If there was ever a profession that perfectly illustrated the Pareto revenue vs client principle it is ours.
Ask most advisers and they would not argue that 80 per cent of revenue comes from just 20 per cent of customers.
How does this relate to your own business? Well, another idea in business is that it costs around five times as much to acquire new customers as it does to sell to existing ones.
So it really does make sense to know who your most profitable customers are and to provide them with an excellent service proposition.
This will ensure that they remain loyal with the added bonus of helping you maximise profitability.
Satisfied customers are also great advocates for any business; they are more likely to recommend you to others who can be your clients of the future.
In the old world of the Hunter sales person, one-off sales were fine, but isn’t it more attractive to your business for good clients to provide you with repeat business on an on-going basis?
The obvious way to achieve this is to have an attractive proposition with a fair price and deliver excellent customer service. Think of yourselves as consumers: how much value do you place on customer service and how likely are you to tolerate a poor experience?
Loyalty is important but it is more than just excellent service at the point of sale. The secret to success in business in the future is about creating community.
How you create this is down to ensuring you know your clients. It’s the logical extension of a skill every hunter processes, fact finding.
Understanding the characteristics of your key customers will help you decide where, when and how to communicate with them. You may already have a client database which holds information such as age, sex and address, but this is just the start.
You need to consider other issues such as:
- What other financial products and services do they purchase?
- What is their activity pattern with you?
- Why do they use you as their adviser?
- What social media do they use?
- What interests do they have?
Getting this information could be a simple matter of picking up a telephone or building it into your next review.
This is segmentation brought to life, allowing you to create an on-going service proposition that not only retains your clients but allows you to maximise the opportunities that their life stage and aspirations provides.
It is clear that retention will be the new marketing of the future as businesses move from a hunter dynamic to a client farming engagement to maximise profitability with a service proposition tailored to the needs and objectives of the client.
The age of the client farmers is upon us.
Why client farming starts with client value
The first step in client farming is to identify the monetary value of the relationship to your business with each of your clients.
Questions appear on the last page of this article.