Since 2000, the Boston Research Group’s DCP studies have been measuring plan sponsors’ loyalty and satisfaction with their record keepers and advisors (i.e., providers). The Number 1 driver of overall satisfaction is the provider’s ability to demonstrate that the value they deliver is well worth the fees and other costs. Importantly, loyalty is also highly correlated with value.
But how does a provider demonstrate value? Multivariate analysis of 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.
In the first part of this two-part discussion, we looked at the client experience factor. In this second part, let’s look at the role that service excellence plays.
Service Excellence Creates Value
Product and service quality is a more intuitive driver of the perception of value than is customer experience. Providers frequently ask about which products and services have the greatest impact on a plan sponsor’s sense of value. In order of impact, the answers are:
• Recordkeeping services
• Level of support provided by the relationship manager
• Performance of plan investments
• Employee education services
• Participant statements
• Web site for plan participants
Two themes emerged from the analysis. First, services directly focused on the plan administrator have a greater impact than participant-focused services in creating a sense of value. Obviously, participant service excellence is a necessity, and plan sponsors will often say that meeting the needs of the participant is their highest priority. But in reality, the greater priority swings to administrative services that most directly impact the plan administrator. The most impact comes from the perceived quality of the record keeping services (after all, that is what record keepers are primarily paid to do). But the performance of the relationship manager (in being the face of the record keeper and in being there to catch any service-quality balls that are inevitably dropped) is a close second in impact on perceived value.
Stated another way, a great deal of the plan sponsor’s perception of service quality is often based upon the skills of the relationship manager. Keep in mind that in many plans, the advisor on the plan plays most aspects of the role of relationship manager. That is, the advisor is often the relationship manager.
Secondly, almost as important as the relationship manager in creating a perception of value is the performance of the investments offered by the record keeper, be they proprietary or third-party. But as with service quality, a skilled relationship manager can have an effect on the plan sponsor’s perception of how the investments in the plan are performing.
Participant services statistically have a lesser impact on the perception of value, but nonetheless are obviously critically important. But of all the participant services delivered, a great education program ranks first in creating value in the plan sponsor’s mind. Interestingly, the other two services creating a perception of value — statements and websites — provide information, access and self-service capabilities to the participant. Other research has indicated this is a key participant-service objective of plan sponsors.
Conclusion
Overall, the 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 the analysis shows those capabilities 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 own success and that of their clients.
Warren Cormier is President and CEO of Boston Research Group and author of the DCP suite of satisfaction and loyalty studies. He also is co-founder of the Rand Behavioral Finance Forum, along with Dr. Shlomo Benartzi.
