Constructing the business of your dreams begins with the understanding that while all people are created equal, not all relationships are. Some people in your life take way too much time (relative to the value received), suck the energy right out of you, crush your attitude and deflate your teams’ spirit. Others leave you feeling energized, excited, positive, and your only regret is that you don't have more time to spend with them.
Think of building a business in which you are surrounded by the latter. How much more productive would you be? What is the price you pay (not to mention the price your family, friends and team pay) when you surround yourself with the former? The vast majority of segmentation models I have seen over the last 25 years are predominantly quantitative (assets and/or production). While this is important, it is simply not sufficient. The “degree of difficulty” is almost always qualitative in nature. While the former “pays the bills”, it is the latter that excites or exhausts us.
Our segmentation model rates the following questions on a score of 1-3:
1 = Poor, 2 = Good, 3 = Great
1. Determine what characteristics would collectively define your “ideal client”.
- Current revenue: This is obvious and already in most segmentation strategies. Top third = 3, middle third = 2, bottom third = 1
- Future revenue: You must capture the “lifetime value” of a prospect or client. For example, you might have a young intern today, who in a few years might be one of your most significant clients. You want to capture this variable.
- Time consumption: The need forhandholding and their decision-making process (how quickly they understand and take appropriate action).
- Center of influence: How consistently does that client refer high quality prospects to you and your team? Consistent and high-quality referrals = 3, consistent or high-quality referrals = 2, neither = 1
- Attitude: Positive, upbeat and low-maintenance clients foster the same characteristics on your team (and vice versa by the way).
2. As a team, rate each client within your practice on each of your characteristics. You need each team member’s input if you’re going to get an accurate reflection of the impact each client has on your practice.
3. Do the math to determine each client’s individual score. Using our model of 5-criteria and a 3-point scoring system, you would have a range of 5 -15 (with a 5 contributing to your early demise and a 15 reminding you why you came into the business in the first place).
4. Finally, add up all of your individual scores and divide by the number of clients, to determine your “average book score”.
And here’s the Epiphany: not all “books” are created equally. Let me explain. Let's say I had two books for sale, each generating $2 million in revenue: one with an “average book score” of 7 and the other with an “average book score” of 12. Assuming each had the same sale price, which would you want… obviously the 12. Why? The higher the book score, the lower the degree of difficulty.
Revenue does not happen in a vacuum. Working with particular clients, in a particular way, with a particular team generates it.
Here are a few questions to ask yourself and your team:
- If you could wave a wand, what type of clientele would you work with?
- Does your current business structure and systems attract and retain clients of this caliber?
- Is your team’s education and development sophisticated enough to add significant value to this type of clientele?
- Is your practice demonstrably superior to your peers and can you articulate it in a compelling way?
- Is your service model so exceptional that your clientele feel compelled to share their experiences with their friends and colleagues?
To quote one of my all-time favorite films, “build it and they will come”.
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