How to give your best clients the most attention



How to give your best clients the most attention

From: bizjournals.com

Image credits: GETTY IMAGES (MONKEYBUSINESSIMAGES)

It’s an old joke: The devil shows a guy around Hell. It’s one big party.

St. Peter shows the same guy around Heaven. It’s subdued and low key.

The guy chooses Hell when he dies. Upon arrival, it’s all fire, brimstone and anguished cries. The guy confronts the devil and asks, what happened?

The devil responds: “Back then you were a prospect. Now you are a client.”

We all remember the 80/20 rule. Originally known as the Pareto Principal, today the ratio makes the case 80 percent of your business revenue comes from 20 percent of your client base.

However, we are also conditioned to think the squeaky wheel gets the grease. We often give attention to the complainers at the expense of our best clients.

The rationale behind client segmentation

Many readers will remember the Talking Heads song, “Once in a Lifetime.” The catchy lyrics include the expression: “How did I get here?”

Client segmentation is an exercise in determining the composition of your client base, the revenue produced and the products they buy with the expectation this data will enable you to concentrate more attention on the clients providing the majority of the revenue. You want this segment to grow.

As I recall, Rob Knapp, the author of “ The Supernova Advisor” took the strategy a step further within the financial services industry. If a financial advisor segmented their book of business according to the 80/20 rule and not only focused on the top 20 percent of their clientele, but gave away the remaining 80 percent of their clients, their business would grow substantially.

Every client deserves attention. In this example the 80 percent would be reassigned to other advisors within the office or firm.

How do I segment my client base?

The principle of client segmentation applies best to businesses where clients provide repeat business and have the potential to buy different product lines. The financial services industry is an obvious example. However, the airlines and hotel industry knows business travelers provide a substantial portion of their profits.

According to Investopedia,“On some flights, business travelers represent 75 percent of an airline’s profits.” It’s estimated 35 percent of hotel revenue is created by business travelers. Is it any wonder why they have frequent flier and affinity programs?

Let’s assume you work in financial services or another field where you have repeat customers. Here’s how you would apply segmentation:

Define Client – Is it an individual? A couple? A household? Their extended family? You would likely determine client = household because this set of accounts shares the same decision maker(s).

  1. How much revenue? It’s pretty easy to match revenue to clients.
  2. How many referrals? Does this client send you other clients?
  3. Products they buy Do they own a variety or do they stick to one favorite? A general guideline is the more products lines an individual client buys, the stickier the relationship. (Because it makes it more difficult to unwind.) Other industries like cable TV and telecom call it bundling.
  4. Potential: Assets held away Do you have most of their investable assets or a small portion? This helps rank potential future business.
  5. What’s their industry? You might discover many of your clients are teachers or auto mechanics. You might have a niche and don’t know it.
  6. How did I get this relationship? Where did your best clients come from? Perhaps you fell out of the habit of using this strategy.
  7. How much attention? How much time do I spend with them? Also, what communication channel do they prefer?
  8. Who makes decisions? Do they come to you with the product in mind? Do you initiate making suggestions?
  9. Do you like each other? You smile when some clients call. You cringe when others are on the phone.

Now you have data. Another strategy I heard about when I was a financial advisor was to rank several categories on a scale of one to five, revenue, referrals, attention, potential and likability can be converted into numbers.

Now you know where your revenue originates. If you have 200 client relationships and 40 represent 80 percent of your revenue, are those 40 relationships getting enough time and attention?

This strategy has you looking into the past, not the future. In most cases you are looking at the business they already gave you, not future potential. You want to segment another group of clients who aren’t in the top 20 percent, yet might be.

Your next step is to determine how you will service your best clients. Ideally, you want them to refer friends and increase the size of their relationship, also known as “share of wallet.” Ideally you will develop systems to confirm these clients are getting your time and attention.

What about the smaller accounts?

Many people do not want to relinquish those smaller accounts. They use the rationale: “They might win the lottery someday.” Ask yourself: Since they are paying fees, are they getting the attention they deserve?” If you aren’t delivering it, perhaps someone else could do a better job.

Consider the other side of the argument. This small account is your client. If anything went wrong because of neglect, you own the problem because they are your client. If you aren’t prepared to take ownership of the problem, transitioning the client to someone else in your firm is a good idea.

The virtuous circle

You are giving the most attention to the clients producing the most revenue. They are deepening their relationships as you learn more about them. They are acting as your ambassadors. You are meeting their friends.


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