Practice growth
A minority of relationships produce most of the revenue. A different minority consume most of the capacity. The gap is the point.
Run the numbers on any established advisory firm and the shape is remarkably consistent. A minority of relationships produce most of the revenue, and a different minority consume most of the capacity.
Those two groups overlap far less than principals expect. That gap is what segmentation is for.
Most firms segment on assets alone, which is the easiest data to get and only half the picture. A four-million-dollar relationship that calls twice a year is a completely different business proposition from a four-million-dollar relationship that calls twice a week.
Score every relationship on two axes: what it pays, and what it takes. Meetings, calls, ad-hoc requests, complexity, how many people are involved, how much of it lands on you personally rather than on staff.
| Pays | Takes | What it needs |
|---|---|---|
| High | High | Nothing. This is the business. Protect it and make sure it is not dependent on you alone. |
| High | Low | More attention, not less. These are the most at-risk relationships in any firm, because quiet gets mistaken for content. |
| Low | Low | A defined, lighter service. Genuinely profitable at scale if you stop delivering the full package by default. |
| Low | High | Reprice or refer. This is where the capacity is going. |
Segmentation fails when the tiers are internal secrets. Staff cannot apply a policy they are not allowed to describe, and clients notice inconsistency long before they notice a service level.
Define each tier by what is actually delivered — review frequency, who they deal with, what is included and what is chargeable — and make it something you would be comfortable saying out loud. If a tier cannot be described honestly to the client in it, it is not a service model, it is rationing.
Do not segment by reducing service to the bottom group and calling it a strategy. That produces exactly the outcome you feared: dissatisfied clients who leave noisily and tell people why.
Segment by giving the top group something genuinely more — proactive planning, faster access, coordination with their other advisers — rather than by giving the bottom group less than they were promised.
Take your twenty largest and twenty smallest relationships. Estimate hours on each for one year. Divide the fee by the hours.
The spread will be wider than you expect, and it usually reorders the entire question of who your best clients are.
Questions this did not answer? Ask them directly — that is what the twenty minutes is for.
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