Market your practice like Apple

The urge to grab any and every piece of business, regardless of size and fit, is powerful. Of course we all want growth, but maybe there is a lesson to be learned from the late Steve Jobs.

I recently read about a meeting Jobs had with Google founder Larry Page in the summer of 2011. Jobs suggested Google stop trying to deliver so many products and just focus on a few. This got me thinking. If a company the size of Apple or Google has limited capacity, what is our ability as advisors to serve a broad range of clients?

The majority of advisory practices attract between one and three high net-worth clients per year. By understanding your clients’ needs better and becoming more relevant in the services you deliver, our experience has shown you can increase that number to between four and 10.

Do a simple test on your own practice. Add up all the clients in your book who generate more than $10,000 in recurring revenue and divide that number by the years you’ve been in business.

We all know that growth is critically important, but you need to avoid a growth-at-any-cost mindset. You can quickly drown your potential for growth by bringing on too many small households. The vast majority of businesses still have a small-account problem.

Most advisors don’t realize that the turn on the top 20% to 30% of clients (by revenue) is greater than the rest of their book of business and the turn falls with each decile of your client base.

I had always thought we gave our biggest clients the best deal because on an absolute basis they pay us the most money. But now I know this happens because our biggest clients are the first ones we go to with new product, insurance or other wealth management ideas. By the time we get through the top 30% we are generally ready to move on to another project. The middle tier gets the odd new product and the bottom tier is generally totally ignored.

The better approach to growth is to target your best clients and create a focus around those with whom you have an affinity. A target market provides direction on how best to move your business forward and allows you to recognize when you need to correct your course.

If you decided to focus 70% of your time on building out the number of dentists in your business, would you have a different business than you do today? Would you decide to advertise in trade magazines instead of the local newspaper? Would you understand business succession issues as they relate to dental practices and perhaps connect with a buyer of dental practices to serve your clients better? Would you learn more about IPP’s and tax-saving options related to dentists and professional business owners? Would you partner with an accountant who specializes in small-business accounting? If you did all these things consistently over a 10-year period, do you think you would have more dentists in your practice than you do today?

We don’t all have to be as smart as Steve Jobs but we can follow his lead in marketing. Many entrepreneurs don’t make it rich in the first year of operation, but those who stick to their strengths and work on continual improvement of their craft have a much better chance of reaching their goals.

Sound simple? It is. The brilliance of Apple is not the diversity of its products; it is that so many people love the few products it sells.

Keith Pangretitsch is director, national sales at Russell Investments Canada Limited, who has a passion for helping advisors grow more efficient and profitable businesses. He is an active member of Russell’s Practice Management program which has worked with more than 1,200 advisory teams across North America and Europe.