Tip of the Week June 3, 2010
By David Miller
Have you ever wondered why you get more referrals from your mid-tier and lower-tier clients than from your best clients?
Most people chalk it up to the fact that their top-tier clients are less approachable. Some say that these people are an anomaly and they really don’t know anyone else with as much money as they have. Others point to the fact that people with money really don’t ever talk to others about their money and want their privacy. I have heard advisors make every excuse possible for their “best” clients and why these people don’t introduce their friends, family and associates to their services.
Consider the following: Most advisors we talk to have between 200 and 500 clients. They have done some type of client classification so they recognize who their best clients are and who their worst clients are, but the service they provide still tends to be reactive rather than proactive. When we analyze these advisors’ time we discover that the time they spend with a client tends to be about the same for everyone—at least the top 70%. So each and every client in the top 70% gets roughly the same amount of attention. Sure it takes more time to prepare a proposal for top-tier clients and you may take them to lunch once a year or give them tickets to a sporting event. But the time you spend with them tends to be very close to the same as your mid-tier client. So in other words the 20% of your clients that are generating 80% of your income are getting about 20 to 30% of your time. Does that sound fair? How would you feel if you walked into a lawyer or an accountant and they looked at you and said, “I realize that the retainer you pay me makes up 50% of my income but I have decided to provide you with about 20% of my time and use the other 30% to help my less prosperous clients.” What would your reaction be? Does that sound a little unfair to you? Well, that is exactly what most advisors are doing.
So now consider your mid-tier clients. As a mid-tier client it is exactly the opposite scenario. You walk into your lawyer or your accountant and they say, “I know you only pay me for 10% of my time but I have decided to actually provide you with 30% of my time out of the goodness of my heart”. How are they going to react? Well they will be pretty excited by this and just might tell anyone who will listen how great these people are and how they too should go see them whenever they have an issue that they may be able to address.
The last objection I hear when I present this argument is that the clients don’t know what percentage of time you are spending with them versus your other clients. This could not be more wrong. Your clients know exactly what they mean to you in terms of revenue and they also know the time you spend with them with respect to everyone else.
As we make the necessary adjustments to an advisor’s practice so that they may provide their clients the level of service they deserve, we here responses like: “It’s about time!”, “I was in the process of looking for a new advisor but I really like you and I am glad you have finally started giving me the attention I deserve”, and “I never understood why you were so busy and I am glad you have more time to focus on me now.”
How could you expect anyone that is harboring these feelings to even consider recommending you to anyone else?
Examine your client list, see where you are getting your referrals and make a plan to change your top-tier client experience today!
The Pareto Platform allows you to design a service matrix that guarantees that the 20% of your clients that generate 80% of your revenue get 80% of your time. Does your CRM have that capability and what would it mean to you and your practice if it did?
No advisor’s office is complete without it.
For questions and comments join the Pareto Systems Group on LinkedIn and participate in the discussion.
Take action:
Stop by our booth at the Million Dollar Round Table Conference in Vancouver June 13-16 and the Securities Industry and Financial Markets Association (SIFMA) Financial Services Technology Expo in NYC June 22-24.