This is the third in a series of 5 blogs examining the different kinds of power that are involved in your client relationships. First, power is at the heart of our interactions with others. Second, as a financial advisor with a body of knowledge and experience that a client does not have, you are immediately in a position of power over your client. As a result, it important to understand the dynamics of power so that one can be more skillful and aware of the dynamics that are at play when interacting with a client or potential client. Understanding power dynamics better can provide a Serious Shift in your ability to ensure that there is always a healthy and respectful balance of power in your relationships with clients and prospects.
Reward power exists where one motivates or looks to gain influence over another using awards, praise or focused attention. In a sales dynamic, reward power comes from having the ability to reward the other party in the negotiation. It could be the power a buyer has to place an order for goods and services or the power a salesperson has to give good service and solve problems.
The purpose of reward power is to trigger that part of human nature that appreciates being recognized for high performance. It is used to gain compliance by distributing rewards that others view as valuable. For example, in the case of the relationship with a client, two types of rewards are at play: the advisor is rewarded when the client is pleased with results, or the advisor rewards the client with extra attention and a more cheerful demeanor if they are compliant and easy to deal with. So essentially, each party is rewarding the other for complying to the outcome they desire. In the case of the client, they want performance (greed of making more money) and they reward the advisor with affirmation and positive attitude if they get it. In the case of the advisor, they want a happy and compliant client who gives them more business (behavior compliance), and the advisor rewards the client with more attention and potential material rewards (tickets to events).
Reward power can be very positive in a relationship if used properly. For instance, it can be used to pay genuine and authentic compliments to a client. If over-used, then entitlement is not far behind. A dynamic of entitlement in a client relationship is very dangerous since it will create a subservient dynamic between the advisor and the client. It is common that the use of reward power seems to be very effective, particularly in the longer term.
Our client and prospect relationships are all about a respectful balance of power. Reward power does have a place but be careful that you do not overuse it.