Tempted by the desire for business growth, many advisers decide to cast a broader net to catch more clients. This may increase the size of a client base, but adding clients doesn’t always correlate with profitability and business satisfaction.
A broader net catches a lot of suckerfish (low-revenue, high-effort clients) and prohibits you from being viewed as a specialist. A more effective way to grow your business is to define, and strictly adhere to, a strategic focus.
Many of the most successful graduates of Russell’s practice management programs have achieved growth goals by going deep within a particular market segment rather than stretching client acquisition tactics to cover a broader audience.
Focus can be defined in a variety of ways. Some professionals define their focus as a certain geographic area while others may focus on a specific product or service. Some may define focus by the types of clients they choose to work with or by the referral sources used for developing new clients.
Strategic focus is the combination of these four variables and the precision targeting of your ideal client. By narrowing your focus in each of these four areas, you will align your business to create strategic focus directed at your target market.
The target should be the overlap of the right plan sponsor clients, being delivered the right products and services, within a geographic reach you can efficiently serve, and supported by a select few referral sources to help cultivate desirable new business.
“In the long run, winning companies are ones that are most focused,” wrote marketing guru Al Ries in his book Focus — The Future of Your Company Depends on It. “Losing companies are ones that are the least focused. The guiding principle, the one that should drive your company’s every decision, is the principle of focus.”
Marketing your practice to a targeted market segment can be one of the most powerful strategic decisions you’ll ever make. Strategic focus can lead to:
- Increased demand for your services through greater brand awareness within your target market
- Precision targeting of the type of client you want to work with and can effectively service
- Improved efficiency in service delivery due to scalable consistency
- Improved close rates due to niche insight and relevance
You may already have the beginnings of a strategic focus within your client base. Maybe it’s a certain type of business that you thoroughly understand. For example, if you have a few engineering or architecture firms among your clients, you may want to consider going deep in this field, positioning yourself as a specialist with a touch of exclusivity to your practice.
Until you reach this level of focus, you are prone to being a wandering generalist.
In his acclaimed book Good to Great, Jim Collins suggests that, “the good-to-great companies are more like hedgehogs — simple, dowdy creatures that know ‘one big thing’ and stick to it. The single most important form of discipline for sustained results is fanatical adherence to the Hedgehog Concept and the willingness to shun opportunities that fall outside.”
When you consider, “of all those I could serve, who should I serve,” you will be better prepared to get the most out of a productive niche that is like-minded and may share thoughts within a tight community. This could lead to effective marketing that turns your clients into your best prospecting tool and proliferates your target market with your message and credibility.
Next month, we’ll examine ineffective marketing and the antidote – viral marketing.
Previous articles in the Ineffective Habits of Retirement Plan Advisers series:
Seven Habits of Highly Ineffective Retirement Plan Advisers
Don’t Fall For the Experience and Intuition Trap
Do Your Best to Move Beyond “Doing Your Best’
Matt Smith is managing director of retirement services with Russell Investment Group. He is responsible for DC research and strategic development of Russell’s defined contribution investment management business in the United States. Smith joined Russell in 2001. Over his 20+ year career, Matt’s experience spans the spectrum of the qualified plan business. Prior to joining Russell, Matt held the position of vice president and general manager of ADP’s west coast retirement services operations.
Copyright © Russell Investment Group 2007. All rights reserved. Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide and is a subsidiary of The Northwestern Mutual Life Insurance Company. Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.
Russell Fund Distributors, Inc., member NASD, part of Russell Investment Group. RFD 07-6870. First used: July 2007