Your clients are your competitor’s best prospects!

I frequently talk to advisors and financial professionals about the prospects they’re working. Their sales pipeline can range anywhere from 10-50 active deals they’re working routinely. Odds are some of those great opportunities are their competitor’s clients. That’s why I’d like to share some insights about how client segmentation can build a moat around your client base. Client Segmentation

Let’s begin with client segmentation
I have yet to meet an advisor or advisor team who doesn’t struggle to manage service delivery and growth…and for that matter, their sanity. Segmentation helps you strategically analyze how you communicate to clients and how your service model applies, or doesn’t apply, to their needs. Most importantly, it’ll help you create efficiencies so you can put your energy toward new client opportunities.

1. Start gathering information

Segmentation is often based on revenue – it’s clean and helps you allocate time to clients that generate the right amount of revenue for the time you invest. Other quantitative measurements like hours (if you aren’t already, start tracking – Google “time tracking apps”), type of work, progress, and profitability are also good places to start. A simple way to create your segments is think of these variables in high vs. low buckets, or high, medium, low buckets. You’ll naturally draw the lines based on the data from the old 80/20 rule – 80% of your revenue comes from 20% of your clients.

2. Don’t skip your client qualitative data

Hard and fast data makes segmentation the cleanest on paper – but not every decision on paper is clear. That’s why I think it’s important to integrate some qualitative components into your process. What’s their cross-sell potential? And what about referrals – can they introduce you to more potential clients like them? This will help with segmentation, but it’s also a best practice for understanding and serving your clients in general.

I’ve mentioned before that you shouldn’t assume, and I will tell you again – don’t assume you know. Ask them what they need – a well-conducted interview can generate more revenue or decrease revenue-eating expenses, all of which can impact how you segment that business. Make this interview guide your own. Use it with existing clients, but also when you on-board new clients. This will help set expectations and you’ll be able to service them based on what they want, not what you assume they want.

3. Review your data

Once you have the information you need, segmentation becomes part art, part science. Start small and don’t over-complicate the process. Consider two to three segments – and ask how you and your team can deliver the right amount of time and value to this client. This exercise is not about identifying the clients you won’t service, or who will receive poor service, it’s more about aligning time and services to the clients’ needs and how they want to be serviced.

Another time I’ll cover what to consider in a relationship plan after you segment your clients.


In addition to blogging here, I also tweet regularly about advisor-focused practice management topics like sales and lead generation, marketing, service and management/operations. Follow me on Twitter at @Rschutty.

Affiliation Disclosures

Insurance products and plan administrative services are provided by Principal Life Insurance Company. Securities are offered through Princor Financial Services Corporation, 1-800-547-7754, Member SIPC and/or independent broker dealers. Securities sold by a Princor® Registered Representative are offered through Princor. Princor and Principal Life are members of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.

© 2013 Principal Financial Services, Inc. |PQ11372H | t13070302re