Duplicating your top clients is an effective strategy for growing your practice. That’s because “duplicates” — new clients who are similar to your top clients in ways such as investment style, asset level, income, and personality — are more likely be loyal to you and provide referrals. Again, those referrals probably will be clients with similar profiles.
“It makes sense to expand your business by duplicating your top clients,” says George Hartman, CEO of Toronto-based Market Logics Inc. “Ideally, you would choose the types of clients you want to work with.”
There are a number of approaches you can take in courting prospective clients who mirror your top clients.
> More to top clients than money
The underlying principle of a duplication strategy is the 80:20 rule, also called the Pareto Principle. It states that 20% of clients account for 80% of your revenues. So, you want more clients like that top 20%.
But the truth is, even some clients who would qualify as “high value” through conventional measures, such as asset levels or revenue, might not meet the criteria you favour. For example, a high net-worth client might have a difficult personality and a habit of wasting your time, or cause stress to you and your team. You would be advised to prune such clients from your book.
> Identifying top clients
The first step in a duplication strategy, says Julie Littlechild , president of Advisor Impact Inc. in Toronto, is to determine what makes a client a top client. She recommends using a range of objective and subjective criteria to assess desired client traits.
For instance, look at clients for commonalities in areas such as investment approach, communication style and personality type. Some clients may not necessarily meet all of your criteria. However, at the end of the day “you must know yourself” when selecting your top clients, Littlechild says.
“You must have disciplined, clear criteria regarding the type of clients you are looking for, and why,” says Vas Pachapurkar, vice president of financial services, Ontario, with Investors Group Inc. in Toronto.
The question you should ask yourself when adopting a duplication strategy, according to Hartman, is: “What do I prefer my client base to look like?”
> It pays to specialize
For example, Hartman says, you might chose to work with school teachers, business-owners or some other group with defined characteristics.
Learn as much about your target group as you can. “It is always the right strategy to become an expert in certain groups,” says Pierre McLean, senior vice president of national sales with Franklin Templeton Investments Corp. in Toronto.
> Getting referrals
Top clients can be an excellent source of referrals. They often have more complex financial situations or more specific concerns than other clients, which require a certain level of expertise, says McLean.
If you market yourself as an expert in your top clients’ area of specialization (schoolteachers, business owners, dentists, etc.), these clients are likely to refer you to prospects who share their characteristics.
Top clients may also belong to clubs, associations or other formal groups, which can be good sources for referrals.
Tomorrow: A seven-step duplication strategy
IE