Determine Return on Assets for Each Segment
Now that you have segmented your clients, youre ready to determine each segments return on assets. Heres how to do it:
1. Determine your practices overall ROA (the revenue you generated divided by your AUM).
2. Add up the AUM in each of your client segments.
3. Multiply AUM figures in each segment by your practices overall ROA.
4. Divide that number by the number of clients in each segment. This tells you how much each client generates a year on average.
Align Service Level with Each Segments Return on Assets
You will find that your top segment generates over $1,000 per client annually, with the bottom segments generating much less than that, often as little as $100 per client a year. Make sure that you are delivering a level of service that is consistent with the revenue each segment brings to your business.
Separate the Wheat from the Chaff
Now comes the thorniest part of the client segmentation process: separating the wheat from the chaff. Here are several options:
1. Assign bottom-tier clients to a junior associate. This strategy is common, but has a big drawback. If you couldnt turn this into a top-tier relationship, theres a good chance they wont either.