Lately I’ve been writing a lot about so-called business “wisdom” that advisory firm owners should take with a grain of salt.

That’s the case mostly because I get tired of playing janitor in my consulting work when advisory firms come to me and I have to clean up the mess of those firms who’ve tried the latest “key” to success, before I can even do the real consulting work.

One of these current theories suggests that advisors should focus on client “satisfaction” and “engagement.” And its proponents offer elaborate (I mean sophisticated) methods to measure where a firm’s clients score in each department. One of the tipoffs for dangerous notions is the use of vague concepts and/or common terms used in unusual ways, such as these two words.

Take client “satisfaction” for example. We all know what “satisfaction” is, at least in a vague sense. We know when we are satisfied or what it might take to satisfy us: we are happy, or content, with an item or situation.

How do we know if someone is truly satisfied?

But how do we know if someone else is “satisfied” with this or that? We could ask them, of course, but anyone who’s ever been in a relationship knows that evaluating that answer to a relatively simple question is far from simple.

Quite often the answer the questioner wants to hear can play a significant role in the reply, such as receiving a present that the giver is quite proud of having gound. Better indicators are whether the recipient wears or uses the gift and how they talk about it, not only to the giver but others as well.

Not a fan of surveys

When it comes to determining client satisfaction, most advocates today suggest using “client satisfaction surveys.”

I’m not a fan.

In my experience, when filing out these surveys, clients tend to tell advisors what they want to hear; and unless the client is really upset about something, their answers will tend to sound more optimistic than they really feel. (If you do use client surveys, I suggest you focus on questions that have specific answers: ‘What could we do differently to make your experience with our firm better?’ for example.)

However, there are those who argue that some clients (possibly many clients) will stay with a firm even though they are not “satisfied.” There is no doubt that all firms probably have some clients who aren’t particularly happy with the firm but who stay because it’s too much trouble to leave. The big questions are thus: How many of them are there? And what can be done to increase their satisfaction?

The term “client engagement” is even more of a problem because it’s being used in a way quite distant from its ordinary definition. Technically, “client engagement” is when a client formally becomes a client of the firm, and completes the necessary documents to do so.

But that’s not what some folks are talking about here. (For your entertainment, the use of old words with new meanings is called “consultant bingo.” I would encourage you to Google it for a good laugh or print one of the bingo cards, and when you are attending a presentation from a boring consulting speaker (perhaps even me), play the consultant bingo game to identify when they are speaking a good line of, well, BS.)

Related: 10 crimes against the customer

In the advisory firm management theory du jour, “client engagement” seems to be the level to which a client is actively engaged with the firm, which in my view, dovetails nice with clients’ satisfaction with the firm in a sliding scale of levels of client satisfaction/engagement.

Levels of client satisfaction/engagement

To identify these “levels,” I find that it’s far more revealing to measure “client satisfaction/engagement” in the traditional ways: client retention, wallet share, referral rates and their demeanor in face-to-face meetings. It seems hard to argue with the fact that clients who remain with the firm, who have the firm manage most or all of their assets, and who refer their friends are pretty darn satisfied with the firm:

Not Very Satisfied/Engaged
These clients appear to have one foot out the door, and seem to be waiting for a good reason to leave the firm. They tend to have only a portion of their assets with the firm, generally don’t make referrals and may be somewhat uncomfortable when they visit the firm.

Somewhat Satisfied/Engaged
These clients are basically satisfied with the firm. They tend to have more than half of their assets with the firms, make an occasional referral when asked, and appear business-like when they visit the firm.

Satisfied/Engaged
These clients are both satisfied and happy with the firm, have most of their assets with the firm, regularly make referrals when asked, and are happy when they visit the firm.

Very Satisfied/Engaged
These clients are your cheerleaders. They have all their assets with the firm, constantly talk up how great the firm is, regularly refer acquaintances, friends and family and seem to regard the firm and its staff as family.

As I’ve written before, in my experience the surest way to create satisfied clients and move them up into the cheerleader category is to make sure that everyone in the tells the same short, clear, and compelling story. It’s a story that can be easily remembered and repeated by its owner(s), employees and clients when it comes up in conversation — and then deliver the service/story you tell.

Actions, not words

Over all these years I’ve been on Earth (really, Angie, you’re like less than 40 years old! This is my head talking), there is for certain much I don’t know. But there are a few things I know for sure (usually learned the hard way.) One of those things? When assessing how satisfied or engaged another person is in a relationship, that person’s actions, not their words, say it all.

If your clients are sending referrals (referral rate) and if they are staying at your firm (retention rate), they are to some degree satisfied and engaged. You never really know how much, but one surefire way to decrease satisfaction/engagement is to ask them: “How satisfied/engaged are you?” (This is the equivalent of the dreaded question “Let’s talk about us!” in personal relationships.)

When you ask this question you have one finger pointing at them and three fingers pointed back at you. Most of the time the person asking the question is actually the one who is not satisfied/engaged.

If you really, truly care about improving satisfaction and engagement in your firm, you’ll ask yourself and your team (not the client) the harder question: “What can we do to improve our service for them?”

And, then, you’ll actually do it.

Angie Hervers is founder of San Diego-based Angie Herbers LLC, where she guides independent financial advisors to long-term, scalable growth by creating and executing customized growth strategies. Email her at angie@angieherbers.com. Follow her on Twitter @AngiHerbers. Opinions expressed are the author's own.

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The problem with client &lsquo;satisfaction&rsquo; and &lsquo;engagement&rsquo;

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