Own your Practice

Practice offering Transformation

6 x Business Transformation Workshops

1. Client Segmentation

2. CVP

3. Charging

4. Client Communication

5. Client Review

6. Transform

Own your Practice

Operational

Efficiency

Practice

Support /

Development

and

Legislation

Advice

Charging

Models

Customer

Segmentation Customer

Value

Proposition

Practice

Financials

Personal

Marketing

Strategy

Management

Information Product

Strategy

Segmentation The cornerstone to improving the

Profitability of client relationships

Agenda:

Why client segmentation is critical

Benefits of segmentation to you and your

business

Segmentation in action – a case study

What will segmenting your clients tell you?

Some exercises and tools to help

Actions for implementation

1.

2.

3.

4.

5.

6.

If you’re

not thinking

segments,

you’re not

thinking.

“ “

Theadore Levitt,

Author & Professor @ Harvard Business School

How did we get here?

Survival Growing

Pains

Mature

Lunacy

Client Segmentation – Why bother?

It is the key to profitable client attraction and retention:

• Define your proposition

• Define your “ideal client profile”

• Identifying your most profitable clients

• Identify which clients are not profitable and which are “at risk”

• Calculate your “average revenue per client”

Client Segmentation - The Challenge

Historically it has been hard for advisers:

• Time needed to gather & review fragmented data

• Defining workable segments

• Avoiding subjectivity based on:

• What they bought in the past

• The length of time since they were last seen

Focus

Light Bulb Moments

Expertise

Better Return on Marketing Spend

Better Results

Segmentation in Action

First Class

12

Segment A

Business Class

60

Segment B

Economy

399

Segment C

60% of the profit comes from the 12 people at the front of the plane

“Text book” segmentation model

10%

25%

65%

Segment A Segment B Segment C

Effective segmentation - 3 step process:

Step

One Name

Job/Role

Industry/Sector

Age

Location

Marital Status

Ongoing Revenue

AUM

Other Assets/to

tal net worth

Income

Source

Service Demand

Collect client data

Effective segmentation - 3 step process:

Step

Two

Sort and Analyse Data

Descending order

of recurring

revenue

Group into

deciles

Overlay

Service Demand

Effective segmentation - 3 step process:

Step Three

Drill Down

Top 20/30

clients

Identify common

characteristics

Gather more data

if required

Exercise 1

Client analysis (example)

Insights, Implications Analysis

Exercise 2

Revenue vs. Service Demand

Insights, Implications Analysis

Revenue vs. Service Demand

Exercise 3

Top 20 client analysis

Tools to Help

Client analysis

Clients sored by recurring revenue Number of clients Total

Recurring Revenue

% of Recurring

Revenue

Recurring Revenue

per client

1st Decile (top 10%)

2nd Decile (11 - 20%)

3rd Decile (21 - 30%)

4th Decile (31 - 40%)

5th Decile (41 - 50%)

6th Decile (51 – 60%)

7th Decile (61 – 70%)

8th Decile (71 – 80%)

9th Decile (81 – 90%)

10th Decile (91 -100%)

Total

Client analysis

Recurring Revenue Range No of clients

Total Revenue

Service

Demand level

1

Service

Demand

level 2

Service

Demand

level 3

Service

Demand

level 4

Service

Demand

level 5

> R p.a.

Average = R

No.

R

> R < R p.a.

Ave = R

No.

R

> R < R p.a.

Ave = R

No.

R

> R < R p.a.

Ave = R

No.

R

< R p.a

Ave = R

No.

R

Total

Ave = R

No.

R

Top 20 client analysis

customer

Name

Annual

Revenue

Estimated

net worth

Assets

with

Firm

Annual

Income Age Occupation

Service

demand

level

(1 – 5) Se

rvic

e 1

Se

rvic

e 2

Se

rvic

e 3

Se

rvic

e 4

How

acquired?

Barriers to effective segmentation

• Lack of or poor quality (or fragmented) data

• Changing adviser behavior and outdated work practices

• Resistance to greater levels of reporting and accountability

• Maintaining motivation (to undertake the segmentation work) over time

Actions for Implementation:

1. List your clients in descending order of recurring revenue

2. Group your customers into deciles/quartiles using the customer Bank Analysis Tool

3. Ask yourself what insights this data is giving you, what the implications are and what you are going to do about it.

4. Rank each customer in terms of service demand on a scale of 1 – 5

5. Overlay this information onto the Revenue v. Service Demand Matrix

6. Identify both your “at risk” customers and your “non profitable customers”

7. Once again ask yourself the insights, Implications, Action question

8. Drill down into your top 20/30 customers using the top 20 customer analysis tool to identify the common characteristics that these customers share

9. Use this to create your “Ideal customer” profile

Actions for Implementation:

1. List your customers in descending order of recurring revenue

2. Group your clients into deciles using the Client Analysis Tool

3. Ask yourself what insights this data is giving you, what the implications are and what you are going to do about it.

4. Rank each customer in terms of service demand on a scale of 1 – 5

5. Overlay this information onto the Revenue v. Service Demand Matrix

6. Identify both your “at risk” customers and your “non profitable customers”

7. Once again ask yourself the insights, Implications, Action question

8. Drill down into your top 20/30 customers using the top 20 customer analysis tool to identify the common characteristics that these customers share

9. Use this to create your “Ideal customer” profile

Actions for Implementation:

1. List your customers in descending order of recurring revenue

2. Group your customers into deciles/quartiles using the customer Bank Analysis Tool

3. Ask yourself what insights this data is giving you, what the implications are and what you are going to do about it.

4. Rank each customer in terms of service demand on a scale of 1 – 5

5. Overlay this information onto the Revenue v. Service Demand Matrix

6. Identify both your “at risk” customers and your “non profitable customers”

7. Once again ask yourself the insights, Implications, Action question

8. Drill down into your top 20/30 customers using the top 20 customer analysis tool to identify the common characteristics that these customers share

9. Use this to create your “Ideal customer” profile

Actions for Implementation:

1. List your customers in descending order of recurring revenue

2. Group your customers into deciles/quartiles using the customer Bank Analysis Tool

3. Ask yourself what insights this data is giving you, what the implications are and what you are going to do about it.

4. Rank each client in terms of service demand on a scale of 1 – 5

5. Overlay this information onto the Revenue v. Service Demand Matrix

6. Identify both your “at risk” customers and your “non profitable customers”

7. Once again ask yourself the insights, Implications, Action question

8. Drill down into your top 20/30 customers using the top 20 customer analysis tool to identify the common characteristics that these customers share

9. Use this to create your “Ideal customer” profile

Actions for Implementation:

1. List your customers in descending order of recurring revenue

2. Group your customers into deciles/quartiles using the customer Bank Analysis Tool

3. Ask yourself what insights this data is giving you, what the implications are and what you are going to do about it.

4. Rank each customer in terms of service demand on a scale of 1 – 5

5. Overlay this information onto the Revenue vs. Service Demand Matrix

6. Identify both your “at risk” customers and your “non profitable customers”

7. Once again ask yourself the insights, Implications, Action question

8. Drill down into your top 20/30 customers using the top 20 customer analysis tool to identify the common characteristics that these customers share

9. Use this to create your “Ideal customer” profile

Actions for Implementation:

1. List your customers in descending order of recurring revenue

2. Group your customers into deciles/quartiles using the customer Bank Analysis Tool

3. Ask yourself what insights this data is giving you, what the implications are and what you are going to do about it.

4. Rank each customer in terms of service demand on a scale of 1 – 5

5. Overlay this information onto the Revenue v. Service Demand Matrix

6. Identify both your “at risk” clients and your “non profitable clients”

7. Once again ask yourself the insights, Implications, Action question

8. Drill down into your top 20/30 customers using the top 20 customer analysis tool to identify the common characteristics that these customers share

9. Use this to create your “Ideal customer” profile

Actions for Implementation:

1. List your customers in descending order of recurring revenue

2. Group your customers into deciles/quartiles using the customer Bank Analysis Tool

3. Ask yourself what insights this data is giving you, what the implications are and what you are going to do about it.

4. Rank each customer in terms of service demand on a scale of 1 – 5

5. Overlay this information onto the Revenue v. Service Demand Matrix

6. Identify both your “at risk” customers and your “non profitable customers”

7. Once again ask yourself the insights, Implications, Action question

8. Drill down into your top 20/30 customers using the top 20 customer analysis tool to identify the common characteristics that these customers share

9. Use this to create your “Ideal customer” profile

Actions for Implementation:

1. List your customers in descending order of recurring revenue

2. Group your customers into deciles/quartiles using the customer Bank Analysis Tool

3. Ask yourself what insights this data is giving you, what the implications are and what you are going to do about it.

4. Rank each customer in terms of service demand on a scale of 1 – 5

5. Overlay this information onto the Revenue v. Service Demand Matrix

6. Identify both your “at risk” and your “non profitable” customers

7. Once again ask yourself the insights, Implications, Action question

8. Drill down into your top 20/30 clients using the top 20 client analysis tool to identify the common characteristics that these clients share

9. Use this to create your “Ideal customer” profile

Actions for Implementation:

1. List your customers in descending order of recurring revenue

2. Group your customers into deciles/quartiles using the customer Bank Analysis Tool

3. Ask yourself what insights this data is giving you, what the implications are and what you are going to do about it.

4. Rank each customer in terms of service demand on a scale of 1 – 5

5. Overlay this information onto the Revenue v. Service Demand Matrix

6. Identify both your “at risk” customers and your “non profitable customers”

7. Once again ask yourself the insights, Implications, Action question

8. Drill down into your top 20/30 customers using the top 20 customer analysis tool to identify the common characteristics that these customers share

9. Use this to create your “Ideal Client” profile

Thank you