Most sales and marketing experts will say the secret to organic growth for a service business is having a clear understanding of who your ideal client is and what unique services you can offer to that narrow client niche. When you search Michael Kitces’ blog for the word “niche,” you will find 82 pages of results—that is how often he discusses the benefits of identifying your area of expertise and focusing all marketing efforts to attract clients in need of your specialized services.
Nikolee Turner and Tony Parkin of Schwab’s Business Consulting & Education division joined me for Episode 28 of The COO Roundtable, and Nikolee shared some of Schwab’s benchmarking statistics: she told us firms that have gotten clear on who they’re trying to serve and have a documented ideal client persona add 28% more clients annually, which represents 45% more assets each year than those firms without a defined ideal client and service offering. While the statistics and anecdotes supporting the fact that RIAs who hone their value proposition to attract a tighter and tighter segment of the population grow faster than “generalist” practices are prevalent, I still see most RIA websites blandly state, “We serve individuals and institutions ranging in wealth from $5 million to $20 million.” A dollar range of potential client assets you hope to manage does not make a client niche—a specific financial problem you are solving for a focused target market does.
On a recent RIA Edge podcast, Informa’s Mark Bruno asked FiComm’s Megan Carpenter what high-growth RIAs are doing differently than their slower growing peers. Her answer: They have a clear client focus and are highly disciplined around it. A watered-down marketing message aimed at everyone will ultimately speak to no one because they won’t hear their story in your messaging—they won’t see you as the answer to their unique problem. She continued, “You’ll find the most marketing success when your messaging speaks to one person, and you let them know you are the best advisor for their specific circumstances.” Megan called it “a courageous approach to a narrow focus.”
Why does Megan refer to this proven marketing strategy as “courageous?” Because despite all the experts screaming from the rooftops that “less is more” when it comes to marketing initiatives that convert new clients, advisors are still reluctant to adopt any of these strategies. They think, “by limiting my marketing message, I’ll be giving up potential growth—I have to keep my net as wide as possible.” They are missing the important fact that by speaking more directly to a targeted segment of the population, not only will they convert more prospects to clients (because they’d feel the advisor understood their needs), but they’d also filter out anyone that isn’t a good fit for their business. As I have written previously, the idea that, “We have a fiduciary duty to provide exceptional service to each and every client” is a great philosophy, but it doesn’t work in execution because you quickly realize that you only have 24 hours in a day. To reach your organic growth targets, it is critically important you spend your time on those clients who have the most impact on your business.
The great Jerry Maguire wrote in his infamous mission statement, “I have 72 clients, and 60 of them are tapdances (earlier he referred to “tapdances” as his non-ideal clients that require him to tapdance around the fact that they don’t fit his service model). I sign 10 or 12 new ones a year … it is going in the wrong direction.” He continued, “The answer to the future is rather obvious. If the tapdancing becomes less constant, less furious, less necessary, what will the result be? The result will be more honesty, more focus, fewer clients, but eventually the revenues will be the same. Because the new day of honesty will create a machine more personalized, more truthful. People always respond best to personal attention, it is the simplest and easiest truth to forget.”
Will this article be another client niche message that you ultimately ignore, or will you finally take the time to examine your client roster and look to pinpoint a specific type of client you have unknowingly gravitated toward over the years? Chances are, you already have the underpinnings of a client niche embedded in your business, you just need to build a marketing plan or service offering around the unique solutions needed by that group of clients. As Megan Carpenter said to Mark Bruno, “If you are confident in your client relationships (our industry touts a 98% retention rate), your existing clients aren’t going to leave you simply because you narrow your marketing focus.” It’s been 27 years since Jerry Maguire penned his mission statement—let today be the day we finally act on his message: deeper relationships with fewer clients really is the future!
This article originally appeared on Wealthmanagement.com