“Client segmentation involves creating more than one marketing package and/or service offering to suit different groups of clients,” says Fiona Tait, business development manager at Scottish Life.
Not all clients are the same, adds Phil Billingham, director at Phil Billingham Partnership. “Segmentation addresses the simple fact that clients have different needs and wants and engage with you in different ways at different times. It is about treating everyone fairly - and that means not necessarily equally.”
Mr Billingham, who is both a certified and a chartered financial planner, sees segmentation as being about allocation of resources and as far as possible giving clients what they need to be in a successful relationship with your business.
Alan Dick, partner at Forty Two Wealth Management and who also holds both certified and chartered planner qualifications, admits that in all businesses there is a temptation to try and be all things to all people.
“Businesses that are driven to grow by simply acquiring clients often take on clients who are unprofitable and as a result end up providing poor service to all clients – even those that are profitable.
“There is plenty of evidence that shows businesses which know their strengths, and target their service offering directly at customers who really value and are able to benefit from the firm’s strength, are much more successful, profitable and have more satisfied customers. It’s a win-win situation.”
Mr Billingham adds that there’s no real argument for not segmenting clients. “Most arguments against segmentation are based on the simplistic view that segmentation is all about the assets under influence or fees payable.
“Whilst profitability is an issue, it’s about more than that. So unless you have a very small, very homogenous client base, it’s likely that some segmentation is required.”
Indeed, Ms Tait observes that as some advisers target a very particular group or type of client and may consequently argue that all of their clients have a similar profile and should therefore all be offered the same service proposition.
