HomeBusinessAdvisory business – Who is the ideal customer?

Advisory business – Who is the ideal customer?

January 22, 2023

Let’s start with an analysis of existing clients:

ClientInfrastructure AdvisorInvestment managerInvestment researchStrategic advisor
% of revenue85%5%8%2%
Demographics45 years old, Male, principal advisor, $350,000, Masters level, de factor45 years old, male, founder and partner, $?, MBA, married40 years old, female, Head of ESG Research, $250,000, Bachelor degree or greater, married55 years old, male, CEO, $250,000, Masters, de facto
GoalsContinue to grow his income and support his team, longer term – build infrastructureCreate his investment fund, raise capital and build a sustainable investment businessBuild an ESG research capability, hire more people to increase capacity and rank highlyGrow his advisory business, create an indigenous economy
Measures of success – Work won against target
– Build infrastructure		– Raise investment capital-Top ranked ESG investment research
– Research votes as $		– Building an indigenous advisory business connecting indigenous economy to the capital markets in a thoughtful and productive way
Values– Rigour
– Honest
– Speed
– People
– Appropriate risk taking		– Rigour
– Speed
– appropriate risk taking		– Rigour
– Speed
– People
– Novelty
– Rigour
– Speed
– Novelty
– Appropriate risk taking
Customer pain points– Have targets, need to go out and find work
– No one can build infrastructure, needs new approaches and funding		– Raising money is hard, needs to have differentiation and meet due diligence requirements
– regulatory requirements		– competitive area
– limited resources
– limited experience		– indigenous interests and economic opportunities are not seen as ‘credible’
– advisory business is paid as a consultant or pursues success fees which creates cashflow crunch
Sector growth rateInfrastructure advisory – no growth rate but multiple macro trends (population growth, climate change, technology, sustainability)ESG funds – projected compound annual growth rate (CAGR) of 12.9% to 2026ESG research – projected compound annual growth rate (CAGR) of 12.9% to 2026Indigeneous economy – 4% per year but could grow 60% over 5 years if follow Maori growth
Sales cycle length– known from previous employment
– 2-3 months from response to RFP		– referred by mutual contact
– dependent on fund raising stage, can be less than 1 month		– referred by mutual contact
– not clear		– known from previous employment
– 1-2 months
Products/services used– Economic and financial analysis
– sustainability analysis
– strategic advice		– ESG impact assessment
– Market analysis
– Fund documentation development		– ESG research idea generation
– ESG research review
– ESG policy development and review		– Opportunities analysis
– Fund development strategies
– Economic and financial analysis

The elements to consider include:

  • Three of the clients are building something new – a new fund, new research capability, new advisory business – but they are not the bulk of the revenue
  • Largest client by revenue has a strong revenue target and the services deliver that revenue
  • Success for all of the clients is growth which stands to reason
  • Two of the clients are founders/CEOs and two are team leaders – all have a P/L in some form so effectiveness and commerciality matters
  • Intellectual rigour and speed of the services is the key value
  • Not the cheapest per hour resource for any of the work provided but likely that the total value of the service is high for the spend
  • All of the areas are growing but ESG and indigenous economy likely to grow 10%+ over next 5 years – that is why it is ‘new’ businesses in these areas – cannot consult to existing businesses as they are limited
  • No clients from formal marketing i.e. inbound enquiries due to an advertisement or brand
  • Common services – economic/financial analysis, ESG market assessment/research and fund development

Draft ideal customer

The ideal customer:

  • has a revenue target (i.e. needs to make a certain amount of money – so not small business or corporate services) or at least a strong connection to a P/L statement
  • Ideally in ESG or indigenous economy due to forecast growth but can be in infrastructure if client maintains/can grow into a strong market position
  • Requires a mix of economic/financial analysis and linking to capital markets with some non-traditional metrics (i.e. ESG) – overarching goal is to raise money from government/markets/regulators
  • All clients are over 40 years old
  • At least a bachelor degree (more likely to have a Masters)
  • Makes more than $200,000 per year
  • Core benefits – speed, rigour, understanding of the greater funding requirements
  • Values – people, rigour

Next steps

What is the Total Addressable Market (TAM)?

How do I go beyond referrals?

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