Implementing KIIDs can be much more than another regulatory requirement with increased expenditure. Approached as part of a wider Customer Engagement strategy they are a key opportunity to differentiate and sell.
With the UCITS IV requirement to produce Key Investor Information Documents (KIIDs) for all funds by 30 June 2012 a slew of outsourcing solutions have arisen to capitalise on the administrative burden that production (including translation) of these documents present. There is a great deal of commentary in the press highlighting the increased expenditure, with estimates ranging up to 20% above current production costs, however, few solutions go further than simple production of the documentation to meet minimum regulatory requirements.[1] If the goal of the organization is to generate revenue through fees and commissions on Assets under management then KIIDs represent an opportunity to offset some of the production costs with revenue enhancing benefits.
Whilst some firms are still uncertain over the benefits of treating every interaction as an opportunity to engage and sell, research on the business impact of Customer Experience continues to prove that better experiences lead to increased revenue via three main streams:
- Existing customers who are convinced to consider further purchases
- Word of mouth recommendations
- Acquisition of competitor’s business and a decreased likelihood of customers switching to competitors
In order to quantify the impact of customer experiences on revenue Forrester research has created an annual Customer Experience index that relates the average quality of interaction between a firm and the customer against the revenue impact on the three revenue streams above.[2] Quality here is defined as whether the interaction met the customer's need, how easy the firm was to work with, and how enjoyable it was to work with, across the entire enterprise experience including products and services. For investment firms with an average of 10 million B2C customers it shows that improving the Customer Experience index score by 10% led to an average revenue increase of $193 million.[3] That is, significantly improving the average customer’s interaction with the enterprise can increase annual revenues by hundreds of millions of dollars.
So, whilst there are strict requirements for presentation and delivery of the information within KIIDs, it is possible to exceed the minimum requirements and seek to drive additional revenue through improved customer engagement. This could be in the form of utilising current trends such as Social networking, engaging blogs, help sites, and immersive interactional online experiences, each which have proven ROI profiles. Approached as part of a wider Customer Engagement strategy KIIDs can contribute to improved loyalty, market differentiation and ultimately revenue generation.
Author: Andrew McKay-Lomatschinsky, Consultant, FusionExperience
[1] http://www.ftadviser.com/InvestmentAdviser/Regulation/News/article/20101011/e67f87b8-cfcb-11df-b2be-00144f2af8e8/Kiids-could-cost-managers-dear.jsp
[2] Forrester Research, The Business Impact of Customer Experience, 2010. Megan Burns
[3] Broken down across the three streams this equates to $73m additional purchases, $109m reduction in churn and $11m from positive word of mouth recommendations per annum
