Relationship Management

5 Critical Actions That Drive Profitable Growth

Kronos

Written by Julie Littlechild on January 31, 2018

I’ve never been accused of being an avid football fan, but I’m not immune to the fact that we have much to learn from great coaches.

One of the legendary stories about Vince Lombardi comes from a time when the Green Bay Packers needed to find a way forward, following a significant loss the previous season. He famously pulled the entire team of very seasoned players together and said “Let’s start at the beginning. This is a football.” And, according to google – the font of all knowledge – he began each new season in exactly the same way.

What’s clear is that Lombardi, like all extraordinary coaches, knew that in order to get to great, the team needed to focus on the fundamentals.

"We’re not immune in this industry. We’d be wise to focus on the fundamentals."

When Is Success A Failure?

Let’s face it, it’s easy to get mesmerized by the latest shiny idea about how to create deeply engaged clients or to grow your business. But sometimes the greatest business building ideas fail precisely because they succeed. Adding new clients is a false win if you don’t have the infrastructure in place to deliver on the promises that you made to those clients.

I’ve been thinking – and writing – a lot about the fundamentals lately. From where I’m perched, with my eyes trained on successful advisory businesses, there are things they all do in some way, shape or form. Step-by-step they get the fundamentals right and lay a foundation that is strong enough to support extraordinary – and as importantly, profitable – growth.

Driving Profitable Growth: The 5 Critical Actions

A little more specifically, there are five actions that, if taken, will ensure you have the right offer, for the right clients, delivered consistently and profitably and in a way that is clearly understood and valued by clients. That would be a good thing.

Driving Profitable Growth Steps

Let’s walk through the actions and what they can mean for your business

Action #1: Define your Ideal Client

Imagine if you arrived at work each day and every client meeting was with someone who was completely right for your business. They wanted, needed and valued the work that you are passionate about doing.

  • The goal is to work with clients who energize you and value what you deliver.
  • The action is to define your ideal client, including both a description of your target market and a filter based on the qualities of a client that truly reflects your ideal. From there you can translate that definition into a set of client acceptance criteria that will help you assess if you will or will not work with a prospective client.

Hint: Defining your ideal is part one of this process. Examine your definition to determine which characteristics are deal-breakers; those should become your client acceptance criteria. It’s this step that will test if you’re really ready to build your business around your ideal client. It takes some courage and you can read more about defining your ideal here.

Action #2: Segment Your Clients

Imagine if you knew that your clients: were receiving exactly the right level of service based on their value to the business, that nothing fell through the cracks and that you were investing the right amount of time in the right relationships. It all starts with segmentation.

  • The goal is to lay the foundation for a tiered service plan that reflects the value of each client.
  • The action is to create and maintain a robust segmentation model that ensures clients are segmented based on your definition of true value.

Hint: The most critical and difficult step in segmenting your clients is defining what real client value means to you. Limit yourself to three to five drivers and you’ll force you to get very specific on what contributes to value. Use too many drivers and your clients will all tend toward the average. Use too few and you’ll likely miss out on indirect forms of value (such as potential).

If you are thinking about refreshing an existing segmentation model, you can read more here.

Action #3: Define your offer, by segment

Imagine if you knew that clients were receiving exactly the right level of service based on their needs and their value and that you could know you were investing exactly the right amount of time and energy in every client relationship. Imagine, further, if nothing fell through the cracks because you had clearly defined exactly what clients in each value tier would receive.

  • The goal is to craft a client experience that supports deeper engagement and aligns service with client value.
  • The action is to define exactly what it means to be a client in each segment, determining the level of direct and indirect contact and ensuring that your plan can be reasonably delivered with existing resources.

Hint: It’s easy to get caught up in defining the perfect client experience because it feels right and we want to do the best for our clients. It’s just as easy to over-commit so I’d recommend you do the math on your client experience before telling people about it. Assess if you can deliver with your existing resources or adjust accordingly. You may need to hire more, reduce contact levels or streamline the process. Read more about capacity assessment here.

Action #4: Assess client profitability, by segment

Imagine if you could confidently deliver on your service plan knowing that you not only had the resources to deliver but that it was structured to ensure that clients, across all segments, were profitable based on the service they received.

  • The goal is to ensure your client experience is both meaningful to clients and profitable for you.
  • The action is to calculate the real profitability of a typical client in each segment based on an assessment of the fixed, variable and time costs.

Hint: While it’s tempting to assess the cost of a client relationship by taking all expenses and dividing by the number of households, that simply doesn’t reflect the reality of those relationships. At a minimum get a true grip on the biggest driver of cost – your time. Assess how much time you invest in a typical client in each segment and assign a cost.

Action #5: Communicate your value

Imagine if clients and prospects fully understood the value that you provide on an on-going basis and were clear on the level of service they could expect. Imagine, further, if they could clearly articulate your value to others.

  • The goal is to reinforce the value you provide and manage expectations.
  • The action is to create a process to articulate and communicate the service plan that you have created.

Hint: When we’re in the first blush of a client relationship we often do a good job at communicating what that client can expect. At that point we may begin to assume that the client understands exactly what we do for them day in and day out. That’s a risk and it’s important to review and reinforce your value with clients, in very specific terms, at least once a year. Read more about the Honeymoon Effect here.

I know there’s a lot here. The fact is that we often don’t think about the fundamentals until we begin to feel stretched, rather than at the beginning of the process. I’d chalk that up to human nature but at some point we need to examine our foundation to ensure there are no cracks and that we have a strong base to grow. No great business was created on a shaky foundation.

To learn more about client engagement check out Julie Littlechild and Ray Adamson's Best Practices Webinar: Why Client Satisfaction Isn’t Enough. Watch here now!

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