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Analyzing an existing client base

Publish date: 15 February 2019
Issue Number: 58
Diary: CompliNEWS
Category: General

By Lee Rossini

In last week’s article, I wrote about identifying the type of client who is a good match for your business; the client who would most benefit from the services you have to offer. The next step is to analyse your existing client base against the ideal client profile you have drawn up. The reason for carrying out this exercise is to identify your most valuable clients and those clients who are not a good fit with your service model. This data enables you to make the following decisions:  Do you keep the client, or do you refer the client to a more suitable business?

Here are some guidelines when analyzing an existing client base:

  • Approach this task as a project and draft workable parameters as you would for any other business-related project you embark on. This includes objectives, criteria on which decisions will be made, timelines, responsibilities, resources needed and the processes to be followed.
  • Using the ideal client profile as a reference point, draw up a series of questions that can be used to analyse your current client base, client by client. Identify the clients who closely match your ideal client profile.
  • Draw up a list of three categories to place clients in.  These categories will determine the action that needs to be taken at the end of the exercise.
  • Prepare yourself to make difficult decisions and to take the necessary action which may be not be pleasant to carry out.
  • Try to be as objective as possible during the process.  However, you may find that there are certain clients with whom you have a relationship that will be difficult to terminate. In these cases, be clear about the level of service that you are willing to provide to them.

After placing clients into the most appropriate category, one of the following actions should be implemented:

  • Retained clients who fit the ideal client profile:  Use this project as an opportunity to communicate your service value proposition to these clients. 
  • Retained clients who do not fit the ideal client profile but who may be prepared to pay for the services: Explain to these clients that the business can no longer provide them with a full range of services. Outline the services that the business can continue to provide, and the fees associated with these services.  If the client is not willing to pay the fees, offer to refer the client to a more suitable financial planning business.
  • Clients who do not fit the ideal client profile and are not prepared to pay for the services: Communicate with these clients why the business can no longer keep them on their books and offer to refer them to a more suitable business.

Although analysing an existing client base feels like a laborious and time-consuming process, there are many hidden benefits to carrying out such a project:

  • It provides you with data regarding your current client base. The data includes type of client, their characteristics and the amount of time required to service them. This analysis should also reveal clients who are not or are no longer profitable. It will also give you the information you need to draw up future marketing strategies.
  • The exercise may reveal new opportunities within your existing client base.
  • It is also a chance to check whether each client file is compliant with the FAIS requirements. In addition, by removing inactive clients from your data base, you reduce the risk of not meeting the FAIS requirements for all your clients.
  • By the end of the project, you will be able to implement improved data base management systems.

If you have not carried out a project of this nature recently, now is the time to do it. It will enable you to get in touch with the type of clients you have on your data base. It will also enable you to align the services you offer with the needs of your clients. This will provide you with an opportunity to communicate the value that you add to the lives of your clients.   

Working Smart

By Lee Rossini

Most financial advice businesses start off small, usually with the founder playing the role of owner, manager and financial adviser. However, as the business grows, planning and implementing organisational structures becomes more of a priority as the need for specialised positions and departments arises. The organisational chart, job design and analysis form an important part of this process. The information gathered from these exercises, specifically the job analysis, is subsequently used to draw up the job descriptions (JD).    


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