Value-Based Segmentation

Traditional customer segmentation focuses on identifying customer groups based on demographics and attributes such as attitude and psychological profiles. Value-based segmentation, on the other hand, looks at groups of customers in terms of the revenue they generate and the costs of establishing and maintaining relationships with them.

A 2007 Fidelity study determined that investment advisors need to spend 22 percent more time servicing clients in retirement compared with the time spent helping them get to retirement. Customer lifetime value is a complex calculation for many advisors, but one that should be tackled because most advisors spend too much time running their business and not enough time developing their business. Compliance work, administration work, client reporting – all of these activities take the focus away from increasing the asset base.

With value-based segmentation, advisors can implement strategies to service the 80 percent of less profitable clients that match their lifetime value to the business without detracting from the 20 percent of high value clients. One such strategy is to streamline the reporting and handling of those low value clients. SS&C's Pages™ is an automated client statement generation solution that allows you to deliver high quality, custom reporting to profitable clients while also providing a fully automated process to produce standard reports for low value clients. Pages is a single application that can be used for multiple customer servicing strategies. To find out more about how Pages can help you to free up time to focus on developing your business, please contact us.