Tricks of the trade

Selling investment products directly to investors is possible using the phone, email or web, but no one is using these channels to full advantage

By Adam Goodvach

November 13, 2009

Money is looking to leave cash investments as confidence in the economy improves and everyone curses that they didn't get back into the stock market six months ago. Companies that traditionally sold investment products through brokers are now interested in selling to investors directly. It will be a challenge for the sector to develop a customer experience focus so it can appeal to investors looking to do more with their money. The institution able to do this first will have a clear advantage during this time of investment reallocation.

Most investors suffered during the past 18 months and many are questioning the use of investment advisors. Financial institutions that sell investment products; from the big banks to AMP, Colonial First State and BT, have relied on brokers to liaise with investors rather than engaging investors directly. With more investors taking responsibility for their own investments, the growth of self-managed superannuation and a preference to avoid commissions, institutions are marketing directly to investors.

Like all disintermediated industries, from airlines to insurance, it will take time for investment providers to get the hang of marketing to investors. The first challenge is to present information in a simple manner so investors understand it. Staff are accustomed to dealing with educated investors but will now have to deal with investors who have little investment knowledge. The second challenge will be to present sufficient information that the investor is happy to make an investment decision. Currently, these challenges are not being met by major players.

Global Reviews recently conducted a Multi-channel Benchmark Study (MBS) of several leading investment institutions. It showed that, across telephone, website and email interactions, major opportunities exist for companies to improve conversion and efficiencies. The MBS covered Colonial First State, Perpetual and AMP. Colonial led the companies assessed with 61 per cent ahead of Perpetual (59 per cent) and AMP (55 per cent) but none met investor expectations, which is a score of 68 per cent. The average score for the telephone channel was 58 per cent while the website rated 51 per cent and email 30 per cent.

Phone a friend...
Regulations make it difficult for contact centres to provide advice to investors over the telephone so they focus on the provision of information. While each company answered questions when specifically asked, only 5 per cent of operators provided additional, helpful information. The proactive supply of additional, relevant information provides context around the answer being given. Less experienced investors value this supportive approach and it can positively inform their desire to become a client.

Resolving the query on the first contact saves the institution money and delivers efficiency to investors. The techniques that prevent investors making follow-up calls were seriously lacking in the MBS. Providing additional information pre-empts questions the investor may have when they hang up the phone. Another useful technique is to provide a summary of the call at the call's end, which covers the key points discussed, the name of any products mentioned and what the next steps are. This was done on less than 2 per cent of the calls made.

The confusing web we weave

The website channel also reveals opportunities averaging only 60 per cent for "Clearly showing which investment products were offered". The website is likely to be the first stop for investors, especially those undertaking initial research. Understanding the names of the products is difficult because the terms used assume prior knowledge. For example, Westpac has sections for 'Investments' and 'Structured Investments' and Colonial First State requires the investor to select from three over-lapping and potentially confusing headings: Superannuation, Retirement and Managed Funds. BT takes a better approach by separating information on investing from investment products. This is more in line with the investor's decision-making process.

A key step for investors is to determine which of the available products they should select. However, the sites assessed scored an average of 48 per cent for assisting investors to compare products. This can be done with a comparison table that lists features next to each other or an interactive tool.

Email like snail-mail
Finally, the quality of email interactions across the sector was of great concern, with only Perpetual responding to all of the email enquiries sent. When responses were received from companies, the vast majority arrived two or more days after the enquiry was sent. This is well outside the acceptable time limit of 24 hours.

The travesty of the email channel is that it is not being used as a channel for acquiring investors. The average for the 'Sales Close' sub-category was a disappointing 22 per cent. This is reflective of the failure to encourage investors to become investors (0 per cent) or give clear instructions for the next steps (45 per cent). All product-related questions were answered in only 32 per cent of cases. Taken together, the companies benchmarked are very unlikely to extract value from email conversations.

Investment institutions are at the first stage of direct selling. Currently, there is more of a focus on providing product information and less on encouraging the sale of the products. Even within regulatory constraints, more can be done. Regulations are often given as an excuse for a poor investor experience but, as the Multi-channel Benchmark Study shows, principles of best-practice investor support will go a long way to improving conversion and making the direct channel more attractive for investment institutions.

Adam Goodvach is the chief executive officer of customer experience benchmarking company Global Reviews.