I remember my response very clearly as the contractor told me they would need to dig a seven-foot hole around a significant portion of the house to fix a problem with the foundation. It’s not a response I plan on repeating here, but let’s just say it was an exuberant expression of my displeasure. The house, to me, was perfect. But it was sitting on a shaky foundation, making it not so perfect after all. It’s not that different when you’re designing your client experience. I thought about my foundation crisis recently, as I was delivering a webinar with Ray Adamson, the Chief Customer Officer at Kronos Technologies. We talked about how easy it is to get mesmerized by the latest shiny client engagement idea that, in turn, makes you more attractive to prospective clients. And we talked about the fact that sometimes the greatest business building ideas fail precisely because they succeed. Adding new clients is a false win if you don’t have the infrastructure in place to deliver on the promises that you made to those clients.(In fact, I should give a big shout out to Kronos for putting their money where their mouth is. They invested to make our Essentials program available at a 50% discount to the first 50 advisors who signed up by March 16. At the time of writing, there are still a few spaces left if you’d like to get access to the insights, tools and resources you need to lay a solid foundation for $149. Click here for more information.)

Assess Your Foundation

In an effort to ensure you don’t fall victim to 'shaky foundation syndrome', here are six questions to ask yourself about your business. Each ‘no’ represents a potential weakness in your foundation that can’t be ignored.

1. Have you defined your deal breakers?

Have you clearly defined client acceptance criteria that determine if you will (or will not) work with a client? We often think about client segmentation as the first step in laying a strong foundation. It’s a critical step, no doubt, but segmentation should define the relative value of client relationships over and above your minimum acceptance criteria.  It should exclude clients who just aren't right for your business. I appreciate that the idea that we need to set minimum acceptance criteria makes some people cringe, although I’m not entirely sure why. The reality is that you can't effectively serve an unprofitable client unless you’re (expressly) doing pro bono work. Your deal breakers define if a client is right for your business, and segmentation defines how right that client is over and above that point. In the example below, I highlight deal breakers as being related to the profitability of the relationship, but your deal breakers might just as easily include personality, values, investing approach or needs.

2. Have you segmented clients based on value?

Now that you have a clear sense of who is right, it’s time to segment clients based on the value they bring to the business. While there's a clear and consistent methodology for segmenting your clients, it starts with your definition of what constitutes client value.  And that definition needs to be your definition. As a result, the most critical and difficult step in segmenting your clients is defining what real client value means to you. Is it assets and revenue alone? Does it include referrals and influence? Is connection to a family group important? If you can limit yourself to three to five drivers, that will force you to get very specific on what contributes to value. Use too many drivers and your clients will all tend toward the average. Use too few and you’ll likely miss out on indirect forms of value (such as future potential).

3. Have you tiered your service plan to link to the value of the client?

With your clients segmented, have you clearly defined what it means to be a client in each segment? And have you done that in tangible terms that you can communicate to a client or prospect? Remember that segmentation is based on the value of a client relationship, so it should influence any aspect of the relationship that should go up or down based on value. That would include the frequency of contact, form of contact (e.g., face-to-face vs. telephone), the responsibility for contact (e.g., senior advisor vs. associate), the scope of offer (e.g., comprehensive financial plan vs. retirement projection) and (if it’s an option) the platform used (e.g., a robo solution).

4. Have you assessed capacity based on your existing resources?

So you’ve just mapped out a service plan that’s a thing of beauty. You know how often you’ll meet with clients and what they can expect over the course of the year - and you’re keen to let them know. At this point, you’d be well served to ‘hit pause’ and assess your capacity. It’s easy to get caught up in defining the perfect client experience because it feels right - and we want to do the best for our clients. It’s just as easy to over-commit so I’d recommend you do the math on your client experience before telling people about it. How many reviews are you providing to how many clients?  How much time does it take to prepare for, conduct and follow up on those meetings?  What time is involved for other team members to make it all happen? Assess if you can deliver with your existing resources or adjust accordingly. You may need to hire more, reduce contact levels or streamline the process (e.g., delegate to technology).

5. Have you assessed profitability at a client level?

Now that you know you can deliver on your promises, it’s time to ensure that the plan you mapped out is actually profitable. Too often we look at profitability at the business level, forgetting to assess profitability at the client or segment level. How many hours are involved in delivering your client experience and what is the appropriate hourly rate to charge for different team members?  How much do you invest in education or appreciation and how should your fixed costs be allocated to each client segment? Without that further analysis you may find that your better clients are subsidizing your smaller clients. And while we expect variable profitability in any business, working with clients who are unprofitable won’t do you (or them) any favors.

6. Do you formally manage expectations?

With a plan in place (and assessed to ensure that you can deliver on it, profitably) don’t keep it a secret. At this point you have the clarity and structure to confidently tell clients what they can expect. And when you do, you eliminate the potential that your clients’ version of ‘great service’ isn’t vastly different from your own. A simple service agreement should do the trick here.  And there's an added benefit of formalizing what you'll deliver.  You not only manage expectations but reinforce the value you provide. Let’s face it, none of this is sexy. It’s the real work associated with doing what’s right for your clients while doing what’s right for your business. It’s laying the foundation that will carry you there. There is, of course, so much more to do to design a client experience that is truly engaging, but it all starts here. So how did you do? Is your foundation solid as a rock or are you building on a shaky foundation?

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Thanks for stopping by,

Julie