Hot business tip number 8: Create a differentiated service offering (segment your client base)
Client segmentation can help focus limited resources.
The pareto principle – aka the 80/20 rule – is a universal truth; the majority of your profit is derived from a subset of your total client base. Despite this there is a temptation–especially for relatively new practices – to try and be all things to all people.
Providing a homogeneous level of service to all your clients has a number of shortcomings:
- You provide the same level of service to both unprofitable clients and profitable ones
- You provide a lower level of service overall as it is not economically viable to provide premium service to everyone
- It makes it hard to focus your limited resources
- It makes it hard to have a differentiated fee scale
A client segmentation approach – where you divide your client base into distinct categories – can do wonders by helping you focus your limited resources.
One common methodology is to classify clients A, B, C etc – based on their current value to the practice – although some argue this approach is outdated and fails to recognise future potential. Alternative methods include more behavioural based segmentation, or segmentation based around their life generation or advice needs or even communication preferences.
Differentiating the service proposition by segment can involve tailoring several aspects of your proposition by segment:
- Frequency of meetings
- Seniority of staff servicing clients
- Personalised communication
- Hospitality, seminars and access to guest speakers
- Reporting and pro-active content
The outcomes? Well research from Business Health shows that while 71% of Australian practices now segment their clients, 13% do not offer differentiated service by segment. This is surprising given an effective segmentation approach can deliver 146% more profit to a practice.
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This is an extract from a collection of business improvement tips for advisers, launched at Zurich’s Trax2Success national roadshow, featuring the 2013 AFA Adviser of the year Jenny Brown.
Click here to read Hot business tip number 1: Look after yourself and your staff
Click here to read Hot business tip number 2: Survey your clients
Click here to read Hot business tip number 3: Place a higher value on your time
Click here to read Hot business tip number 4: Review your client onboarding process
Click here to read Hot business tip number 5: Adopt an estate planning methodology across your business
Click here to read Hot business tip number 6: Tailor your communication strategy by client generation
Click here to read Hot business tip no number 7: Change your approach to review meetings
Click here to read Hot business tip number 9: Set up a Board of Advice
Click here to read Hot business tip number10: Develop a client retention strategy
Click here to read Hot business tip number 11: Run a program where staff drive improvements
Click here to read Hot business tip number. 12: Build your emotional intelligence
Click here to read Hot business tip number. 13: Go Social
Click here to read Hot business tip number. 14: Get better at handling objections
Click here to read Hot business tip number. 15: Create stronger referral sources
Click here to read Hot business tip number. 16: Set up a Google account
Click here to read Hot business tip number. 17: Learn from leading advisers
Click here to read Hot business tip number. 18: Make better use of technology in your business
Click here to read Hot business tip number 19: Improve your office environment
Click here to read Hot business tip number 20: Develop a great value proposition
Click here to read Hot business tip number 21: Make more use of video in your business
Click here to read Hot business tip number 22: Optimise your website for mobile
Click here to read Hot business tip number 23: Have a marketing plan
