Getting better engagement from their clients is a major challenge for many asset and wealth managers. The answer may just lie in segmenting your client base.  

Why all marketing plans should start with segmentation 

While a single vision is great for a business objective, the same does not hold for your client base. In fact, if you fail to segment your clients effectively, you won’t be able to serve them with what they need.  

Market segmentation is one of the oldest pillars of marketing, yet it is often poorly executed – especially in investment marketing. The path to stronger growth, better engagement and your competitive advantage starts with segmentation.  

What is segmentation?  

To segment your audience is to group your existing and potential clients according to their needs. This seems simple enough, but it is often easier said than done. Many asset managers end up with grouping their clients as wholesale or institutional, and perhaps one step further by region or size of their business.  

But does this mean we can now speak to their needs? Take a step back and think about a typical wholesale audience: it may consist of independent advisers, tied advisers, wealth managers, private bankers and perhaps discretionary fund managers. These groups all have different needs, levels of understanding and interest in your content.  

For example, just among independent advisers you can find: 

  • Small businesses with a regional focus, versus larger, more established businesses  
  • Advisers who want to research investment products and process in detail, versus those who are more interested in funds’ ratings prefer to let others do the research  
  • Advisers who need a one-stop shop from asset managers, versus those who seek specialisms from different managers 

When executed properly, segmentation opens up vast avenues of potential growth opportunities for your business. Once you understand your audience’s needs, you can tailor your messages and content to what each group needs. This way, segmentation can help you achieve a much higher rate of engagement.  

What do we need for effective segmentation? 

While by no means exhaustive, here are seven principles that underlie a good segmentation process.  

  1. Scratching below the surface – as mentioned earlier, segmentation goes beyond grouping your clients into buckets by type. The value of segmentation lies in getting to grips with your clients’ needs and adapting your approach based on this information. For this, we need to go beyond the labels that the market often assigns to our client types and think about the different groups we can find within these categories.  
  2. Client insight – collecting insights about your market is one of the cornerstones of good segmentation. This means uncovering the obvious, as well as hidden needs and wants of your clients. It is a deliberate process of gathering what we know and synthesising it. This includes information on your customer relationship management (CRM) system, as well as insights from your sales team and external research. Think of these insights as the night-vision goggles which can give you an edge over your competitors in really understanding your market. Once you have done this exercise, it becomes much easier to see what your clients may need from you, and how well you are positioned to deliver on this.  
  3. The value trap – it is very tempting to group clients according to their potential economic value, or: ‘how big a client can they potentially be’. But, this is ultimately a flawed approach. Value is rarely a proxy for a client’s needs. You may end up with segments that are similar in value, but with very different challenges. Value defines their potential, while needs brings us closer to propensity – i.e. the likelihood that they would engage in a certain way.  
  4. Your own context – your segmentation model should be unique to your business, influenced by your culture, organisation, structure, objective and vision. You competitor’s segmentation will not work for your company. You need to build segments taking into consideration your organisation’s differentiators and what you can deliver.  
  5. Do it regardless of the data – many investment managers shy away from segmentation because they don’t have adequate data. We may not have as much data as more consumer-focused sectors, but this is no reason for not attempting segmentation. All segments are imperfect – the important thing is to start somewhere and adjust as you collect more data in time. Just as you would change the focus on a camera lens, segmentation should be seen as a journey of ongoing optimisation to enhance your vision of your client base. Having 70% accuracy is better than talking to an unsegmented audience. Also, remember that data goes beyond the analytics numbers; your internal stakeholders’ qualitative data is equally valuable.  
  6. Future-proof your business – segmentation is valuable for solidifying your marketing, regardless of how well your business is performing at any point.. Even if you’re not struggling for flows, it is worth ensuring you understand your clients’ needs. It enables you to build loyalty among existing clients, as you can demonstrate you continue to value their business. This also serves you well if you have to defend business at any stage. Clients respond much better if you show that you understand what they need. Insights into your clients’ needs can help ensure your brand remains relevant, and serve as input into product development.  
  7. Identify – not create – segments already exist; a segmentation process only helps you identify them. Marketers do not create segments. Your clients already have needs and challenges, whether expressed or not. Marketers need to identify these, understand them and group them in such a way that your company can act on these.  

Do you need help with understanding and segmenting your clients? Get in touch to see how we can help.