A Young Business was the focus of the last blog. Today I will share an experience in a “Stable” company, and to keep the “framing” consistent, will look at another services business.
Vince had a large book in a fee only financial services practice. He had categorized his clients into an “A”, “B”, and “C” list. The “A” list was made up of his largest investors, and the “C” list clients were his smallest investors. Most of these clients had been generated during the mid-2000’s period of “irrational exuberance” and Vince had not really built any strategy for generating new clients since his book was so large. Unfortunately, Vince’s income had been on a gradual but steady decline. Vince got his practice back on the growth path by answering some key questions:
- Why were “A” clients those with the largest investments? In my mind, “A” clients did have to have a “qualifying level” of investment, but there were other key factors that made up an “A”. These included
- They have a trusted relationship with you
- They are helpers
- They manage their money with integrity and have reasonable expectations
- They are fun and easy to work with
“A” clients defined my way were more likely to provide Vince with referrals, and to disclose all investments in their portfolio
- Was Vince doing an annual review with his “C” clients? No- he felt he did not have the time, and, after all, they had the smallest investments. How often did he call them? Two times a year at best. I had Vince schedule 30 “C” clients for in depth reviews, including some time to talk about asset allocation and portfolio blend. The result? Vince found out that he did not have more than 20% of anyone’s total investment assets, and that 13 of these people were “A” clients under my definition.
- Was Vince holding any Client Appreciation Events? Vince did hold an annual golf tournament for his “A” clients, but the event turned out to be a “guys only” experience. By structuring different types of events for Vince to reach all genders, and to include guests of his “A” clients, Vince reached a broader market opportunity than he had ever seen. The events were not “practice oriented”, they were “appreciation oriented”.
What were Vince’s results? Steady growth in assets under management, more “A” clients, and a systematic culling of the “C” client list.
Summary for Stable
- How have you categorized your clients? Are the characteristics and criteria you have used in the past current today?
- What assumptions have you made about your “smaller” clients? Would spending some time with a sampling of them produce some interesting results?
- Do you hold events that allow you to broaden your “sphere of influence” without making it a practice-oriented program? Trusted relationships build ANY company. Take the time to invest in the relationship-building component of your practice.