Why and How to Segment Your Client Base


Segmenting clients is, in theory, a fairly straight-forward strategy. In most financial advisory firms, clients are defined according to their revenue. For example, clients with revenues exceeding one million may be classified as top-tier; middle-tier clients may be defined as those with revenues from half a million to one million, and so on. Then, services and styles of client engagement are identified according to tier. This kind of agency infrastructure takes effort to create, but frontloading segmentation strategies can have huge long-term benefits in terms of efficiency and profits.

Still, it is challenging to know exactly where to start when it comes to segmenting your client base. For one thing, you want all of your clients to feel valued, which means services should be comparable across tiers. Similarly, you don’t want to focus so heavily on one segment that you fail to grow another.

Before you dig into the details of how to segment your client base, take some time to think through the theory behind the practice. Here are some helpful starting points:

  • Client segmentation is not a new practice. It’s also not unique to the financial services industry. Even doctors and teachers segment. A primary care doctor will initiate different protocols for active, non-smoking patients than for sedentary, longtime smokers. Similarly, the resources a teacher provides for high-performing students are different from those provided for struggling students. In both cases, however, the doctors and teachers demonstrate the same level of concern. Also, their services provided should meet their patients’ unique needs now while also allowing for the possibility that those needs may change over time.
  • Customer segmentation should make your life easier. If you’re focusing on the top 20% of clients who drive 80% of your business and feel beleaguered by the remaining 80% of clients who may need more but bring in less, you may be already segmenting your clients, but not in the proper ways. Think about client segmentation this way: The better you know each group of clients, the more effective you will be at serving them through proactive communication, such as newsletters and financial education seminars and webinars. In this way, you increase your value to clients while being more efficient with your use of time.

Once you’ve decided to segment your client base, you’ll need a highly organized team to dig into the nitty-gritty details of making the segmentation work effectively for your firm. Here are a few tips for getting started:

  • Establish criteria that makes sense for your practice. Identify your most and least profitable clients. You may also choose to determine a client’s value based on the number of quality referrals they’ve created, how long they’ve been with your firm, or how often they need support.
  • Divide your client base into three clear categories. Name those categories so that they’re easy to reference in spreadsheets, meetings, and other internal communications. In case information should somehow leak into client view, you’ll want to avoid using names that ascribe value, such as “Platinum” or “Silver.” Instead, use a generic labeling system, such as “A, B, C.”
  • Consider a broader view of each client group. Identify the lifestyle trends that clients in each segment have in common. Ask questions like, “What motivates these clients?” “Are they spenders or savers?” “Where are their financial knowledge gaps, if any?” “Do they tend to be risk takers or risk averse?”
  • Set up workflows for communicating with each client segment. Align them with the characteristics of each segment. Workflows should include all stages of the client relationship, beginning with recruitment, and should consider specifics such as what services you will offer to each segment, how often you’ll proactively communicate, and how you’ll show your appreciation for their business. Make the workflows visual and automate them, if possible.
  • Communicate your client segmentation strategy. Make sure appropriate staff members have this information and stress the importance of following the protocols determined by the workflows. They should all understand your client segmentation strategy, both in theory and practice. To this end, consider making client segmentation training part of employee onboarding.

At Berthel Fisher, we make it our mission to help our advisors deliver the best client experience in the business. From our investment products and advisory services to our back office support and forward thinking management team, we are continuously investing in every advisor on our team.

If you are interested in joining Berthel Fisher, get started today or give us a call at 1-800-356-5234.


By Andrew J. Christofferson

Andy Christofferson is Chief Business Development Officer and Director for Berthel Fisher subsidiaries. Andy joined the Company in 2012 and holds FINRA securities licenses 7, 24, 63 and 65. He is a graduate of the University of Northern Iowa in Cedar Falls, Iowa where he received a Bachelor’s degree in Finance.