When you've just won over a new client, it's a great feeling to know you've made a convincing case for your expertise, your company and your products.
But once you've started working with that client, what's to keep him in the fold – or any of your other clients for that matter? How can you ensure that your hard-won business won't become another advisor's new find? Here, some of the experts share their secrets for creating clients who'll never leave. Some of their ideas are intuitive. Some may surprise you.
In brief, top ideas include:
- Identifying the cream among your crop of clients.
- Treating them royally to ensure their loyalty.
- Getting to know them as people, not paychecks.
- Asking them what they want.
- Fine-tune your products to meet their needs.
Without looking at your portable computer or reviewing a computer printout, you probably can tick off a list of your top clients – the ones who generate sizeable revenue for your firm. But it doesn't hurt to check your understanding with some numbers. Duncan MacPherson, co-founder of Pareto Systems Inc., a British Columbia-based company, points out that typically 80 percent of an advisor's business comes from 20 percent of his clients.
In fact, MacPherson named his company – specializing in business development, practice management and marketing solutions – after Pareto's Principle. Vilfredo Pareto, an early 20th-century Italian economist, observed that 80 percent of his country's wealth is held by just 20 percent of the people, and his "80/20 rule" has been applied widely since then to a variety of business situations.
Doug Carter, president of Carter International, a California-based training and development company, and the author of "Clients Forever: How Your Clients Can Build Your Business For You," slices the pie another way. In the course of his work in England, Australia, Canada and the United States, he's found that just 8.7 percent of the client base provides 50 percent of the business.
Whatever precise share of your clients is providing the bulk of your business, identifying that significant share and concentrating your efforts there obviously would get you the biggest return, most experts agree.
"If 80 percent of the business is generally from 20 percent of the clients, then an advisor has to be sure he's investing 80 percent of his time with that 20 percent. It starts with who, not what," MacPherson says, adding if an advisor has 500 clients, he may not want to competitor-proof the entire list, but the 100 "who carry the weight."
This raises the delicate issue of whether an advisor should pare down his client list to the essential share that does the heavy lifting, so to speak.
MacPherson believes strongly in right-sizing a client list. "I've seen people go from 800 clients to 150 and still double their business," he says. By focusing on top-producing clients, an advisor should see sizeable payback.
Peter Montoya, who heads the financial services marketing firm that bears his name, also leans in the "small is beautiful" direction – it's better to have fewer, high-quality clients. Still, it's not easy to pare down your client list, he admits.
"It's like when you were in your 20s and you couldn't face breaking up with your girlfriend, although it would be better for both sides," says Montoya, whose business is based in Tustin, Calif. "Breaking up is hard to do."
Carter, too, suggests advisors drop some clients – although not because they're financial lightweights, but because they're no fun. "Most people have at least one client … who brings in a substantial amount of money, but is a pain in the neck," he says. "You hate meeting with them. That's financial prostitution. Get rid of them."
There are experts, however, who advocate keeping clients regardless of their bottom line. Bill Good, chairman of Bill Good Marketing, based in Utah, wrote in Research magazine that an advisor never knows where next year's top 20 percent will come from. An inheritance or promotion can transform a minor client's financial prospects, Good notes in his article entitled "Never, ever, ever give up a client." He also maintains that dumping the little guys is a crummy thing to do and merely drives business to the competition – discounters, low-loaders and no-loaders.
"Smaller accounts can be very profitable if managed correctly. Don't abandon them. Don't give them away," Good writes.
Don't assume
Whether you trim your client list or not, much of your success with clients depends on the relationship you develop with them, the experts say.
"Often, advisors lose great clients because they take them for granted," MacPherson says.
"And the longer a relationship evolves, the more things are taken for granted."
