Putting the client at the heart of strategy

Strategy formulation often takes the traditional approach of first coming up with a broad, aspirational vision statement and then developing a raft of tactics designed to realise that vision. Then, only once that is done, a marketing plan is developed to support these broad strategic aspirations.

So everything is in place to build competitive advantage and returns for stakeholders, right? Well, maybe. The simplistic, top down approach to strategy formulation has many flaws in the complex and volatile trading environments that business now have to contend with.  This will be developed further in future posts.

If the purpose of a wealth management organisation is to attract and service clients, then developing a comprehensive marketing plan – who are you going to sell to, what are their characteristics and how are you going to sell to, and service, them – with proper market segmentation, is key to putting the client at the heart of strategy formulation, not an afterthought or merely a series of unconnected tactics.

Comprehensive marketing plans generate the key strategies to grow the business.  They lead to robust downstream decision making. Proper segmentation is vital in formulating effective and growth-oriented marketing plans.

However, although proper segmentation is vital in developing a comprehensive marketing plan, it is rarely done properly, if at all. Segmentation and, if appropriate, sub-segmentation are critical in the strategic decision making process.

Proper segmentation provides focus to a range of strategy settings, including ensuring that the service/product offerings, positioning, pricing as well as distribution, promotional and selling strategies are integrated and targeted to the profile and characteristics of a particular customer segment. Further, many downstream decisions in marketing, sales, service, operations, compliance, HR and organisational structure will flow from this segmented strategy formulation.

Best practice strategy formulation should be rigorous, including the segmentation analysis.  A number of market segmentation aspects need to be taken into consideration.

An area of common confusion in segmentation is to confuse “industry” and “market”. To take a simplistic, non-wealth management example, you may have a business that delivers goods to fashion retailers. The industry is transportation but the market is fashion retailing.  This determines resources and capabilities (for example, the attributes of the delivery drivers that engage with customers is critical). This may sound obvious and front of mind in strategy formulation but the point is that proper segmentation makes sure you can’t miss walking up to these vital decision points.

Investible funds are a common segmentation methodology in wealth management. Geographic segmentation is also a way to segment markets. However, segmenting on criteria such as funds and geography can make it difficult to develop targeted strategies as the customer signalling and characteristics within the segment are often less apparent.

Customer behaviour segmentation on the other hand divides the market into groups based on the assumption that the types of product and services offered reflect that buyer’s characteristics and patterns of consumption or demand, making for easier development of targeted strategies. When segmenting according to customer behaviour, market segments must be focused on the attributes of those who may purchase the firm’s products or services and not on the internal features of those products and services.

There may also be significant value in breaking down segments further into sub-segments to provide laser-like focus in the strategic business plan as the product offering, positioning and selling strategy may differ among those various sub-segments.

However, it is also important to know when not to segment to ensure that marketing and other decision making isn’t any more complex than it needs to be.

It can be seen that there is much more to developing a comprehensive marketing plan than a few non-targeted promotional and sales strategies adopted as an afterthought to strategy formulation.

As a proper marketing plan brings laser like focus to key decision making, taking the time to get it right and making your marketing plan and segmentation a centrepiece of strategy is of the utmost importance. A commitment to the process is essential. Applied software and systems (such as Trackermap) can help facilitate a robust and detailed approach.

The client is paramount for almost every organisation and developing a properly constructed marketing plan based on effective segmentation is the vehicle for putting clients at the heart of your strategy.


Simon Quirk
Director, Trackermap