How to Segment Clients for Greater Success

Different clients have varying impacts on a professional services engineering firm, influencing factors such as profitability, future growth, and operational challenges. It is not always clear which clients represent high profit opportunities as well as the potential to facilitate sustainable growth with minimal challenges. So being able to determine which clients represent the greatest chance for high performance can be extremely valuable. Preparing a thorough client evaluation begins with assembling strategic statistical data.

The 80/20 principle, also known as the Pareto Principle, is a concept that suggests roughly 80% of the results come from 20% of the efforts. In the broader context it simply suggests that all efforts do not equally contribute to the end results and there is a subset of “super-contributors." In the context of a professional services firm, it can be used to segment a client base by dividing customers into three categories based upon the rate at which they contribute to the overall earnings of your firm. The first step is to create a list of all clients their total revenue, profit and profit percentage. Sort the list from highest profit percentage to lowest. Then, segment the list into three groups.

Super Contributors (Top Tier). This group represents the top 20% of your client list. They should be your highest priority to maintain, nurture and build long-term relationships. Identifying key characteristics such as client type, region or market will reveal valuable traits to pursue in future clients. This information will the business development teams refine the target client persona and focus efforts on potential customers with similar characteristics.

• Keep them happy

• Expand their connection through repeat business and cross-selling

• Understand the qualities and traits that make them super-contributors

Status Quo (Middle Tier). This segment likely includes some average performing clients that have the potential to be top-tier clients with some potential adjustments. These customers warrant

• Maintain their business with consistent attention

• Determine whether they can be a strategic client

• Evaluate how they can be moved into the top tier

Low Touch (Bottom Tier). These clients contribute very little to the total bottom line and often may detract from the profit value. They are also likely to require significant attention and cause the majority of headaches around the office.

• Deprioritize the marketing effort for this group unless they are a clear strategic client

Strategic Client. Some clients may not offer tremendous profit benefits, but do provide other tangible or intangible benefits such as offering an opening into a new market or boosting your image or your brand. These clients require their own custom treatment to extract their strategic value.

CONTINUOUSLY UPDATING TARGET CLIENT PERSONA

Reviewing the characteristics of existing top-tier clients is an invaluable practice for identifying what to look for in potential new clients. By analyzing the traits and behaviors of successful, highly profitable clients, consulting firms can create a client profile that serves as a blueprint for client acquisition. This profile typically includes attributes such as industry sectors, company sizes, specific needs or challenges, and geographic locations. Identifying the common denominators among top clients allows firms to pinpoint the prospects that are most likely to generate substantial revenue and long-term value. This focused approach ensures that the firm is not only attracting more clients but also acquiring ones that align with their core competencies and expertise, leading to sustainable growth and client satisfaction.

By focusing their resources, attention, and customized solutions on high-potential clients, consulting firms can optimize profitability while maintaining relationships with all clients. This approach ensures that every client's needs are met, but valuable resources are allocated where they can make the most significant impact on the firm's success.