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Successful advisers offer easy-to-implement advice for practices looking to improve and update their businesses.

Why the client segmentation model is outdated and should be replaced

Client segmentation may make business sense, but it defies common client-servicing sense

Apr 2, 2014 @ 12:10 pm

By Megan Carpenter

I spend a lot of time consulting with advisers on things that they do on public display. Everything I counsel them on keeps things framed from the clients' perspective. Before you write a single word of marketing copy, utter one syllable on television or do any interviews, advisers should remember one thing: no matter what forum you think you are in and whom it's reaching, there is a chance it will also reach your clients.

Don't assume that when you are featured in InvestmentNews your clients aren't reading it. You know how the saying about assumptions goes. Think about the phrase “client segmentation” for a second. Now imagine how a client would feel if they knew they were being “segmented.” How would you feel if your doctor “segmented” you into a group of patients they clearly didn't find very interesting or worth much time?

The standard industry approach to client segmentation — rating clients, assigning certain value rankings as indicators, creating different service models for clients — is outdated.

In the final episode of Season 1 of InvestmentNews' “Practice Makeover,” I really appreciated hearing makeover recipient Trent Bradshaw say “I love my clients. I want to make sure we deliver to them what they expect.” In earlier episodes, we heard Trent talking about shifting his client base from blue-collar workers to white-collar professionals and implementing a standard client segmentation strategy. That concerned me.

Here is a typical client segmentation model:

  • Determine key indicators for your clients (assets under management, number of products, willingness to refer, likeability)

  • Assign ratings to each client for all of the indicators, tally up and rank

  • Develop separate service models for A, B, C and D clients and apply to entire database of clients

This may make perfect business sense, but that doesn't mean advisers should throw common sense out the window. Clients don't want to be segmented, and they want to feel like they're being taken care of.

As Trent continues through his evolution and works to serve clients the way they deserve it, I encourage the Bradshaw Financial Planning team to implement a client accountability model. The momentum that we've witnessed throughout the series needs to be augmented by strategic marketing that focuses on client retention and prospecting, and a client accountability model solves for both. Keys to implementation are:

  • Do what's best for your clients, not just for the bottom line

  • Empower and train your staff to be the front line of the client service experience

  • Shift client service responsibilities from adviser/owner to staff by training your staff

A properly trained support team should be able to handle most service needs with clients, escalating only when necessary based on defined processes. This allows the adviser or firm owner to focus on the growth of the business while continuing to provide great service to all existing clients. Client accountability models provide a great level of support to all clients, instead of segmenting them.

With a client accountability approach, advisers can achieve enhanced client service, greater practice efficiency, increased profitability and more focused marketing.

You also don't run the risk of being called out for devaluing people you accepted as clients in the first place. Words and perception matters. View everything you do for clients through the client's lens. Not just in terms of what they get for what they pay or the business they bring into the firm, but from the perspective of how they would feel if you opened up about your approach to them.

Megan Carpenter is managing partner at FiComm Partners, a specialist communications firm that works with independent RIAs, financial advisers and those that want to reach them. She can be found on Twitter and LinkedIn.


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