The carrot and the stick

Many brokers feel that they are faced with a carrot-and-stick scenario when it comes to communicating effectively with customers.

On the one hand is the carrot - the clear commercial advantage that well-managed customer communication offers - while on the other is the stick, which is the Financial Services Authority's demand for brokers to prove that it is treating its customers fairly by communicating with them regularly before, during and after the point of sale.

Yet, in this difficult economic climate, carefully targeted communications are not a luxury - they are absolutely necessary because existing customers, as well as prospects, tighten their belts and focus on price more than ever at these times.

So how do you take advantage of communication to retain and grow existing profitable customers and attract new ones like them?

Establishing close and trusting relationships is key and this can be achieved relatively quickly by using the right content, via the right channel and targeting at the right time. However, we know from experience that many brokers struggle to do this because of resource and time pressures as well as IT and database issues. Now, more than ever, it is vital to win customers and prospects over with relationship-driven communication.

Brokers have until 31 December to demonstrate their compliance with the Treating Customers Fairly requirements and the FSA's latest progress update - based on management information from 96 firms - reveals that one in five relationship-managed businesses is not expected to meet the deadline.

Ultimately, an investment in good communication should be made for the good of the business and customers rather than to avoid FSA intervention. There is therefore an incentive for brokers to invest in appropriate, well-timed customer contact; it will not only impress new business prospects but also encourage customer loyalty.

- Andy Heap, chief executive, Ignition NBS.