Successful referral marketing begins with client segmentation. But, according to a recent study by Cerulli Associates, most financial advisors do not embrace formal segmentation.
One of the fundamentals of referral marketing is being able to describe something unique
you can deliver to a specific kind of client. As in any field, specialists make more than generalists. They also get referred more frequently. So, it is surprising how few advisors embrace the concept. The Cerulli study found that only 37% of all advisors had a formal client segmentation plan, and only 26% of RIAs did so.
Many advisors believe they have an intuitive feel for how their client base is composed, and consider what they have is an informal segmentation plan. However, as the study points out, “Though the informal segmenters are likely to believe that their process pays dividends with less commitment, their lack of dedication actually results in lack of implementation.” I equate an advisor in this situation equivalent to the client who is satisfied with his undocumented, intuitive financial plan. The test is whether you changed anything about your service mix or communication plan once your segmentation was complete. If not, you missed something.
When segmenting clients, or its cousin, choosing a target market, the biggest mistake I see is being too general. Remember, for people to refer you consistently you must represent a clear solution for a type of problem or type of client. This is not possible if you have defined your ideal client as “women” or “retirees” or, god help me, “individuals with at least a million dollars in investible assets.” Your segmentation or targeting must address some characteristic or challenge that a (probably small) portion of the populations shares and can relate to.
Highly compensated executives with substantial wealth in stock options, families who want their investment plans to reflect their Christian values, or couples with children from prior marriages all represent groups with a clear need. The prior general segments compared to detailed descriptions like these is the difference between heading “west” versus heading to Fiji. They may start the same way, but tell you vastly more about what it will take to get to the destination. It is a difference you need for people to remember to mention you when the right opportunity arises.