Effective client segmentation for professional services firms. Financial Services Faculty Webinar

Transcription

1 Effective client segmentation for professional services firms Financial Services Faculty Webinar

2 Client Segmentation Brett Davidson Chief Executive

3 Client Segmentation Do you segment your client base? Why/Why not? If you have segmented your clients how have you then differentiated the services offered to each segment? 3 Does It Actually Matter?

4 Effect On Profitability KEY VALUE DRIVER PROFIT PER PRINCIPAL INCREASE IN PROFIT CLIENT SEGMENTATION No Yes 53, , % Effective (Segment, differentiated services, reviewed regularly, allocated in consultation & most staff aware of key clients) 331, % Source: FP Advance Business Fitness Report

5 Today s Agenda Segmentation & Profitability How To Do It Effectively Using The Insights To Better Serve Clients

6 Segmentation, Targeting & Positioning Market Segmentation: looks at how a potential market can be divided into smaller segments that are more efficient to serve. Market Targeting: determines which of these potential segments the business should target. Market Positioning: defines how a business wants the target segments to see their brands in a competitive market and then to deliver to the expectation they 2004 FP Advance have all rights reserved built.

7 Does One Size Fit All? No. Why? 1. Your business aims 2. FSA regulations 3. Customer age 7. Attitude to risk 8. Education 9. Life/investment experience 4. Cultural issues 5. Personality types 6. Personal likes/dislikes 10. Investment history 11. Clients ongoing needs 12. Complexity of financial affairs Who Do You Work With?

8 Client Segmentation - Example Active Clients Definition Service Standard A Top Value To The Business (Top 5% of clients) First Class Service B C Next Most Valuable (Next 20%) The Rest (That meet minimum criteria) Business Class Service Standard Class Service D Anyone Else (That can t be turned away) Reactive Service Only (Clients are managed not serviced) X P Have To Go (You know right now they are unsuitable) Prospects Polite & Compliant Goodbye Kept On The Boil

9 Segment One Of Two Ways Recurring Revenue OR Assets Under Management 1. Prepare list of clients from highest to lowest recurring income 2. Pick a minimum level below which clients are out (draw a line) 3. Then segment top 5%, next 20 % and the remaining 75% (these are A, B and C) Same process but using AUM

10 Key Issues Analysis - Top 20 Clients Client Name Age Marital status Children Y/N If Y how many? Retired or working Occupation (if retired, what was their occupation before) Clients Total Income (from all sources) Total net worth Assets invested with you Wages & salary Bonuses Dividends Trust/partnership distributions Other

11 Key Issues Analysis - Top 20 Clients Other potential assets (not invested with you) Property Assets Services purchased (Tick all that apply) Their top 5 concerns/issues Family home But-to-let Property abroad Investments Pensions Life insurance General insurance Retirement planning IHT & estate planning Tax strategies Referrals to other professionals

12 Top 5 Issues Analysis - e.g. Retirees 1. Preservation of capital 2. Producing enough income to maintain lifestyle (in all markets) 3. Inter-generational wealth transfer (when and how much?) + estate planning and IHT considerations 4. Health care issues in later life (or for their parents now) 5. Enjoying life right now - removing the hassle Write A Cover Page For Your Client Facing Service Standards

13 Advanced Client Segmentation - example 1 Pre-Retirees 2 Retirees 3 Accumulators A AUM > 500K OR Income > 350K B AUM > 250K OR Income > 150K C AUM > 100K OR Will pay min fee of 1,000 pa

14 Internal Service Standard Client A Client Internal Service Standard 1 x Annual Review Meeting pa - Standard agenda 1 x Half-Yearly Review Meeting pa - Standard agenda Phone Call From Adviser In Alternate Quarters To Reviews (i.e. 2 pa) Corporate Hospitality (any of list below 1x pa) - Golf - Lunch - Football - Rugby Birthday Cards/Christmas Cards Client Newsletter/ (specific and targeted) Investment Luncheon or Dinner (+ invite a friend along) Annual Client Seminar (all clients) (+ invite a friend along)

15 Internal Service Standard Client C Client Internal Service Standard 1 x Annual Review Meeting pa - Standard agenda Generic Newsletter/ Annual Client Seminar (all clients) (+ invite a friend along)

16 Let s Get To Work - Segmentation 1. List of clients by value 2. Find segmentation points 3. Match services to segmentation Creating Value & Efficiency

17 For More Assistance Look At Some Of Our Support For external facing client service standards go to For example cover page document Or just visit the website at

18 Q&A Session Please use the Question facility to ask Brett any your questions and we will do our best to answer them

19 Do not miss the Financial Services Faculty seminar: "Prudential supervision of personal investment firms and sustainable business models" on Thursday, 2nd December 2010 For more information about this event, please visit Please note places are limited for this event