Do You Segment Your Clients Based on What’s Important to Them?


John Anderson is Head of Practice Management Solutions, SEI Advisor Network. John and I have presented together several times, and he has a lot of good ideas on what makes for successful marketing. I attended one of John’s sessions a couple weeks ago which included a discussion of the importance of client segmentation to discovering and developing your niche market and unique value. Something he said really struck me: “Too many advisors segment their clients based on what’s important to the advisor, not on what’s important to the client.” I’m going to steal that. Anyway, I asked him if he would contribute a guest post on that idea, and he graciously obliged. Here it is.

Yesterday I got a note from Stan, a friend and someone who I truly respect.  It was obvious that he had read one of my previous posts that poked fun at holiday letters and discussed communicating your value as an advisor.   I smiled when he said that he wasn’t going to write me a long letter, but wished our family a “wonderful holiday season and a very successful new year.”   As I looked at the note for the third time (still smiling), I reflected on some of the great advice I have received from Stan over the years.  One of my favorites and one that I try to use almost daily is to say things in a way that the client needs to hear, not the way that’s easy for you.  We all have our own style and our own way of doing things. What Stan was trying to tell me was to pay more attention to the clients’ needs and what resonates with them, rather than what I think may be important. When we consider how to update our client experience, when we decide to change our service mix or choose who we will provide additional benefits to, we should keep the same idea in mind – how do we make the change based on something that’s good for the clients instead of making the choices based on what’s good for us? Which brings me to the subject of client segmentation.


Segmentation as a case in point

Client segmentaiton is fundamental to developing a niche marketing strategy or to developing your unique value proposition. Almost every advisor I meet does some type of client segmentation.  I have seen clients broken into Gold, Silver and Platinum; A, B and C, and A, AA and AAAs; and many other naming conventions.  However, most of the time they are broken into categories that are important to the advisor, and not into how s/he can help the clients.

For example, let’s say you have a 35-year old client who inherited $2 million and wants to put the money aside for the future growth.  You also have a couple (both 70 years old) who have a $2 million portfolio that they are living on in their retirement.  Most advisors would look at the AUM or the amount of revenue generated and automatically list those clients as “A.”  Yet, what do they have in common?  My guess is nothing.  If you address all your “A” clients in the same way, using the same tools, the same message and the same processes, something is broken and at least one of the clients will be unsatisfied in their relationship with you.

Use a multi-dimensional model

In a 2010 study by FA Insights entitled “Growth by Design”, the authors suggested that the most successful firms have a target market.  They also suggested that “those firms that have a more granular perspective of their clients will be well-positioned to market and deliver a compelling service offering to prospects and client.” 

Frankly it just makes sense.  The better you understand your client you will have more insight as to their needs and “how they need to hear things.”   If you have a client that is 1) fully–retired, 2) was a business owner, 3) is family-focused, 4) wants to meet quarterly, 5) has a large referral network, and 6) has a net worth of $2 million, you can tailor your conversations around retiree fears about running out money and protecting assets and passing them on to heirs, instead of talking up a “hot” growth fund or innovative idea for savings.  As you know your segments better, you will be able to address their concerns even, if they have not expressed them yet.

As we come to the year-end, think about your own client segmentation. Have you used a multi-dimensional approach?  Do you speak to your segments differently?  As you begin 2014, what kind of impact do you think it will make on your business?  Let me know some of your segmentation categories and I will compile some of the best for a future post.  Good luck from someone who is  1) An accumulator, 2) Executive, 3) Family-Focused, 4) Wants to meet annually, 5) Has a large referral network, and 6) chooses not to answer.

And thanks to Stan for allowing me to share some of his knowledge.  Happy holidays and success to you too!

Leave a Reply

Your email address will not be published. Required fields are marked *

Scroll to top