Do you segment your clients beyond asset amounts?

We have written many times in the past about the importance of client segmentation. In this latest of our “12 StepChanges to a Better Business” series, we are going to explain how we work with adviser firms to assist them in completing structured and effective client segmentation.

As recently as January 2019, we wrote here about why different people want (and deserve) different things. Segmentation enables you to identify groups of likeminded clients or clients of equal value, and to then deliver differentiated services that meet their needs. We have worked with a number of firms who had previously felt that they had this task completed already, having segmented their clients by assets under management only. We feel that this is only one aspect of a multi-dimensional view that is needed.

When StepChange works with advice firms on their segmentation approach, we follow four main steps as part of the process.


Identify the relevant factors

As mentioned above, assets under management are only one factor to be considered. There is a need to identify each of the other relevant factors to be considered, some of which may be subjective factors. These might include;

  • Asset amounts
  • Current recurring income levels
  • Current services used (cashflow planning, rebalancing etc.)
  • Future potential of client
  • Business introduction value (referrals)
  • Number of products held
  • Age
  • Whether you enjoy working with the client


Apply a weighting to each factor

Some factors are more valuable than others. To smooth this out and ensure that greater value is placed on the appropriate values, a weighting system for the different factors needs to be developed. This will help you ensure that the most valuable clients (as identified by the factors you deem most valuable) end up in your “gold” segment.


Score the clients

The next step is to score all of your clients based upon your chosen factors and their weightings. Some of this can be done with downloaded information from providers / your CRM system. Some of this has to be done by reviewing each individual client. Having a robust and easy to use system for this is probably the greatest benefit that we bring to advisers! Your clients can now be allocated to their correct segment, based upon this rigorous exercise as opposed to gut feel…


Deal with exceptions

There will always be exceptions. If lots of clients emerge as exceptions and clearly in the wrong segment, this suggests your factors and/or weightings are not quite right and need to be revisited. If you have a small number of exceptions, which is always to be expected, treat them as that – exceptions. You can of course manually re-allocate a client to a different segment based upon your own business judgement.


Structured and rigorous completion of your segmentation will result in you providing the most appropriate level of service to your different clients. At StepChange, we can help you to achieve this important result.