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The RARE Advisor: Launch Pad Step to 2024 Growth

The RARE Advisor: Launch Pad Step to 2024 Growth
Jan 11
2024

In this episode of The RARE Advisor, I want to introduce you to what I call the ‘Step Before the Strategy’. The first step that you need to take is a really quick internal calculation within your practice that will set the stage for your 2024 growth. Let’s dive in.

 

It's always exciting when we start off a New Year: we're full of aspirations, have goals for the year, want to grow our practice, want to run a better business, want to treat clients right, want to gather new assets, want to create and develop better portfolios, want to increase sales, and the list goes right on down the line. But the step that comes before all of that, it is kind of the precursor to each and every one of those things I just mentioned, is a quick calculation. Really, you could argue it's two calculations that are attached at the hip. It is Total Customer Value, and Total Maven Value.

Total Customer Value is the total value of revenue driven by a particular customer over a particular period of time. If you're going to pick a single period of time (you're going to only want to calculate this one time) then I would say run it over a five year period of time. If you are going to pick multiples, I would look at a one year, a three year, and a five year period of time. But it's simply identifying what the revenue generated by that particular individual is. And I want to do this for all of my database. What's the revenue generated by those individuals over that period of time individually? Then, what I want to do next - and this is a really important part - I want to take that Total Customer Value and I want to use it to calculate Total Maven Value. Total Maven Value is the Total Customer Value plus I'm going to credit those individuals with any introductions, they gave me (referrals or introductions that lead to new business or new clients). I'm going to credit them the value of the person they introduced me to.

So, if my customer is worth $5,000 to me over five years, and they've introduced me to three other individuals who each in turn were worth $5,000 in their formula, then I'm going to create a Total Maven Value for that starting point customer of $20,000. Now, then one of those introductions that was in the maven calculation, they might become their own maven, right? Because they have their own Total Customer Value. But then they've introduced me to two or three people, and I can go right on down the line. So this is key. And the reason it is key is because you want to duplicate your best clients. You don't want to duplicate the bottom half, or even the bottom two thirds of your client base. You want to duplicate the top 5, 10, 20%, maybe a third at most of your client base, those are the people you're trying to adhere to. So by identifying, first of all, who they are and who they hang out with - that's step number one. By looking at the Maven Value, you'll very quickly determine whether or not you're any good at getting introductions (which, by the way, are lightyears beyond getting referrals - we have a whole system and a program for that if you need help with that). But it all starts with calculating the Total Customer Value, and then identifying the Total Maven Value.

And oh, by the way, last tidbit. The reason I calculate this for longer than a one year period of time is because I want to account for assets under management and recurring revenue. Because we know inside of our practice, even though on the P&L statement non-recurring revenue can be very valuable on the value of our practice, the recurring revenue is what drives the bulk of the value in the practice. So, over a five year period of time, I can get an idea of what that recurring revenue looks like. You can go any period of time you want - maybe you want to do 10, maybe you want to do lifetime. There's all kinds of ways to do it. But, I would say if you're gonna pick a single period of time, go to five years so that you're getting recurring revenue in balance with your non-recurring revenue. Hey, have a great 2024.

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The RARE Advisor is a business model supercharged by Recurring And Repeatable Events. With more than thirty years of working with and coaching successful advisors, host Mike Walters (along with other leaders in the industry), discusses what it takes to grow a successful practice. With the aim of helping financial professionals and financial advisors take their business to the next level, Mike Walters shares insights and success stories that make a real impact. Regardless of the stage of your practice, The RARE Advisor will provide thoughtful guidance, suggestions for developing systems and processes that work, and ideas for creating an authentic experience for your clients.

The RARE Advisor is also a podcast! Subscribe today via Apple Podcasts, Google Podcasts, or your preferred podcast listening service for easier on-the-go listening.

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