All this stuff about client segmentation – is it really better for the client?
What’s so bad about being segmented based on assets anyway? Isn’t it just another regulatory pain in the backside for advice firms?
Segmenting clients according to their assets has been the default structure until the product governance rules (or PROD) came in. These require you to show how the products and services you offer match the clients you offer them to.
The idea is that PROD gives you an opportunity to look at your service proposition, make it more focused on the clients you want to do business with (and less on those you don’t), and therefore make your business more efficient.
It follows that this will make the client experience more valuable too.
But how do we know it does? Do clients even care?
Well I think so, and if it’s ok with you, I’d like to share a recent experience with a professional services provider to prove it.
I’d like to stress this is NOT a financial adviser.
It’s another professional service, but they’re nice people and good at what they do, it’s just perhaps unfortunate for them they had a hyper-sensitive marketeer as a client. Or is it? I’ll let you be the judge of that.
They were referred to me when I first started out as a freelance. They did the job as far as I know what the job is - as is often the case, I didn’t have much context. So initially I just went with the flow.
But gradually I began to get a sense of being firmly in the 'bronze’ category of service, which based on my ‘worth’ was probably quite right. But in terms of the value I was getting, it felt wrong.
Being ‘bronze’ must have meant I was allotted x service which entitled me to x amount of time.
It wasn’t that I wanted more time, but I wanted value from that time.
Value to me is being spoken to as a real person, not as a cardboard cut-out of a typical type of client on a certain tier. It felt as if because my worth was bronze, they thought my brain was too.
The information I was given felt dumbed down. When I asked questions about how to do something new on Xero, I’d be told it would be easier to leave it to them.
Questions were met with “I know it’s complicated isn’t it”, which perhaps I would know, if they had explained it properly to me first.
In short, I didn’t feel connected with the process, and the process is my own money. While I want someone to do the best with it, I also want to feel as if I understand it.
If they’d taken a different approach to segmentation and looked at me a bit more closely, perhaps in terms of where I am in life, they’d know I’m generally switched on, organised and engaged.
They’d know that I’m not the sort of person to forget a VAT payment, but definitely the sort of person who would take offence at being thought of as doing so.
Despite the admin faff I knew would be involved, I parted company with them earlier this year and explained why I was doing so.
Overall it felt as if they were unconnected to the rest of my life and treated me in a totally different way to almost every other service I use.
Now that we all get our names on Starbucks coffee cups and text messages from our dentist reminding us of our appointments, we’re used to hyper-personalised treatment, which means being treated as a number really stands out.
I wanted from them what I get everywhere else (including from my wonderful financial adviser!).
I’m not saying anyone reading this would have done treated their clients in the way I’m describing here, but hopefully it highlights how an ‘assets first’ approach can feel in practice.
PROD provides an opportunity to embed detailed segmentation more formally into your business, so that a ‘clients first’ approach really is part of everything you do.