Client Tiering

Definition

Client tiering is the process of categorizing a firm's clients into ranked groups (commonly A, B, C, and D) based on revenue generated, profitability, responsiveness, and overall fit with the firm's services. This segmentation helps CPA firms identify which clients deserve premium service and which may be candidates for fee increases or disengagement. The Pareto principle often applies, with top-tier clients generating the majority of revenue while lower-tier clients consume disproportionate staff time.