Define & Conquer—Marketing Strategically to Achieve Growth

A Granular Understanding of Clients Through Segmentation
Gaining a deep understanding of current clients through segmentation can be a helpful starting point for firms determining an appropriate target market. Segmentation analysis involves identifying trends across a firm’s base of clients in order to group clients with similar characteristics.

The resulting client groups or segments can help to prioritize whom the firm is best suited to serve. Conducting client segmentation can clarify the types of relationships that are the most profitable. In addition to improving marketing effectiveness, segmentation can reveal new opportunities with existing clients, such as supporting more customized marketing efforts and identifying broader advice needs for servicing, that will increase share of wallet. Further, by revealing which types of clients are most linked to certain services (e.g., investment management, insurance or tax planning), segmentation provides important insight for improving revenue generation.

Clearly, those firms that have a more granular perspective of their clients will be well-positioned to market and deliver a compelling service offering to prospects and clients. Despite the potential benefits, however, almost half of all firms surveyed in the Growth by Design study have yet to conduct any form of client segmentation (see Figure 3).

Of those firms that do conduct client segmentation, some have segmented clients based on revenue, assets or profit alone while others pursue a multi-dimensional segmentation model that provides greater insight into broader client characteristics. For example, capturing factors such as client occupation, source of wealth, preferred relationship style and other qualitative characteristics will help to form a clearer guide for determining the most appropriate target market.

Client Value Proposition Hinges on Desired Outcomes
With a defined target market, the firm can think more clearly about what outcomes clients value most in order to better articulate and implement the value proposition for the firm. The development of a unique client value proposition is central to building an offering designed for a specific target market.

Standout firms understand this and their discipline regarding value propositions further differentiates their marketing capabilities. This was particularly true for the firms we refer to as Standout Innovators, the largest and most successful in the industry, all of which reported having a compelling value proposition that was easy for clients to understand and distinct from their competitors. Just two-thirds of other Innovator firms at this stage had the same level of confidence.

Defining and articulating the value proposition requires that a firm truly stands in clients’ shoes and considers the desired outcomes that must be achieved for clients. For example, just beating an investment performance benchmark or having a written financial plan are probably not desired final outcomes for most clients. What matters more for clients is to achieve a sense of comfort and security as it relates to their financial lives.

The outcomes must then be consistently delivered to each client through disciplined implementation; it is simply not enough to tell the firm’s “value story” to prospects and clients. Just over two-thirds of all firms surveyed indicated that they have established a client value proposition and slightly over half of those firms with a defined value proposition believe it is consistently implemented.

Without the alignment of all staff members to the delivery of the value proposition, client satisfaction cannot be assured, the firm’s reputation for service is put at risk, and marketing will suffer as well. While the development and implementation of a value proposition is a practice most common among larger and more mature firms, firms across all stages of development can create and implement a unique value proposition that supports them well when pursuing a target market and delivering value.

While marketing may not be the strongest suit for many advisory firms, building stronger marketing capabilities represents an exciting opportunity for growth. A well-defined target market and a clear understanding of the valued outcomes the firm provides form a solid foundation for improving these capabilities. For firm executives seeking to achieve more deliberate and aggressive growth, further guidance for strengthening firm marketing capabilities is provided within the Growth by Design report including direction on pricing practices, client retention strategies, developing a marketing plan and a marketing budget.