Do you feel like you've hit the ceiling as far as your ability to grow your business? Are you too busy servicing existing clients to pursue new ones?
If so, you may need to look at your existing service model. After all, the approach that worked when your business was smaller simply might not work anymore — and it could be keeping you from achieving even greater success.
Servicing your existing clients more efficiently can help you:
- Become more profitable;
- Gain more client referrals;
- Boost your assets under management;
- Increase client satisfaction and loyalty.
Three-step process
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Many advisors have found success with this three-step process. It involves allocating your time — which is, after all, your most valuable commodity — according to each client's earning potential.
Here's how it works.
- Determine your value proposition. This may seem like Practice Management 101, but it's also something that a lot of people — both inside and outside the retirement industry — avoid doing. It's a critical part of the process, though, so set aside some time to create this statement. It should describe your competitive advantages and helps clients understand how you can help them achieve their goals.
- Segment your block of business. Regular contact with your clients is crucial. In fact, the primary reason clients change financial professionals is lack of service. That said, it's also important to find the balance that's right for you when it comes to how often you communicate with your clients. Many financial professionals, for instance, discover that they're over-servicing some of their least profitable clients.
Determining how often you should service which clients is key to gaining efficiencies so you can find time for new client opportunities. One way to do this is to break your existing block of business into A, B and C clients based on criteria you determine is important, such as:
- Assets under management;
- Future revenue potential;
- Referral potential;
- Commissions/fees in the last 12 months;
- Cross-sell potential.
The chart below gives some suggestions for breaking down your book of current clients.
| Segmenting Your Block of Business | |||
| A Clients | B Clients | C Clients | |
| Percentage of book | 20% | 30% | 50% |
| Annual commissions/fees | Significant | Medium | Low |
| Profitability | High | Medium to high | Low to medium |
Develop a relationship plan for each segment. Because each client segment represents different earning potential, each should get a different slice of your time. A relationship plan lets you balance client needs with the need for efficiencies. The plan also provides an example of the frequency and type of contact you might consider for your clients.
| Sample Relationship Plan | |||
| A Clients | B Clients | C Clients | |
| Monthly | Newsletter | ||
| Quarterly | Plan review and/or introduce new solutions | Newsletter | |
| Semiannually | Seminar or other client event | Plan review and/or introduce new solutions Seminar or other client event | Newsletter |
| Annually | Interview/survey to gauge satisfaction Annual plan review Birthday/holiday greetings with personal note Ask for referrals | Interview/survey to gauge satisfaction Annual plan review Birthday/holiday greetings Ask for referrals | Annual plan review Interview/survey to gauge satisfaction Ask for referrals |
Find the sweet spot
After you develop your client retention strategy, you'll want to revisit and refine your plan periodically. Once you've found your sweet spot, however, expect to gain fans — from both your current clients and prospects.
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