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80 /20….so what!

06 May 2004 Mike Clare Independent Strategy Consultant

If we know that we get 80% of our business from 20% of our clients then surely we must spend most of our time with the clients that are represented in the 20% category. Sounds like good advice to me - yet this is not what happens in reality.

Once a customer has been developed to the extent that they become a client, ie. regular repeat business is forthcoming, they should be pampered to the extent that they have no reason to go elsewhere. Curiously, many of us neglect these clients as we hunt for more customers as we are so conditioned into believing that quantity is better than quality. Financial planning is no longer the numbers game that we were told it was when we started out. It is a sophisticated, high trust process of diagnosing, interpreting and prescribing.

To deliver this level of sophistication and establish the positioning of ‘the trusted advisor”, the intermediary needs to define exactly what a client is. My definition is that a client is a person, or business – that transacts repeatedly and solely with your company, whereas a customer has only transacted once, or transacts on an ad-hoc basis. The intermediary who claims that he has 3 000 clients is possibly counting prospects and customers as clients and is ignoring this principle. If we know that retention of clients is less expensive than gaining new clients, why do we believe that our business-success is dependent on new customers? Ask yourself, “Am I a production factory or a high-advice financial planner who services a targeted niche?”

A dynamic sales strategy will recognise the Pareto Principle and the devastating cost of neglect. All initiatives will be aimed at the clients that make an impact on your turnover.

So, where to from here:

1) Segment your clients based on business support and business potential.
2) Target the top 20 %
3) Sell, re-work or discard the balance.
4) Commit to maximising your contact with the top 20% (max 150 clients per intermediary).
5) Amaze them with creative value-adds.
6) Differentiate yourself continuously.
7) See them one-on-one as often as possible.
8) Continually thank them for all the referrals.
9) Build a relationship based on human touch.

Implement this strategy and your revenue is sure to increase dramatically. It worked for Jerry Maguire!

Ethos, Pathos, Logos…

Quick Polls

QUESTION

There are countless articles written about South Africa’s poor retirement outcomes. Which of the following would you single out as the biggest contributor to local savers not accumulating enough to buy an adequate and sustainable pension?

ANSWER

Lack of personal accountability
Poor participation in formal retirement funds
Reluctance to seek financial advice early on
SA’s high unemployment rate
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