Who are your best clients, and how to get more of them?
This is a 3-part series of videos, where we’ll discuss: first- WHO are your best clients, second- WHERE to find more of them, and third- HOW to reach them so you can grow your business!
In this 1st video of the series, you’re going to learn HOW to identify your best clients.
Most B2B owners I speak with are the same: they’ve never force-ranked their clients from best to worst. I put myself in that bucket too, until about a year ago. When a business coach recommended THIS approach: identify your best clients, so you can get more of them!
But it brings up an interesting question: who ARE your best clients? Most of us will run a revenue report and see who’s bringing in the most revenue every year. It’s a good starting point, but that doesn’t tell the whole story.
Here’s a great way to modify this list. Rank your clients by annual revenue or lifetime value and then focus on your top 20 or 30% of clients. We’re going to dig a little deeper here. If you’re using a spreadsheet, add 2 more columns: effort and enjoyment. Yes, if you want to build a sustainable and scalable business, you want to be working with people and projects you LIKE, right?
Let’s say you have a client that pays you $100,000 a year, and another who pays you $20,000 a year. At first glance, you’d love to get a lot more clients like the first one. BUT, what if getting that client is super difficult and involves a long sales cycle, or you have to put in too much effort to cater to their needs and higher expectations so the margin ends up much lower, or dealing with that client drains you and the rest of your team? You have to take all these things into account. Higher contract value often comes with much higher support costs.
Our business is the same too. When we’re working with companies to produce their explainer videos or video content marketing, we can get a $100,000 client but that can mean that instead of doing 2 rounds of edits to the video we have to go back and forth 50 times over a period of 6 months. Compare that to a smaller client where we can get a video done for them in a week without much hassle.
So do we want to dedicate our efforts and resources to win 5 more of the big client or 20 of the smaller client? Because it WILL take you much longer and more staff to win and support the larger clients so you won’t be able to scale that number as much.
Ultimately, you have to think through these issues and decide for yourself what company you’re building. And it may very well be that getting a larger client doesn’t need that much more effort, in which case of course you want to go big. But also keep in mind this: the element of risk. If you have 100 small clients, you’re much more diversified than if you have 10 big clients.
Not so much because of the economy because nobody knows who gets affected more and how. The larger client may slash their marketing budget but the smaller client may go completely out of business. However, what you CAN count on is employee turnover. So even if you have a champion in a large company, don’t rest on your laurels. It’s a precarious position to be in.
What happens if they get fired or move on to a different company? The good news is that they may bring you along as a vendor, but that doesn’t happen too often, since the new company may already have their own vendors in place. The bad news is that you will lose your existing client since no one’s left behind who knows you can take care of their business.
So what you want to do is dedicate some effort into expanding your network within existing clients. One- because it can lead to new business. But two- that’s a worthwhile pursuit even if only to secure continuity within the company in case your point of contact leaves.
Comment below if you have any questions or would like to learn more about our approach in identifying our best clients, and you can sign up on B2BNXT.com for the free monthly newsletter where we share similar insights and case studies from our own experience as well as interviews with B2B experts and owners of Inc5000 companies.