For every business, large or small, one of the most important measures of business success appears nowhere on their Balance, Sheet, Income Statement or Cash Flow Statement.
It is Client Capital.
For entrepreneurs, creating client capital is a fundamental pre-requisite for the success and sustainability of their enterprise.
What is Client Capital?
It is the sum of three elements.
The first is the depth of relationship with the client. The most important measures of depth are the number of products and services clients buy from you and the degree to which a relationship for life is established. Clients recognize that you are invested in their success and well being over the long term. Another important measure of client capital is the degree to which clients turn to you for advice and counsel in myriad areas of their business and life. For example, high performing advisors become the Alpha Advisor for their clients. They are viewed as a Trusted Advisor.
The second measure is the breadth of relationship. This is the degree to which clients willingly introduce, recommend and refer you to people in their social circle. They become your evangelists. The breadth of relationship is based upon the old axiom: The best form of marketing is word of mouth. High performing advisors learn that marketing has evolved beyond promotion to evangelism.
The third measure of client capital is the degree of engagement. Client satisfaction is often used as a measure of success. However, client satisfaction does not necessarily equate to client loyalty. Satisfaction is ephemeral. It waxes and wanes. Clients can be satisfied one moment and something outside of your control can result in them being dissatisfied. Client engagement is more important, in that it is the extent to which clients are invested in the relationship. When you are invested in making a difference in the lives of your clients, the right clients reciprocate in kind and are committed to your success, as well as their own.
The natural result of relationships is towards inattentiveness and erosion of sensitivity. To maintain and grow relationships, we have to work at them. High performing advisors develop and implement a strategy and well thought out tactics to create client capital. They recognize the importance of investing in their clients to maintain and expand the equity in the relationship for mutual benefit.
