by Tony Vidler
Ever noticed how the fast food stores tend to cluster together as some sort of “fast food alley”?
Have you ever wondered why?
There is a “convenience” element for the typical customer of course, however there is a more important reason – which might just be a useful lesson for professionals worried about online competition.
When it comes to fast food the average consumer will not travel a very large distance to obtain it. It is perceived to be a relatively low value purchase (mostly) and one is generally getting it for the convenience. The further away it is the less convenient it is. However it becomes more convenient and considered to be of more value when variety is introduced. So the clustering similar businesses providing fast food tends to make each of them individually more attractive to customers.
By hanging out together they all tend to get more business.
We do see a similar pattern in many places in the “advice” world. Accountants and lawyers and financial planners working out of the same building tends to be good for all of those businesses.
Why can’t we do that with the Do-It-Yourself business models in professional services?
Banks do. Why can’t the rest of us?
The short answer is “we can”. The longer answer is “we can if we shift our own mindsets”.
It is apparent that for many the whole concept of Robo-Advisers, or customers engaging in Do-It-Yourself options has become an Either/Or situation as far as the advice side of the business is concerned. Customers choose to do it themselves, or they get advice. It is Us or Them. The Good Guys versus the cheap and nasties who shall not be mentioned by name….
But why not build 2 types of business inside a practice?
There is the full service, advice-based option for those that prefer it of course. But just about any practice could build automated services, or simple product menu’s, for those customers who have relatively simple needs. Many of those customers who begin at the lower-cost/no service/automated transaction end of the business will in time have increasingly complex personal lives that will trigger advice requirements.
If you think about it you could build 2 types of business that have 3 different service levels.
1. The DIY (or transactional) business which is essentially a “no personal service” model. Customers would still be engaged via regular communications and information, but no personalised service is provided.
2. A basic advice service. Relatively low cost/low time and low service, and using some of the DIY products and services as client solutions – but there is a minimal, or limited, advice component.
3. Full service/Comprehensive Advice. The full cost, fully personalised, bespoke advice process.
The danger of the transactional business models is that we leave them to deal with our customers freely, and unchallenged. We opt out of the relationship simply because some customers want to do business in a different way, or because their lives have not yet become complex enough to warrant large fees and detailed advice solutions.
Perhaps building your own “fast food alley” is the solution to keeping customers out of the hands of competitors.