This case study is based on the situation of a client of the Covenant Group. Names and details have been changed to preserve privacy.


“I like the sound of that number!” was Joel’s response at our annual strategic planning session. I had just asked why he’d set his production target at $400,000 for the next 12 months.

“It does have a nice ring to it,” I acknowledged, “but is that the right amount? Your revenue this year was around $250,000. While not trying to discourage you, $400,000 is a 60% increase. What makes you think you can bump your business up that much?”

“Because I did it last year!” he exclaimed. “In our planning a year ago, my targeted revenue increase was even higher — from $150,000 to $250,000. That’s 66%, so why shouldn’t I be able to increase it by that much again?”

“I am not suggesting you can’t,” I said. “In fact, based on how well you followed the plan we developed last year, I am confident you can reach that goal if the right elements are in place and you are as diligent as you were this past year. One of my roles as your coach, however, is to challenge your thinking so that you have total confidence in the decisions you make. All I am asking you is whether $400,000 is the right number for you over the next 12 months? Why not $300,000? Or $500,000? Or even $1 million?”

“Well, $300,000 would be too easy, based on the way my practice is expanding,” he replied. “And $500,000 is double this year’s result, which would be quite a stretch and I hate falling short of any goal I set. And $1 million — well, give me a couple of years, will you?”

“Of course, Joel,” I laughed. “I know you thrive when you have an ambitious target. But let’s not put too much pressure on you just yet!”

“So, what should my goal be for next year?” he asked.

“That is entirely up to you,” I replied. “Tell me in more detail why you think your stated objective of $400,000 is the right number.”

“OK,” Joel began, “last year, at our planning session, we laid out a new marketing strategy that has really paid off. I started to conduct periodic reviews with my best clients in the manner you suggested, with an agenda that always includes an item around having them introduce me to other people like themselves. The language we developed and the “experience” we created around those introductions worked better than I would ever have imagined. Almost all my new business this year has come as a result of introductions from existing clients.

“I will continue to use periodic reviews that way in the coming year,” he added, “and I am confident I will have even better results, now that my top clients are accustomed to the idea of helping me expand my business to other quality people.”

“That’s great, Joel. Tell me, though, do you expect to make more sales to new people, or additional sales to your existing clients?” I asked.

“Any reason I can’t do both?”

“None whatsoever. In fact,” I answered, “I would expect you to do both. My question is how much of each?”

“Does it really matter where the business comes from, as long as it gets here?” he asked.

“Only if you want to take charge of the growth of your business rather than leaving it to chance,” I replied.

“What do you mean by that?” Joel asked.

“Basically, ” I continued, “there are three financial ‘levers’ in your business on which you can push and pull to control the momentum of your practice. They are product mix, average size of sale and number of sales. Product mix clearly refers to the products you have in your kit bag and the extent to which your clients take advantage of the full range of things you can do for them. What products can you offer your clients today?”

“Primarily stocks, bonds, some managed accounts and a few mutual funds. I am also licensed for insurance, but I haven’t done much in that arena,” Joel replied.

“The top producers with whom we work typically have three to five of the products they offer in the hands of most of their best clients. Does that describe your practice?”

@page_break@“Not really,” he admitted. “Most of my client relationships appear to be around product silos. And the referrals I’ve had tend to reflect that if a client owns stocks, that client will refer me to others who are interested in owning stocks. Managed accounts lead to other managed accounts, and so on.

“I can see where this is going,” he added. “If I simply open up my kit bag, as you call it, to everyone, chances are I have some additional products that would fit for some clients.”

“You got it,” I went on. “Simply presenting your full complement of tools to clients will often lead to additional revenue. In fact, didn’t we agree last year that you would put an item like this on the agenda for your periodic reviews with clients?”

“We did,” he conceded, “but I haven’t given it the attention it deserves. I guess I was too anxious to get to the introductions part of the agenda! I promise to make cross-selling a priority this year.”

“Good,” I said. “That will make a difference for two of those financial levers — product mix and number of sales. They typically go hand in hand; an increase in one usually means an increase in the other. That brings us to your average size of sale.”

“ I definitely want to increase my average size of sale,” Joel said.

“And how are you going to do that?” I asked.

“Talk to people with more money?” he responded.

“Ha, ha, funny guy,” I said. “But you have it right. Size of sale is a function of your market. If you want to improve your average revenue per sale, you either have to work more at the top end of your existing market or move upmarket. What is your thinking in that regard?”

Joel was quick to jump in: “If there is anything I’ve learned from our work together over the past year, it’s the value of focusing my efforts on my Top 20 and ‘A’ client relationships. They represent the highest percentage of my revenue and my most profitable client segment. They are also closest to my ideal client profile and have the highest average holdings. If I continue to get referrals from them to people like themselves, my average size of sale will take care of itself.”

“Good strategy,” I said. “But I’d like you to be a little more precise. What products do you expect to sell? To whom? When? What is the actual number for average size of sale? How many sales? How many introductions do you have to obtain to meet enough of the people who can help you meet your target? How many periodic reviews will you have to conduct to earn the necessary number of introductions? Is this too much information for you to have?”

“Of course not,” he said. “Your point is that I have to understand the metrics of my practice in order to plan effectively and manage my business — rather than have it control me.”

“That’s a big part of it,” I agreed. “But there is more to it than simply ‘knowing your numbers.’ You must also consider the implications of the goals you are setting. Are you prepared to handle a significant increase in business? Are you adequately staffed with a trained support team? Do you have the appropriate technology in place? Do you require additional expertise, for example, in insurance planning and products because you haven’t done much work in that area? And, most important, what impact will bringing in all these new clients have on how you spend your time? How are you going to ensure that you continue to work at the highest level of your capability and not get overburdened with administration?”

“Wow,” Joel responded, “I see that setting objectives is more than just wishing and believing. I need to apply much more science to it. Can I go to work on this and check back with you next week? I don’t know what my final objective for next year will be, but I do know I’ll have all the information I need to justify it and proceed with confidence.”

“I look forward to it, Joel,” I answered. “Good luck!” IE



George Hartman is a coach and facilitator with the Covenant Group in Toronto. He can be reached at george@covenantgroup.com.