Customer segmentation is key to a profitable advisory practice


I'm an adviser looking for solutions for my customers.

I'm looking for personal products.

Are you prioritising your high value customers? Here are two valuable tips on how to segment your customer base for a more profitable practice.

Client segmentation helps you understand which groups of your clients represent the most value to your business by categorising their most relevant characteristics (e.g. needs, attitudes, usage behaviours, demographics). Segmentation can help you identify various client 'profiles' and prioritise your most profitable segments (i.e. your 'Class A' clients) with targeted service features and communications. 

In a recent study of Australian advisory firms, it was found that the majority of practices (81%) are segmenting their clients, and are differentiating their services based on segments1. Knowing your target segments' unique needs can help you design service offerings so you can get maximum value from all of your client types. 

When segmentation is done well, it can lead to a 168% increase in profit per principal/owner1

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The five keys to effective segmentation:

  • Create a formal segmentation model 
  • Use the segmentation as a basis to differentiate service offers
  • Review segment characteristics regularly 
  • Involve all firm members (not just principal advisers) in the segment review to ensure objectivity
  • Ensure all firm members know who the 'Class A' clients are.

Define your 'Class A' client with objective criteria

Usually advisers have a long and personal history with their clients, which can make it difficult to be objective about whether they should still retain their 'Class A' status. Just over one third (37%) of advisory firms fall into the trap of letting advisers rate/categorise their own customers into segments1. Best practice is to have formalised objective criteria and the involvement of other advisers in the review. 

Tip #1

Start identifying and prioritising your high value customers today with CommInsure's Smart Adviser Marketing's Service Model Template. Here you can explore a range of objective criteria that determine client value.

Smart communication is about resonance, not reach

The process of identifying your client segments will improve your understanding of how to best communicate with clients from each segment, and what channels are most appealing to them (e.g. mail, email, social media). Instead of trying to get your message to reach everyone, you'll be able to target more meaningful communications to specific segments based on what you know about their needs and behaviours. 

Tip #3

Create targeted mail and email marketing campaigns for each of your target segments using CommInsure's Smart Adviser Marketing's email and letterhead templates. Put your best foot forward by following our direct marketing best practice guide.

Make a start on your advisory firm’s client segmentation today with our Smart Adviser Marketing: client segmentation tools. If you don't have access contact your CommInsure BDM or state office today.



1. Rubik/Business Health’s Future Ready VI whitepaper (2015)