How to Segment Your Client Base and Services in 4 Simple Steps

By Amy McIIwain, President, Financial Social Media on Tuesday, August 23rd, 2011

 Back in April, my colleague Barbara Kotlyar, wrote a blog entitled “Change the Nature of Your Relationship (Nurture Your Clients).” It touched on the advantages of segmenting your client base, and suggested that one good starting point for a segmentation strategy was to divvy up your clients by  household profitability/ revenue generated. (There are, of course, many other criteria you can use, such as age bracket, level of influence in the community, length of the client relationship, and so on.) I’d like to follow up on Barbara’s blog by outlining a 4-step process that can help you successfully implement a segmentation strategy. 

Step 1: Name your client segments


This seems obvious, but it’s where you must begin. Label your segments. The labels are up to you: they can be alphabetic such as A, B, C, D, or they can be named after precious metals such as Platinum, Gold, Silver, Bronze, or they can use any other type of designation. You’ll probably find that the segmentation tends to arrange your book of business into the 80/20 rule: in an advisor’s world, 80% of your revenue should come from 20% of your clients – this 20% probably falls in your top client level.    


Step 2: Segment your services to appropriately fit the client levels you’ve just identified


To ensure that your segmentation of your client base works, you also need to clearly outline and define the levels of service you will provide to each category. This, of course, depends on the types of services and value add you are already providing, and what you’d like to add to your repertoire. 


For example, are you already doing client appreciation events? If so, this is a great example of where to apply your segmentation rules: would you invite your “D” or “Bronze” clients to all client events, or would they be omitted from events that catered to the ‘higher ranking” segments? Would you choose to spend time doing a quarterly review for an “A” client and a “C” client? Or just the “A” client? Who gets a quarterly review versus an annual review? Naturally, you would provide standard services to all clients, such as estate planning, performance reports, portfolio analysis and monitoring. But there should also be separate and distinct services that distinguish the different levels. Here’s a simple example:





Invitations to 2-3 Client appreciation events. 

Invitations to 2-3 Client appreciation events. 

Quarterly face-to-face meetings in office/at dinner/lunch.

Quarterly face-to-face meetings in office/at dinner/lunch. 

Special attention given to one on one social event.

Monthly phone calls.

Monthly phone calls.

Birthday and Anniversary calls from Principal.

Birthday and Anniversary calls from Principal.






Invitations to 2 client appreciation events. 

Invitation to 1 Client appreciation event.

Semi-annual face-to-face meetings. 

Annual face-to-face meeting.

Call every 60 days. 

Phone call quarterly. 

Birthday and Anniversary calls from the office.

Birthday and Anniversary calls from the office




No invitations to client appreciation events.

Annual phone call




Step 3: Communicate and implement your segmentation plan


You’ve segmented your client base, you’ve identified which services to provide at each level, and now you need to communicate and implement your plan. First and foremost, you should make your entire staff aware of this plan. You also need to tell clients what they’ll be receiving from you. This can be easily accomplished from the outset with new clients. For existing clients, an optimal time to have the conversation is during a face-to-face review. Just a point of clarification: of course, you won’t be telling a “D” client they will be receiving a birthday call from one of your subordinates in the office, but not from you personally! Rather, you will set the expectation that a birthday call from someone in your office is a wonderful thing, and your firm is more than happy to provide it. More to the point, you’ll find it useful to address items up front such as how often you will meet to review the client’s portfolio. 


If you’re an advisor who is hot on the trail of cleaning up your practice, a segmented book will help you identify which clients to jettison. Firing a client or turning down a prospective client is not an easy thing to do, but in the end, having the conversation with them letting them know your service model does not fit their needs is a necessary step that can be accomplished in a professional, friendly manner. Likewise for letting them know that you’d be happy to recommend them to another advisor who would be a better fit. 


Step 4: Just do it!


You’re probably thinking, “I know I need to get my act together and do this!” The hardest part of any project is taking that first step. So take an hour or two and write down a description of your services on paper, or on the white board. Then plug them into the different client levels you’ve identified. Not only will you be saving time down the road, you’ll be creating efficiencies, cleaning up your book, and achieving higher levels of profitability. After all, your retirement counts just as much as your clients’ retirement!

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