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The Risks of Relying on One Big Client

The risks of relying on one big client

What happens when you win a big client that makes up a significant proportion of your monthly revenue, and consequently demands a disproportionate amount of your time?

Well, excitement can quickly turn to long hours, and that, in turn, can detract your attention away from your other paying clients. 

In this episode of The Agency Accelerator Podcast, I share some of my thoughts about the pros and the cons of winning and relying on a large client for your agency. 

If you are in this situation (and many have been) then I will also explore how to mitigate your risks.

Here’s a glance at this episode…

[1:06] 

The excitement of winning a big client

[1:26] 

How to avoid over-servicing your clients

[2:11] 

Importance of getting your team clear about service levels

[2:33] 

Tips in handling big clients

[3:28] 

How to win new clients (so you are not just dependent on 1 or 2 big clients)

[4:13] 

What is the biggest challenge in running an agency?

[5:12] 

Importance of identifying the risk as early as possible

[5:40] 

How to anticipate famine on your agency

[7:39] 

The importance of having your business development and plan in place

[9:12] 

Why you should not focus on one big client

Quotations

“..my advice to anybody that is thinking about putting all their client eggs into one basket because they've won one really big client is you need to spread your risk one way or another. And I would ask you to ask yourself what would be the impact to my agency on my business if I lost this one big client..” - Rob Da Costa

“Something else to bear in mind is that larger clients can often be worse payers and can have a significant impact on your revenue and your cash flow. Just make sure that you are getting really clear around payment terms.” - Rob Da Costa

“Just remember that having the lion's share of your business tied to another company also means your fortunes are tied to theirs if their business flounders, if they change tact or they decide to move supplier, you could find yourself out in the cold through no fault of your own without sufficient alternative sources of revenue.” - Rob Da Costa

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 Full Episode Transcription

What happens when you win a big client that makes up a significant proportion of your monthly revenue, and consequently it will demand a lot of your time?

Well, excitement can quickly turn to long hours, and that, in turn, can detract your attention away from your other paying clients. 

So, what are the pros and the cons and the risks of winning a large client? That's what we're going to be covering in today's episode of The Agency Accelerator Podcast. 

Accelerate your agency's profitable growth with tools, tips and value-added interviews with your host agency owner and coach Rob DaCosta.

We had some interesting conversations in The Self-Running Agency Group call recently, where we were discussing the pros, the cons and the risks of winning a big client that ends up accounting for a large percentage of your revenue. 

I'm sure you can relate to this because it's probably happened to you, too. So I thought I'd record a podcast episode to share some of the thoughts that we shared in the group with you today. 

It's super exciting when you win that really big client, and that excitement quickly turns to well, now we've got to service them. ‘How are we going to cope?’ And this can lead you to hire new team members juggling things around and, of course, making sure that you deliver what you promised this new client. 

But one thing to be mindful of is if you win a big client that might be 2 to 3 times the size of your next biggest client. Then there's a tendency in the agency to give that new client carte blanche access to you and your team. After all, you want to do a great job, and you are super happy that they selected you over perhaps bigger agencies. But if you're not careful, this can really quickly lead to over-servicing, working long hours and getting lots of stress in the agency or to keep this new client happy. 

So even if their fear equates to a lot more of your team's time, we still need to be really mindful about putting clear boundaries in place and making sure that we don't end up over-servicing that particular new big client. 

You also need to make sure that your team understands this, and that means that there's a clear scope of work that they're working on. That you've broken that down into time allocation. Everybody's self managing their time. And obviously, everyone in the team knows what they need to focus on, but also that they don't take other clients for granted as well. 

Now winning this big client might be one step on your agency's journey of growth. So know that when you've won this big client, you've got two choices. You either use it as an opportunity to take the next step in your agency, hire more people, set more systems and processes in place and then work super hard to win more clients of a similar size. Or you recognise the risk that this large client brings because you are putting all your eggs into one basket, and therefore you work super hard to spread that risk by winning more slightly smaller clients.

Now without being the bearer of bad news, history says that at some point, probably through no fault of your own, you're going to lose this client even if they're a retainer for you and you're doing a great job. That's going to happen. 

So let me quickly tell you a story about when I ran my agency. We grew over time. As you know, we had 25 staff in the end. But maybe about three or four years into the agency, we won our first super big client. This client was probably three times the size of our next client. Then very quickly, we won our second big client. As I've already said, we worked super hard to do a great job for them. We were kind of punching above our way in terms of the size of agency that we were versus the size of agencies they've been used to working with in the past. That made us want to work even harder to prove that they've made the right choice. We kept these clients for quite a long time. But within about a space of six months between the two, each of our clients got bought out. One of them got bought by IBM and the other one got bought by Adobe. 

And guess what? We really had the rug pulled from our feet because we didn't really get a chance to re-pitch, because obviously IBM and Adobe had their preferred agencies and they just wanted to roll all of their marketing services into them.

Therefore we didn't even get a look in and our client contacts were really sorry, but that we were let go. So with a space, we kept these clients for maybe five or six years. But then, within a space of six months, we lost both of them. 

Now, fortunately, during that time, we had put some of the advice I'm giving you today into practice, and we started mitigating our risk, and we started increasing the average order value of most of our clients. 

So whilst they weren't as high as the two clients we lost, they were much closer. This meant that when we lost these two clients, it wasn't the end of the world, and we didn't have to make some bad decisions, which I'll talk about in a moment. 

So my advice to anybody that is thinking about putting all their client eggs into one basket because they've won this really big client is you need to spread your risk one way or another. And I would ask you to ask yourself what would be the impact to my agency on my business if I lost this one big client, and often the answer is fairly significant. Then start focusing on spreading your risks so that if you do lose your large client, it won't be catastrophic and you won't have to make some really difficult decisions as you lurch into that space of famine, such as being desperate to win some business to replace that revenue, which often means discounting. Or it could well mean taking on the wrong kind of client or even worse than that, it could be letting staff go. You need to anticipate all of this and plan for it. So, as I said, the question to ask yourself is ‘What would be the impact on my agency if I lost this client?’ and then start planning as though that's going to happen.

So that means making sure that your time isn't being sucked up into this new client and you actually still have time to focus on business development to win more clients. Obviously, you need to make sure that you are putting the right structures and infrastructure in place to support this new client and giving yourself the capacity to support more similar clients or making sure you're winning more small clients. 

As I said, this was a conversation in our group coaching call this week that someone asked, and a lot of people could relate to that particular challenge. The member of the group has just one, this large client, and they're already thinking about this. They're already worried about the impact on their agency, both from a positive sense in terms of growth, but also a risk as well. So I just wanted to share with you my thoughts on that today. 

Something else to bear in mind is that larger clients can often be worse payers and can have a significant impact on your revenue and your cash flow. Just make sure that you are getting really clear around payment terms. And if their payment terms are not favourable to you, then you want to really think carefully about whether you want to take them on. In fact, one strategy might well be in your agency to deliberately not win a big client because of the risk it puts and the strain it will put on your agency. 

Of course, another risk is that you get so consumed with servicing this client that you have no bandwidth in your own time or your agency's time to focus on business development. And it really can cause you to lurch from feast to famine. Because, as I said, if you lose that client, you just don't have anything in the wings to replace it. 

So this is something else that you want to think about, and when you're working on your vision and your plan for your agency, think about the size of clients that you want to win. ‘What should the average order value be? How does that increase over time?’ And, yes, winning a big client may well catapult and speed up the delivery of your plan. But you also need to be cognizant of the risk that it presents as well and not just get flattered by having an ego stroke that someone wants to pay that much money but actually say, ‘Does this fit in the strategy of our growth? What is the risk to the agency?’ And, of course, ‘What's the fit for them as a client? And do we think we can do a great job?’ 

Just remember that having the lion's share of your business tied to another company also means your fortunes are tied to theirs if their business flounders so much yours, if they change tact or they decide to move supplier, you could find yourself out in the cold through no fault of your own without sufficient alternative sources of revenue.

And that is a really risky place to be. Okay, a short and sweet episode today. But I just wanted to share my thoughts with you because, as I said, I've been in this place before, winning a large client and being very excited by it, and I'm sure you have as well. But you need to look beyond that. You also need to be thinking about how this aligns with our vision and be planning accordingly and planning for what happens when you lose that client at some point in the future.

If you do that, then you will be able to win these clients. You’ll be able to service them really well, but you also have the time to focus on backfilling with more clients in the future so that you are not just relying on one client and putting all your eggs in one client basket. So food for thought.

I'd love to hear about your experiences with this, so please do feel free to send me an email. My email address is in the show notes, but other than that, I hope this was thought-provoking. Have a fantastic weekend and I'll see you next week for the next episode of The Agency Accelerator Podcast.

Why do some companies offer their clients pain killers while most try to give them a vitamin pill?

selling

If you had a really bad headache and you could buy a pain killer or a vitamin pill, which would you buy?  The painkiller, right? Obvious!

Yet in business, I see time and time again, agencies trying to sell their prospective clients a vitamin pill.  This is not a good way to sell.

Imagine going to your best friend’s wedding and having too good a time and waking up with an almighty headache the next morning.  Would you reach for a pain killer or take a vitamin pill? Well a pain killer of course!

Clients who are in pain have an urgent need to solve that pain (with your solution). Yet many agencies are trying to sell their prospective clients a vitamin pill (something that is nice to have but not urgent) rather than a pain killer!

So when you are marketing & selling your product or service, are you addressing the client’s pain or are you telling them your product is something that would be great to have in their business?

Getting this positioning wrong will have a massive impact on your agency.

A real bugbear of mine is that many websites make this mistake by starting out selling the vitamin (which looks like telling the client how great YOU are and what YOU do on your home page) rather than recognising the pain (which looks like building empathy with your client by showing you understand the pain they are in).

This could well be the case with your own website?  

They are trying to sell the client something they may not be aware that they currently need (the vitamin pill) because although it might enhance their business, it doesn’t solve one of their major pains right now (the pain killer).

Let me give you a real example of this – something that happened to me last week.  I got a cold call from a company that can track visitors to your website and give you detailed info on them.  

Sounds great right?  

The issue is that this isn’t one of my current pains.  A current pain for me (regarding web traffic) is that I would like to get more traffic to my site.  Only then would it be worth investing a monthly fee on visitor tracking software. Meanwhile, that product is just a vitamin pill for me, so I am not going to buy it!  The guy on the phone wasn’t really listening to me and just tried to tell that spending £500 / month on their software was a good investment.  Not if it doesn’t solve one of my key pains!

They needed to better target by understanding who they were calling first.

If we start by identifying the client’s pain then we ‘stand in the client’s shoes’ and demonstrate we understand them (which builds empathy, a crucial part of the sales process). The language we use when we discuss our product or service will then be geared to show the client how we solve that pain rather than just discussing the features of our product (which we can do later).

So 3 things we can all do better in our agencies:

  • Know your customer persona/avatar and specifically what the top 3 pains/issues are in their business
  • Understand the language they use and build our solutions using this language, showing how our solution can cure their pain
  • Make our initial communications (via email, blogging, your website) all about the client and their pain (so they want to read more) BEFORE we talk about our solution and how great we are

If we do this we are much more likely to build empathy with a client which will lead them to say ‘tell me more’ and then you have started a dialogue that can more easily lead to a sale.

Understanding your customer journey

customer journey

We all understand that in order to grow our business we need to turn contacts (i.e. target customers who don’t know us today) into customers. It’s tempting to assume that one piece of marketing or one contact will be enough to convert these contacts but in truth, it’s much more complex than that.  In order to create engaging content, you need to understand the customer journey.

Your customer personas

There are a number of stages we need to follow in order to truly understand our customers and therefore ‘speak their language’. Firstly, we need to understand who our target customer is. Sounds obvious right? You’d be surprised how few companies have identified their target customer groups (maybe 3-4 different types) and therefore can map their typical behaviours, challenges and needs of each group onto their product/service. If you do this as step one then you can start to produce sales and marketing messages that resonate with each group. Take me for example, as a business coach and mentor, 2 of my (3) customer personas are HR managers of mid-sized businesses and Owner/Managers of small businesses. Do you think they have the same needs when looking for a coach? No, they don’t. If I understand their specific and unique requirements then I can start to ‘talk their language’ when marketing to them.

Understand your customer’s journey

Now you understand your client types you can start to map the journey they will take as they look to buy your solution and move through your sales funnel. What are the various stages they go through as the convert from contact to warm lead to prospect to hot prospect and finally customer (and then repeat customer)? And what can you do at each stage to ‘encourage ‘ them to move through this process? It will certainly be different messages at each stage; your communications will get more detailed and sophisticated the further they move through the funnel.

Sound intriguing?

If not and you want to find out more, download my FREE ebook on developing your customer personas.

The strange story of how the agency owner won more business by no longer measuring ROI

customer persona

We all know that in many aspects of the marketing world, return on investment (ROI) is hard to measure and whilst it might win you business, it also helps you lose it (by not delivering or not being able to accurately measuring it).

A conversation about ROI is often linked to a purchase decision (i.e. if the client thinks they will get good ROI then they might buy from you).  

We all try to quantify ROI if we can, which can be particularly challenging if we are selling something like PR. Yet is this the best way to get a client to buy?  How do we connect emotion to this conversation? To be honest, we probably don’t!

We would be better served talking to the client about what their cost of inaction (COI) is because that’s where the emotional decision making will take place.

You see, if you are really selling something that cures a pain for a client (have a read of this blog on the subject) then you can also talk about the cost to their business if they take no action?  

This discussion is much more real to your client and also laden with emotion.  Thus it’s much more like to get the client moving and help them make the decision to buy from you.

Let’s take a moment to consider why.  There are 2 main types of motivation that move us on in life:

ROI is a toward motivation (something I aspire to, that i wish to move towards)

COI is an away from motivation (I need to move away from my current situation because it’s painful, precarious and a risk to my business)

Can you see how COI conversations are much more likely to result in the client taking action NOW and purchasing your solution?

I fell foul of this in the early years of running my agency coaching business until I decided I needed to better understand my target customer.  I spent time researching and talking with my target audience, developed my customer personas/avatars and consequently started developing content (including my website) from the customer’s perspective.

A key learning here is that if you really understand your client, it is much easier to address their pain with your solution.  

So here are 3 things you can action today:

  1. Go and talk to existing and past clients and find out what their number 1 pain is today and what they are most afraid of in their business.  You might be surprised to find it isn’t what you think! And when you start hearing the same comments, you know you have hit onto something.
  2. Look at your website’s home page and make sure it starts by recognising your target audience’s core pain because then they are going to think ‘oh you get me, tell me more’ and consequently click on the ‘About Us’ page – where you can start telling them how wonderful you are.
  3. Everytime you write a piece of content (such as this blog) consider which of your customer personas/avatars (or buyer persona) you are talking with.  Imagine they are sitting across the table from you and you are having a chat. I bet that will alter how you write!

Once I had this understanding in place it become much easier to engage with my target market and resulted in higher win rates and increased revenues.  So I find it strange that agencies typically only talk about ROI when selling, rather than COI (or both!).

What are your experiences with this?  I would love to hear about your views in this area.

Building empathy with your target market

empathy, customer journey, customer persona

When I get inbound new business calls (regarding potential coaching clients), I always like to enquire where they heard about me/found me. This is a prerequisite for any business that does any form of marketing (after all you need to do more of what works, and less of what doesn’t!).

So last week I met a new prospect (who has since become a client) to discuss helping their agency grow and develop a clearer market position. I asked where he heard about me and he had an interesting story to tell:

He runs a number of training courses focused on writing and content development. On one of his courses he shows an example of a bad website and an example of a good website. It turns out he has been using my website for some time as the good example (fortunately not the bad one!). And he kept thinking, I must give Da Costa Coaching a call at some point.

That point was this month because he has hit a brick wall in the development of his business and wants to move it forward and was interested to see how I could help him.

Standing out from the crowd

So that’s great isn’t it? – to get an endorsement and win a client at the same time. But what makes my website stand out (to the point that it is used as a good example of website writing)?

My bugbear about so many websites is that they are all about the company and show little understanding of their potential customers (except in a case study that is buried deeper in the site – where there is a good chance a new reader will never reach). Yet what you really need to do very quickly with website visitors is build empathy – show them you understand them and recognise the key challenges they face (that your product / service can solve).   The typical website starts by saying “We do this and we do that and aren’t we great” but if you haven’t already built some empathy and credibility with the reader then they are likely to think “who cares!”

Websites should be about building awareness and credibility. The home page should demonstrate you understand who your target customer is and show you understand their challenges. This makes the reader want to learn more – which will probably lead them to click on the ‘about us’ page and find out who you are. Of course companies can only do this if they have an in-depth understanding of who their target customer is. And if you are thinking, “but we can sell to anyone” then you are likely to sell to no one! You need to “pin your colours to the mast” and focus your marketing on the specific market sectors, and this starts with your website.

If this resonates with you yet all sounds quite complex, then get in touch, give me a call and let’s have a chat.

Stop making your website about you

website text

I review a lot of websites that have a home page that tells the reader how amazing they are and what they do.  After all you love to talk about your company and its products and services. Maybe you’re excited about a new product you have launched or a new market you can service. You’re selling your product or service, so that’s what you need to write about, right?

Wrong.

The truth is that nobody is interested in you, your company or your products – well not at least until you demonstrate some credibility. And this approach is rather an egocentric view of the world and a sure fire way of someone leaving your site pretty quickly (look at your Google Analytics to see your reader’s behaviours and how long they stay on your site).

In order to ENGAGE with your reader, you need to start by showing them you understand their market and their unique set of challenges. That way you leave them wanting to read more about you, thus clicking deeper into your site.

Think WHY -WHAT – HOW

The old marketing approaches are still relevant today and particularly so to website copy design and structure:

  • WHY should someone read your website and engage with you?
    • This is where you show them you understand their market and the challenges they face
  • WHAT is it that you offer (that is unique in your market place)?
    • What do you do? What is your proposition to keep them reading?
  • HOW do you solve the client’s challenge and HOW easy do you make it for your target customer to engage with you?
    • Clear call to action and next steps – don’t make it hard for your reader to navigate your site – it should guide them through your ‘story’

Of course to achieve the above you need to really understand your market and how you fit in and then build your unique set of propositions. You also need to have a very clear understanding of your target customer(s). If you want some help with this then please get in touch. Also have a read of my whitepaper on market positioning.

 

Why customer personas aren’t just a marketing fad

Implementing strategy with Da Costa Coaching

A bug bear of mine is that so many websites are written from the perspective of the company rather than the customer.  So for example, the format for a typical website is “We do this and we do that, click here to find out more”.  This, like much marketing, is written from a company centric perspective yet it isn’t rocket science to realise that in order to keep the interest of the reader, all marketing should be client centric.  If you buy into this then you will also understand that in order to be customer centric, you have to have detailed knowledge of your customers – and the latest term for this is Customer Personas.

Your customer personas describe your typical client and will probably cover 80% of your client base.  If you get an understanding of who they are, their key challenges and drivers – then you bring them to life and will find it much easier when producing marketing or content to consider with whom you want to engage.  Let’s take me,  I have 3:

David (50 years old) the CEO of mid sized business (25-200 staff) – He is the driving force of the business with clear vision and ambition to grow the business. He doesn’t always communicate with the rest of the staff/management team that well. He isn’t always patient with staff and his ambitions sometimes leave rest of business behind and looks for external help around people and infrastructure.

Jane (40 years old) Owner/Manager of small business – Enjoys the rewards of working hard including eating out and nice holidays. Gets frustrated that her staff don’t always get it. Keen to delegate more but doesn’t have the right level of management team beneath her. Surrounds herself with a great external network of mentors, coaches and allies. Frustrated that the business takes one step forward and one step back so looks for external help.

Sarah (35 years old), HR Director/manager of mid sized business – Trying to deliver the people agenda for ambitious companies. Can sometimes be a lone voice when the business is moving too fast without considering the people/infrastructure. Turns to coaching to support the development of senior teams but also can be the person tasked with finding a coach.

When I am writing (including this blog), I first consider who I want to engage with (which will rarely be all 3) and then what their challenges are around the particular topic I am writing about.  I can then consider the key words they might type into Google and so on.  If you want to read more about this, download this whitepaper from my client, Southerly Communications.  If you want some help with yours, then get in touch.

So whilst the term customer persona is relatively new, the ideas around it aren’t (and they are very sound).  Is your business clear about your personas?  Is your marketing communications company- or customer- focused?

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