The #1 driver of overall satisfaction is the provider’s ability to demonstrate that the “value” they deliver is well worth their fees and other costs. Importantly, “loyalty” is also highly correlated with “value”. These findings were identified in the most recent release of the annual Defined Contribution Plan study (DCP) that included 2,700+ plan sponsors. Since 2000, the annual DCP study, conducted by Boston Research Group in partnership with LRN, has been measuring plan sponsors’ loyalty and satisfaction with their respective recordkeepers and advisors (i.e., providers).
But how does a provider demonstrate value? Multivariate analysis of the recent 2013 DCP data gives a very clear answer. There are two categories of factors. The first is related to the client’s experience. The second is focused on the quality of products and services within specific channels. Let’s look at the customer experience first. Which Customer Experience Creates the Greatest Value? Value is created through partnering with the plan sponsor. Partnering essentially translates to being on the plan sponsor’s side, anticipating their needs and their participants’ needs, and proactively finding ways to meet them. Additionally, value is created by assuring the plan sponsor that they are in good hands with you at the helm. Specifically, a perception of “value for the dollar” is created by the provider engendering confidence in the plan sponsor that it has the technical capabilities to ensure that the plan’s operational needs will always be met and that the plan is always operating in fiduciary compliance. Here are the top 7 ways to contribute to that value/loyalty (as derived from advanced causality analysis):
- Minimizing the administrative burden
- Partnering effectively with the plan sponsor
- Understanding the needs of the plan sponsor
- Having the necessary resources no matter how complicated the plan
- Protecting the fiduciary
- Offering the latest and best technology
- Effective in enhancing participants’ retirement readiness
While it would seem that product and service quality is a more intuitive driver of the perception of “value” than customer experience, analysis confirms that ultimately plan providers are in a personal services business. It is certainly true that they must have the requisite technical and legal capabilities. But those capabilities tend to be costs of entry. The greatest impacts on perceived value are delivered through the providers’ human capital and a focus on “partnering” for both their success and the plan sponsors’ success. (related materials cited above first appeared on NAPA Net (http://www.napa-net.org) in July 2013 http://www.napa-net.org/news/managing-a-practice/service-providers/how-does-a-provider-best-demonstrate-value-part-1/