Shifting your perspective on client segmentation

July 01, 2017 by Devin Rivera

An advisor considers how to segment her client base

About the author

Devin Rivera

Account executive

Devin started with Advicent in the support department, working with existing partners to help them leverage our tools. Now on the Advicent sales team, he works to help advisors find the solutions that best suit their needs. Devin believes that, in any aspect of life, a well-made plan provides freedom. He is here to enable advisors to help their clients achieve financial freedom.

In a broad sense, client segmentation is the process of using key traits to divide your client base into groups of similar individuals. In nearly every case, this begins a conversation about marketing. Yes, this is a crucial step in directing marketing efforts. But segmentation has incredible power that often goes unused. Properly leveraging client segmentation can help you differentiate your practice, save hours of wasted time, and even increase your AUM.

Knowledge is power, and good data is hard to come by. This is why segmentation strategies often fall short. Unless you have an enormous marketing budget, you are not likely to have a surplus of useful information about your pool of prospects. However, once a potential client chooses to engage, you have the opportunity to gain valuable insights that most advisors fail to see. At this point, asking the right questions can help you better serve your clients and differentiate yourself.

Segmenting your client base

There are countless ways to segment your client base, some more useful than others. The difficult part of client segmentation is choosing which criteria to use. Two things can make this easier – knowing what you want to accomplish, and maintaining good data in a useful database.

For the latter, I recommend leveraging a CRM software. A good CRM tool will allow you to easily sort your client list based on various criteria. In doing so, you might find some interesting patterns. Maybe you will recognize that your biggest revenue generators all live within the same zip code. Perhaps you will notice that a significant portion of your client base are software engineers. You might find that only the homeowners hold life insurance policies. Not all of these patterns will prove to be useful. But as I mentioned, knowing what you want to accomplish will help determine where you want to put your focus.

If you want to create more efficient workflows, try putting together a list of your most, and least, profitable clients. Then determine why each made the list. This can help prevent you from spending an inordinate amount of time on a given client. Or you can use this to determine how you might get more value out of a certain group of clients. How do your current workflows differ between your A, B, and C clients?

If you want to deliver more value to your clients, you can try organizing them by their top priority goals. Is everyone focused on retirement, or are some of your clients more concerned with travelling? How many are talking about starting a small business? Take one group at a time and ask yourself how you can bring more value to that group.

Segmenting your existing clients is also a good way to determine potential niche markets. You might have already started on a particular market without knowing it. Those software engineers – do they have any unique needs? Have you already put in extra work to better serve some of these clients? Could it be applicable to others? See what you can learn about this group that another advisor might not know. If you can anticipate clients’ needs, they’ll know that you understand them. Once you’ve identified and delivered this value, remember to ask for referrals.

As simple as it is, there is a great deal of value in taking a step back to evaluate your client base. Set aside some time quarterly to step back for a wider view. You might be surprised by how much you can simplify in your practice when you take the time to do so.

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