Intermediaries who master the art of segmentation are better equipped to service their clients appropriately, and their practices will have greater potential to grow, says Jacques Coetzer, the general manager: Strategy and Transformation at SanlamConnect, the distribution business within the Sanlam Retail Affluent business.
Segmentation is a critical tool when planning how to allocate an organisation’s resources efficiently. It’s a means to ensure that the right clients receive the right advice at the right time in the right way.
“Segmenting their client base fundamentally allows an adviser to concentrate their maximum effort where maximum growth opportunities exist. An important part of this process is aligning the appropriate parts of one’s value proposition to the appropriate segment. And then it’s about behavioural finance and speaking to clients in the right way at the right time. Importantly, using digital systems to service parts of the client base can act as a force multiplier,” says Coetzer.
The most powerful arrow in an adviser’s quiver, when it comes to segmentation, is reliable client data, captured accurately using a strong Client Relationship Management (CRM) tool. If they have the necessary client data, the correct fields to filter, and are clear about how they wish to segment their data, it’s half the battle won, he says.
The other half entails equipping themselves with the knowledge required to use the CRM optimally, and then to be consistent and deliberate in extracting and using the information to serve clients appropriately.
Having defined segments allows intermediaries to satisfy a variety of needs by offering different targeted services and incentives based on specific client requirements. This is a powerful way to enhance one’s value proposition, says Coetzer.
Additionally, segmentation allows intermediaries to focus their personal attention on specific customer groups, and their digital efforts on others, helping to increase efficiency in terms of time, money, and other resources.
It also allows intermediaries to learn about their clients. By gaining a better understanding of clients’ needs and wants, it becomes a lot easier to tailor campaigns to segments most likely to benefit from specific services or offerings.
Focus on the future
We often segment based on the historical value of the client, but it is worth shifting the focus to segmenting based on clients’ future value instead. This starts with understanding which clients have the most future opportunity value, and segmenting and aligning your value proposition accordingly.
“Using large-scale data analytics and technology, we can help clients along their journeys to financial wellness, by being better enabled to map out a client’s next big financial decision, based on various objective criteria,” says Coetzer.
Then it’s about using behavioural finance principles to define clients’ personalities and cluster them accordingly. For example, some people like face-to-face conversations and a more reassuring, empathetic relationship with their intermediary. Others just want a summary of the facts, preferably in a short email. It’s vital to know how people prefer to be dealt with to improve relationships and increase efficiencies.
“It’s not impossible to ‘personalise yourself out of business’. If you try to tailor your communication to every individual, you risk using too much time or too many resources. Rather, define your audiences and tailor communications to each group. For example, if you have identified six different client ‘personality types’, you can tweak one email to read slightly different per segment,” says Coetzer.
If an intermediary can get it right, segmentation will allow them to give the client what they expect more consistently, when they expect it. This creates a stronger relationship and builds more trust between the adviser and the client. Ultimately, this means that when the client has a future need, they have a place to come back to, to fulfil that need, says Coetzer.