Understanding emotion is key to a good business relationship

Emotions wind their way through every facet of our daily lives. They drive our decisions and moderate our state of mind, some might argue especially when it comes to savings and investments. Anger, fear, happiness and sadness can all come with the customer into meetings or as they read communications from you, and these feelings require careful navigation. For those of you with face-to-face relationships you may already understand your customers emotions, especially when it comes to their finances. But adviser relationships aren’t the only touchpoint that clients have with a firm. Comms from central teams may erode the trust advisers build, which will ultimately be worse for business.

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Emotion at the heart of commercial strategy

Fostering stronger emotional connections with customers drives good business. Research by the Harvard Business School found that fully emotionally connected customers are 52% more valuable, on average, than those who are just highly satisfied. The study found that although just 22% of customers were fully emotionally connected, the group accounted for 37% of revenue. In turn, they spent, on average, twice as much per year as the highly satisfied group of customers.

The study also recommended financial services firms conduct research into understanding how their customers relate to their products and client-facing teams, and that the most sophisticated companies are already putting emotional connection at the heart of their commercial strategy. If a business can align itself with the emotions that drive their customers’ most profitable behaviour, the potential payoff could be huge.

Similarly, a study by The University of Amsterdam found that targeting customer mood is better for business.

In its observations, research participants who were feeling cheerful recalled 52% of brand ads, whereas those who were unhappy remembered just 35%.

It’s time for the industry to move away from transactional relationships and towards meaningful connections that instill loyalty given these are better for business, driving growth and higher profitability.

Tapping into emotion to avoid mistrust

Emotional awareness in financial services is perhaps more important now than ever before. Mistrust of the industry is high, and many have anxiety about their finances. The FSCS found that only 25% of adults with financial services products say they trust the industry to act in the best interests of its customers, while 31% distrust it. Many also approach financial services with a heightened wariness about hidden fees and charges. To overcome these hurdles, it’s crucial that firms build robust, trusting relationships with their customers.

That’s especially true in light of the Consumer Duty legislation, which was introduced to deliver better outcomes for consumers, and calls out jargon and confusing communications. The ONS found that 1 in 4 UK adults is financially vulnerable and approach finances services with trepidation. These vulnerable customers need a considered approach. Communications that can demonstrate empathy will land better and build trust.

In The Wisdom Council’s own testing, we found that 60% of documents that aim to explain fees and charges were deemed not fit for purpose. Confusing communications are a sure-fire way of stirring up a whole host of negative emotions that your customer may remember in future interactions with you.

Client-facing teams are in a privileged position

Money elicits powerful feelings in customers – it taps into our basic instincts; we need it to survive. It also symbolises decades of early starts, hard grind and discipline for all those who’ve managed to save themselves a decent nest egg. A decline in investment performance or the possibility of inflation eroding the value of cash savings has the potential to drive great anger and fear. Conversely, any increase in value has the potential to bring great happiness.

This wide range of feelings requires sensitivity from advisers, whose job it is to discuss the personal subject of someone’s finances in great depth. Most advisers rise to this challenge and embrace the intimate view of their client that few others have access to. Customers with a good adviser relationship feel valued and understood. They trust that their savings are going to be expertly cared for and that their adviser understands their needs.

So, how to tap into emotional states beyond personal relationships?

Bringing customer understanding to the core of business decision making and ensuring the customer’s vulnerabilities are understood would go a huge way in bridging the current gap in trust levels. And research that involves your customers can also help as customers feel valued and finally believe their opinions (and emotions) are being listened to and acted on. Client-facing teams do a lot of the heavy lifting and centralised teams have plenty of tools available to tap into client emotions from a distance and make the changes needed for the good of the client and the business.

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