Offer “frequent flier” service

But life for their best customers is a very different story – and that’s a business model from which you can learn.

In managing the experience your clients have in working with you and your team, you need to differentiate dramatically the experience your top clients have while working with you. That’s an area in which the majority of advisors do an abysmal job.

– Organize clients into groups

To make differentiating treatment for your clients feasible logistically, you need to group them into categories. If you have 30 high-value clients, having 30 entirely different approaches to delivering value would be tough. Yes, there will always be some customization, but you should begin with a common service proposition for clients that represent roughly the same value.

Historically, most advisors have segmented clients into three categories. Some refer to these as A, B and C clients. Others call them “gold,” “silver” and “bronze.”

The difficulty is that lumping your top-third of clients into one category doesn’t do your most important clients justice. After all, you don’t want to treat your No. 6 client and your No. 60 client the same way.

Instead, consider dividing clients into five categories, as follows:

1. Top tier: your top 10% of clients.

2. Next tier: your next 15%.

3. Above-average tier: your next 25%.

4. Below-average tier: your next 25%.

5. Bottom tier: your bottom 25%.

With these five groupings, you still have a manageable number of categories. But, at the same time, you have isolated your most important clients for special treatment.

– Establish a baseline for service

In thinking about how to treat your clients, start by establishing a baseline of communication, advice and service that you will feel good about delivering to everyone. If a client doesn’t merit the investment of time and energy to deliver those minimum thresholds, he or she shouldn’t be your client.

Once you have that baseline in place, your next step is to differentiate the experience dramatically for your most important clients. The operative word here is “dramatically.” The problem isn’t that you don’t treat your top clients better than your average clients; you meet with them more often, call them regularly, invite them to lunch and any service issues are dealt with promptly. The issue is that even doing all these things, the experience for top clients doesn’t look all that different from the service average clients receive.

Contrast that with the way legacy airlines treat their very best passengers. Ever since the introduction of “frequent flier” programs in the 1980s, airlines have provided frequent fliers with separate check-in lines, separate lounges, upgrade certificates and the opportunity to pre-board flights.

But, recently, United Airlines Inc., American Airlines Inc. and Delta Airlines Inc. increased the stakes dramatically for passengers who qualify as being among their very best customers. A recent article in The New York Times described some of the perks customers who qualify for United’s “global services” status receive, including:

– automatic upgrades and access to by-invitation VIP lounge

– concierges at major airports to help stickhandle any issues that might arise

– shuttles directly from lounge to plane

– flights held for passengers who are delayed

Say what you will about the atrocious fashion in which United deals with its average passengers; it treats its best passengers exceptionally well.

– Treat top clients differently

In serving your best clients, you need to adopt a similar mindset. In the past year, I’ve had half a dozen advisors describe client-recognition events – perhaps a holiday brunch or wine tasting – that they considered successful because they had 100 clients in the room. When I ask how many of their top 20 clients had attended, the typical answer is one or two.

That doesn’t mean doing broad-based client activities isn’t worth it. Just understand that your best clients often find these events unappealing. Top clients typically are busy and can afford their own wine tastings. Furthermore, some clients in this cohort aren’t attracted by a large event at which they feel like a number.

That’s why an advisor I know invites his top 20 clients for annual birthday lunches. Another advisor hosts monthly dinners to which she invites three of her very best clients and their spouses. The dinners are at a top-tier restaurant on a Monday night, when things typically are quiet, so that she is able to arrange a visit to their table by the restaurant’s award-winning chef.

Of course, to have top clients feel well served, you need to go far beyond taking them to dinner. Here are some examples of ways you can stand out in delivering value to your best clients:

– Most clients don’t enjoy the drive to meet at your office. Offer to meet your top clients at their business or home.

– Create a unique investment policy statement for each of your most valuable clients.

– Clients with substantial investment portfolios often use multiple advisors. For large clients, offer to have a member of your team consolidate all their investment accounts into one spreadsheet each quarter, as does one advisor I know. Clarify to these clients that you will never see their overall investment picture unless they first give you permission.

– Another advisor has a staff member who handles the day-to-day financial affairs of elderly clients, including paying bills. For clients with aging parents, he offers this as an option, waiving the normal cost.

– One advisor gives her top clients the chance to have an associate on her team who is in her late 20s work one-on-one with the clients’ children or grandchildren. For teens going to university, the associate talks about budgeting and use of credit cards. For young adults in their 20s and 30s, the conversation focuses on setting financial goals and establishing a path to hit those goals.

Sometimes, the associate goes the extra mile. She once helped the daughter of a key client who was purchasing her first car, researching prices online, then getting involved with the dealership to ensure the final price was fair. On other occasions, this associate has met with bankers to get mortgage pre-approval for first-time homebuyers, then helped to negotiate the offers for their houses.

– One successful advisor has found that getting key clients’ accountants to sit in on annual reviews can avoid complications in co-ordinating investment decisions and tax-planning considerations. For these top clients, the advisor offers to cover the accountant’s hourly fee for sitting in on that meeting. Most clients thank him for the offer and don’t take him up on that; but even if he does write a cheque to the accountant for $500, that’s money well spent in the message he sends about his commitment to improving the outcome for his most valued clients.

– Each December, one advisor tells his top 20 clients he’ll match a $250 contribution to their favourite charity, giving him a window into which charities are most important to his best clients. Then, in his yearend email, he lists the charities he has supported as a “thank you” to all clients for the chance to work together.

– One advisor offers quarterly breakfast sessions for all his clients to attend together, at which representatives from money-management firms discuss their views on the market and how they’re positioning portfolios. However, the advisor doesn’t invite his top 30 clients to those breakfasts. Instead, those clients are invited to a private group lunch at a local country club. Those lunches consistently attract six to eight top clients.

– One team of advisors hosts annual client evenings with speakers from outside their firm, such as economists, a gerontologist and a sports psychologist. To keep costs down, these events begin at 7:30 p.m. and offer dessert and coffee. Top clients are invited to a private session with the speaker over a light dinner in advance of the main event. Although some clients stay on for the full session, many leave after dinner, satisfied with the chance to hear from the speaker while in a small group.

The ways these advisors treat their top clients are exceptions to the norm. As you think about what these advisors do, consider whether two or three of these ideas might work for you. By making top clients a priority and treating them dramatically differently, you’ll lock in relationships with your biggest sources of revenue, as well as with those clients whom competing advisors are most likely to try to pick off.

Dan Richards is CEO of Clientinsights (www.clientinsights.ca) in Toronto. For more of Dan’s columns and informative videos, visit www.investmentexecutive.com.

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