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Defining Client Value Beyond $ Signs

Segmentation is the first critical step toward greater efficiency and ultimately improved profitability. In our blog, “Take the First Step Towards Greater Efficiency With Client Segmentation,”  https://aeschlapia.wordpress.com/2012/03/27/take-the-first-step-towards-greater-efficiency-with-client-segmentation/ we provided you with basic steps and resources to segment your client database.

Start your segmentation process by defining client value.  Viewing each group with different needs and priorities will present you with the ability to serve each segment based upon their needs, not the firm’s profits.

Client segmentation is about improving customer service for all of your clients.  Use it to deliver solutions more effectively by streamlining and automating the services you offer.  Aligning the right level of advisor support to the client’s specific needs results in increased client satisfaction and in turn may even result in more client referrals.

Advancing Your Client Segmentation Plan

Client segmentation needs to be taken to a deeper lever in order to gain the full benefit.  Once your initial segmentation process is complete, you are ready to segment your client database further by distinguishing clients based on characteristics beyond the dollars.

Many advisors have not segmented their client database in a meaningful way beyond assets under management.  Assets under management will be your constant starting point for segmentation and predicting client needs.   Understanding that clients within the same segmentation class still have extraordinary needs and expectations will allow you to provide matched solutions with your product and service offerings.

Trying to provide the same high level of service to everyone can make it difficult to focus on the more complex clients and on the inevitable changes that come with growth and business development.  Ironstone can assist you in all phases of client segmentation and ultimately design a comprehensive client segmentation plan that will allow you the opportunity to hone in on specific and unique needs of clients within each segment.

Ironstone recommends  you place some of the following attributes in your segmentation plan beyond assets under management:

  • Revenue produced for the firm
  • Quality of your relationship with the client
  • Earnings potential
  • Client lifestyles & life events
  • Client demographics
  • Risk analysis/Behavioral attributes

Applying the above listed characteristics will provide another layer to your segmentation plan and aide in shaping optimal service for your clients.  You may not want to engage in each market base, but you can start with the characteristics that employ the biggest role in improving your firms’ bottom line.   By marketing to each subcategory you will accomplish more targeted messages and information that will resonate with your clients, resulting in engaged clients and prospects, higher response rates and a shorter conversion cycle.

Use this model to segment your clients by determining their level of revenue and the value of the business relationship.08.06.12 Segmentation Guide

Readers, we are curious!!  How do you approach segmentation in your firm?

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  • Strategic Planning
  • Business Development
  • Operational Effectiveness
  • The Human Element

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Take The First Step Towards Greater Efficiency With Client Segmentation

 Client segmentation should be one of your first steps towards creating greater practice efficiency and profitability.   Yet we have found that advisors are skeptical about client segmentation due to the fear of losing clients.  Firms that have implemented client segmentation have found that segmentation aids in the retention of your ideal clients.

Client segmentation is about improving customer service for all of your clients.  Use it to deliver solutions more effectively by streamlining and automating the services you offer.  Aligning the right level of advisor support to the client’s specific needs results in increased client satisfaction and in turn may even result in more client referrals.

Start your segmentation process by defining client value.  Viewing each group with different needs and priorities will present you with the ability to serve each segment based upon their needs, not the firm’s profits. Advisors often discover that they can expand some client segments, when they know specifically what costs they will need to put against projected revenues.

Begin your segmentation process by following these steps:

  •     Define client value – Identify the drivers of value in your client relationship
  •     Quantify client value – Create a rating system to gauge each client
  •     Test your system
  •     Define Segments
  •     Track segmentation data
  •     Define & Update Processes

A firm’s defined segments may look something like this:

  •  A+=top 2% of your client database
  •  A=next 18%
  •  B=next 10%
  •  C=next 50%
  •  D=next 20%

To make segmentation truly effective, determine the type of services and frequency to promote clear communication to clients and prospects.

Trying to provide the same high level of service to everyone can make it difficult to focus on the more complex clients and on the inevitable changes that come with growth and business development.

Ironstone can assist you in developing a client segmentation plan,   identify gaps in your existing plan and collaborate with you to develop a solution to achieve the results you are looking for.

Contact us for assistance in starting and improving your client segmentation plan.  View our Segmentation Guide!  SegmentationGuide

We want to hear from you!   Share your best ideas here, we always love hearing from you!

Follow us as we explore each of Ironstone’s Fundamental 4™!

  • Strategic Planning
  • Business Development
  • Operational Effectiveness
  • The Human Element

You won’t want to miss our next in the series:  The Human Element-Hiring & Onboarding