Q: How do you segment clients?

There are many ways to segment clients but David Shelton, independent consultant and author of The Business of Advice, said the most widely used is value to the business both in terms of current recurring revenue and expected revenue.

According to Mr Shelton this can be very effective because, typically, advice businesses tailor their service proposition to the value of the client.

He said an adviser needs to work out where to set the boundaries and a degree of trial and error may be needed to identify these.

According to Mr Shelton the following structure provides a good example:

Clients with a value of less than £500 a year may be managed as “transactional” with little ongoing service.

Those between £500 and £1,500 a year are likely to be “advisory” with face to face adviser contact at least once every two years.

Those more than £1,500 a year are “advisory” with more frequent contact.

Mr Shelton said this is a framework that advisers and support staff can readily understand and put into practice and which is designed to support the profitability of the business.