Michael Brady, CIMA®, RIA Managing Director
In the effort to build a sustainable practice, many advisors spend a good deal of time and money creating strategies to attract new clients. However, in the race to acquire new clients, some overlook the potential for organic growth.
Organic growth refers to increased asset management fees, fees for new service offerings, or client acquisition based on referrals. One strategy known to help accelerate organic growth involves segmenting your existing client base to understand better the needs of your clients and tailor services and offerings around each segment.
You don’t have to use a complicated rating system, simply classify all of your clients as either “A,” “B,” or “C” according to guidelines such as these.
Dispersion of Clients
Once segmented, you can more easily see where you are and where you should be spending your time. If you are like most advisors, around 20% of your clients make up 80% of your business. Advisors with whom this 80/20 rule apply often find that the demands of serving the “B” and “C” clients makes it challenging to ramp up service levels to “A’s.”
Once your client base is segmented, you can dive deeper into the needs of your “A” clients and more easily identify common behaviors and priorities. For example, you may find your “A” clients are all in similar professions and may respond well to a certain delivery style, or have similar needs which could rise to new service-offerings or strategic partnerships with other service providers. You may also find coverage gaps, or clients who don’t have a “go to” person at your firm (other than you) to contact for service. If no such resource exists, you now have a roadmap for hiring criteria.
When you look at your “A” group as a whole unit, you can also begin to design networking events, client appreciation outings and outreach efforts tailored to their collective interests.
In addition to devising strategies designed to prompt your “A” clients to become engines for growth, you must also create goals for the “B’s” and “C’s.” Ultimately, you will have to decide how to staff for and provide service to the “C” clients in such a way that is consistent with your brand and does not create a drain on your resources. You will also want to develop programs to cultivate the “B’s” so they eventually become “A” clients.
Ultimately, the segmentation exercise will help you identify the best-fit financial and service solutions for clients at every point along your client continuum. The end-result is better served clients, and a more efficient and sustainable practice.
The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, a Registered Investment Advisor.