of $7,500 to $10,000 Quarterly review, newsletter, periodic flash reports
Gold Fees of $10,000 to $25,000 Quarterly reviews, newsletter, flash reports, one other contact per month, two principal contacts per quarter
Platinum Fees of $25,000 to $35,000 Quarterly reviews, newsletter, flash reports, two other contacts per month, two principal contacts per quarter
Diamond Fees of $35,000 and above Quarterly reviews, newsletter, flash reports, two other contacts per month, principal contacts one per month, quarterly dinner or special event.
Taken from On practice management. Deena Katz.
It is important that the quality of the financial service provided and the advice is consistent across all levels.
Are all clients worth keeping?
Write down a description of your “perfect client” – include personality, temperament, net worth and complexity of issues – using this approach will assist you assess the relationship you have with clients. Compare this description with your current client base to highlight the relationships that are not rewarding. Having inappropriate clients for your practice can drag down the practice’s ability to grow and not add to the long term profitability for your practice.
Some employees find themselves make comments similar to these: The client relationship with Mr H is not working I don’t like working with Ms C Mr K is rude to staff Mrs P has unrealistic expectations Mr and Mrs D demand too much time.
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Firing clients may be necessary to develop your practice. Remember that Pareto’s law states that roughly20 percent of your income in ten years will come from your current client base so you may decide to weed some clients out so you can concentrate on retention and locating more appropriate clients.
Pursue the people who fit your criteria and with whom you’d enjoy an ongoing relationship.
Retaining clients
Katz says that one of the biggest impediments to the growth of her practice is not the lack of new clients but poor client retention as it is more time consuming and costly to find the next client than to take care of the current ones.
Personal approaches delight clients and you may choose to select from a variety of approaches including acknowledging birthdays, anniversaries and even a holiday postcard from the advisor. Provide clients with articles or items of interest. Communications are essential to maintaining the best possible relationship with clients and can be used to reinforce the practices philosophy and manage the client’s expectations.
Review documents can also be used to manage client expectations and reinforce your practices investing philosophy and maybe accompanied by a casual and personal letter. Newsletters can be used to create and reinforce your image. Ranking your growth plans
The following table will assist with your decision-making as to how you plan to grow your business. It will help you to rank any broad plans you are considering according to your selected criteria.
Criteria Plan 1 Plan 2 Plan 3 Plan 4
1.
2.
3.
4.
5.
Activity 13 ()
2. Complete the growth table using the criteria established in Activity 14.
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Developing a growth action plan
As discussed in Section 1 you will require an action plan that details the targets and activities to be put into place to achieve growth in the practice.
These action plan will show the what, when, where and how and can be used for controlling the implementation of the plan which we will discuss in Section 4.
Table 12
What is to be done (objective & target)
When it is to be done (target date)
Where will it be done
How will it be done (tasks involved, stages/key points)
Who will do it
Activity 14 ()
1. Develop objectives and targets to increase the practices growth and complete Table 12.
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Section Summary:
In this section you have explored analysing your client base to determine profitability using activitybased costing. You have examined and establishing criteria to develop a growth plan. Low minimums and service levels and fees were explored and how to go about ranking growth plans against criteria to develop action plans
We have covered developing marketing, promotion plan and growth action plans in the previous sections that outline the what, when, where and how of each. These action plans can be used for controlling the implementation.
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Notes
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Protecting your plans
Once the plans are in place you need to ask yourself: What could go wrong? What are the critical assumptions on which the plan is based? What would be the financial consequences be if these assumptions did not come true? How will these assumptions be measured? How will I know if it is about to happen? What can I do at this stage to prevent it from happening? What can I do if it does happen? Arm yourself with a contingency plan so that you will know what to do when things do go wrong or if your monitoring shows that something may be going wrong.
A force field analysis depicted below in Table 13 will identify things that could prevent your plan from working and identify the resisting forces and the driving forces.
5.1 Monitor Implementation Plans against Agreed Indicators
Expect the unexpected. Things can go wrong.
Monitoring shows us whether the unexpected has happened or is about to happen and measures and compares actual results or work in progress with planned performance. It provides an early warning so corrective action can be taken.
It is easy however when we have plans that outline clearly who should have done it, how it should have been done and when and where. Refer to the action plan headings that were included in Sections 1 and 2.
What is to be done (objective & target)
When it is to be done (target date)
Where will it be done
How will it be done (tasks involved, stages/key points)
Who will do it
What needs to be added here is a measure to monitor the objectives and targets.
Section 5: Implementing and Monitoring Plans
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Steps to monitoring
Step 1 Establish where monitoring is needed
Indentify what is most important to the success of the plan for example, improving the quality of the service, or increasing profit or the number of clients. Think about your objectives and targets. Let’s use the objective to increase $300,000 average mortgage clients by 30% over the next 2 years as an example. This is the objective that needs to be monitored. Step 2 Establish specific measures to monitor
You need to measure what counts most. In the case of promotion or growth action plans your objective should be specific and quantifiable for example, aiming to increase $300,000 average mortgage clients by 30% over the next 2 years requires you to measure whether a gradual increase in the number of $300,000 clients is actually occurring over the 2 years so as to achieve the 30% increase. So you need to measure the increase. Step 3 Compare what is happening with what should be happening
Once you have established how to measure, monitoring becomes a simple matter of comparing what is happening with what should be happening and taking remedial action if required. Variations will occur and you need to decide what variations are important enough to warrant moving to Step 4. Step 4 Take action as necessary
Contingency plans need to be put in place if you find you are not meeting your target of an increase over the 2 years.
Monitoring tools
There are many monitoring tools available from computer databases, project management software and personal schedulers. Complex and detailed systems such as GANTT Charts may not be suitable for monitoring marketing and growth plans in smaller practices.
Financial controls
Financial controls including budgets are a common way of controlling plans and will provide practices with the information they require to see whether you are achieving your objective and target.
Balance sheets will help identify trends; the profit and loss account will compare the income from all sources with the expenses incurred to determine the net profit (of loss) made during the accounting period; and the funds statement will show the source and application of funds – where the money has come from and where it has gone.
These financial controls would be suitable tools to measure our objective to increase $300,000 clients by 30% over the next 2 years. The funds statement would also be able to tell us the amount of money that has been spent on advertising or promotion to achieve the increase in $300,000 clients to make sure the cost of promotion is not consuming any growth profit.
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Characteristic of an effective monitoring system
Accurate The information is correct and provides the information you need in order to take appropriate action
Timely Information is available quickly and regularly to allow corrective action or other action to be implemented
Economical The benefits of gathering the information outweigh the costs of gathering it.
Easily understood The information is clear to those it affects and those who will act on it.
Useful It meets the needs of the practice and the people using it
Management: Theory and Practice. Kris Cole.
Table 13
What is to be done (objective & target)
When it is to be done (target date)
Where will it be done
How will it be done (tasks involved, stages/key points)
Who will do it How will the objective be monitored
5.2 Adjust Implementation Plans As required to Meet Objectives
Reviewing work practices and processes
Growth must be profitable and not drain the resources, including employee resources, of the practice. Growth plans may impact on the work practices and processes and a review of these will be needed to identify any impacts or the need to expand or develop additional work practices.
The right people, processes and resources are needed to grow a practice.
Here is a list of things that may impact on or be impacted on by growth plans and which should be reviewed in light of any growth plans: organisational structure of practice and job roles adequate resources including employees and technology physical space intra-office communication processes Work practices that impact on the customer systems and processes.
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There are number of tools that can be used and conducting a force field analysis will show you how the plans affect people, systems and procedures.
A Force field analysis developed by Kurt Lewin provides a framework for looking at the factors (forces) that influence a situation. It looks at forces that are either driving movement toward a goal (helping forces) or blocking movement toward a goal (hindering forces). Table 13
Force-field analysis
Activity 15 ()
1. Using the growth action plans you developed in Activity 14 include the monitoring measures for each objective. Complete Table 13.
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Section Summary:
In this section you have explored the importance of protecting plans and how to go about monitoring marketing, promotion and growth plans to ensure you achieve your objectives. You have also learnt the importance of reviewing work practices and processes. The 4 steps to monitoring provide you with a process to follow and monitoring tools to use including financial tools and the characteristics of an effective monitoring system are explored.
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Notes
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John Westwood in How to write a marketing plan provides the following guide to writing up your marketing plan and including the promotion and growth plans.
Section 1 Introduction – background to the plan and the reason for its preparation and its purposes and uses.
Section 2 Executive summary – the key points of the plan in a clear and concise form. Include the underlying assumptions on which the plan is based, the objectives of the plan and the timescale over which the plan will be implemented.
Section 3 Situation analysis – include the summaries of the external and internal marketing research and the key results from the SWOT analyse under the following headings.
- Assumptions – a brief factual statement giving the key facts and assumptions on which the plan is based and few in number and only related to the key issues which would affect the likelihood of the plan’s marketing objectives being achieved. - History/budgets – include data going back three years and forecasts for the next three years. - Strategic markets – historical information and forecasts for the practices service and products showing the percentage of practice service and product sales. Depict in tabular or graphical form. - Service and product offering – list the services and technological and commercial factors relating to them – include the results of the SWOT analysis on your service, products and competitors product and services. Section 4 Marketing objectives – the key objectives that are to be achieved and quantified.
Section 5 Marketing strategies – the types of strategies being used – defensive, developing or attacking or a mixture. Then list the strategies under the headings of these main elements of the marketing mix e.g. Strategies related to products Strategies related to pricing Strategies related to promotion Strategies related to place.
Section 6: Writing the Plan
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Section 6 Schedules –a master schedule showing the program for the implementation of the marketing action plan and including the promotion and growth plans. Each action plan would be listed in the master schedule or the sub-schedules for the product, pricing, promotion and place. Bar charts are a good way to depict the schedules. The detailed action plans could be included in an appendix.
Section 7 Promotion –detail the promotion plans (discussed in Section 2) and the approaches to be used.
Section 8 Budgets – the total cost of implementing the plan.
Section 9 Controls – a monitoring and control system to measure performance in achieving the objectives of the marketing and promotion plan and to recommended corrective action where necessary.
Section 10 Update procedures – outlining when the plan is to be revised.
Section Summary: This section provides you with an outline of the key information that needs to be included in a marketing plan.
References
Cole, K., 2005, Management: Theory and Practice, (3rd Edition), Pearson Education, Australia Deena Katz, On Practice Management,1999, Bloomberg Press, USA John Westwood, 2003, How to write a marketing plan, Kogan Page Australia Malcolm McDonald, Marketing Plans: How to prepare them, How to use them, 2002, Elsevier Butterworth-Heinemann, USA Philip Kotler, 2001, Kotler on Marketing, Simon & Schuster, USA S. Taylor, R Juchau & B. Houterman, 2009, Financial Planning Australia, (3rd Edition), Reed International Books Australia Pty trading as LexisNexis Butterworths Subhash C. Jain, 2000, Marketing: Planning & Strategy, (6th Edition), South Western College Publishing, USA