Everyone knows about the 80/20 rule, right? The Pareto Principle, also known as the Law of the Vital Few and the Principle of Factor Sparsity, states for many events, roughly 80 percent of the effects come from 20 percent of the causes. It is a common rule of thumb in business; e.g., “80 percent of your sales come from 20 percent of your clients.”
How much have you read, heard and studied about referrals? Many million-dollar-plus-earning advisors are consistently focused on more high-quality referrals and the best manner to acquire them. In another recent survey of top advisors, 83 percent indicated a majority of new clients come from client referrals. Your strategy has probably already considered asking directly versus indirectly, timing of the conversation, scripts to use, specific questions to ask and, ultimately, how to leverage your best clients.
What we’re discussing today are ideas about combining those two big-picture ideas and then taking a giant leap toward maximizing the 20 percent of your clients who comprise 80 percent of your income. Duplication of those clients would mean huge successes for your practice.
How do we turn the 80/20 rule into the 20/200 rule? How do we take the top 20 percent of your client base and allow them to create 200 percent more revenue? Follow these three proven steps:
Step No. 1: Know your 20 percent
If you don’t know where your current revenue flows from, how are you going to increase future revenue? Simple first step: Find out where the majority of your revenue is derived from. If this is your first time segmenting “A” clients (20 percent in number, 80 percent in revenue), “B” clients (30 percent in number, 15 percent in revenue) and “C” clients (50 percent in number, 5 percent in revenue) you’ll be amazed. If you’ve already completed this, take a couple minutes to review it.
Step No. 2: Know who they know
The second step determines if you’re serious about “client cloning” or not. Now that you’ve compiled a list of clients to duplicate, begin researching who they know. Chances are you’re already aware of a few connections. If you’re still searching, try two other methods. Do you currently maintain a profile on LinkedIn? If not, begin today. Via LinkedIn, search for your top clients and extend an invitation to connect. Once linked, view their other connections to identify others they engage with.
Lastly, if all else fails, visit with your client and ask. Spend time with some of your “A” clients over a meal and tell them you feel a desire to know them better. Ask a lot of open-ended questions about the potential introduction sources and become a better advisor to them in the process.
Step No. 3: Know how to ask
The best financial advisors in the country develop scripts to ask for their clients’ advice and ask for their help in introductions. I posses a number of these scripts; you probably do, too. If you don’t already have an “asking for advice” and “asking for introductions” script, contact me. A report titled “The 20/200 rule” has all scripts, plans and instructions in a reproducible format. Use mine or script your own words and use them. These words are your final key to success in this plan.
Turning the 80/20 rule into the 20/200 rule is proven to work; I’ve seen it dramatically change marketing plans and results for advisors around the country.
Matt Neuman, “The Advisor’s Advisor,” is a leading authority with many of the industry’s premier carriers.
Contact him at email@example.com.