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April 29, 2013

How that ‘one great client’ could doom your firm

When I was a kid just out of college (a long time ago) working as a sales rep for the DuPont Company, I used to believe that I couldn’t be successful until I got what I needed from others.

  • “I’ll be better at sales when I get better brochures from corporate.”
  • “Business will pick up once engineering improves these products I’m selling.”
  • “Once I get through the training program, my results will improve.”

But once you mature a bit and get a little real-world experience under your belt, you realize that success is your responsibility entirely. You succeed or fail because of what you do or don’t do. Simple – and true! If you buy into this concept – and most successful professionals will – then why do we continue to ignore it when it comes to running our businesses?

‘We rely on’

Every time I kick off a relationship with a potential client, I ask them to tell me what they’re doing about marketing now. In virtually every case, the answers start with “We rely on . . .”

  • We rely on word-of-mouth from our satisfied clients.
  • We rely on referrals to generate sales leads.
  • We rely on one or two big clients to bring in most of our revenue.
  • We rely on the great relationships with key contacts.
  • We rely on repeat clients.

Two huge concerns

Please know that none of those concepts is inherently bad. Word-of-mouth is great. Referrals are terrific. Big clients and repeat clients are necessary. Strong relationships are critical for success. But there are two huge concerns with these strategies: 1) because others are involved, at some point, they will come to an end; and 2) because you’re succeeding with them right now, other marketing and sales efforts are being ignored.

I was in Boston recently working with a client. As we looked over the client list, we noticed how many clients had been lost over the past few years – good clients, really good clients. So we dug a little deeper and found that in several cases, their one key contact left the firm and with them went the relationship with that firm and all of the business. Since their relationship with that one person was so strong, they never bothered to get to know others in the firm and ended up paying the price. Unfortunately, this happens all the time.

I have another client in New York that gets nearly half of its business from one CPG company. It’s been a very good, very long-term, very profitable relationship. But that CPG company is starting to experience significant financial issues and starting cutbacks and layoffs. And guess which department is at the top of that list? My client is now scared to death about what will happen to its business with that client – and subsequently, to its business overall. Again, because things were so good for so long, the client coasted, never putting in place the things required to grow in case that one big client ever went away.

Here’s the bottom line: The key individuals that you work with will resign, get fired, retire, relocate, leave the industry and die. And if you’re relying on a handful of those kind of contacts for your success, the question isn’t if you will face challenging financial times, it’s only a matter of when.

Invest in marketing and sales

How do you fix it? First, take advantage of the success you’re experiencing now to invest in marketing and sales to:

  • build awareness in the markets you serve;
  • position your firm for the buyers you want to influence;
  • put in place efforts that generate a constant flow of fresh sales leads; and
  • develop processes for following up with and nurturing those leads.

Second, set a goal to get to know at least five contacts at every large client you have. How? Ask your primary contact for internal referrals. Schedule a lunch-and-learn. Spend time on their Web sites. Use LinkedIn to connect. Set up Google Alerts to keep an eye on happenings at those companies. Do whatever it takes.

Relying on only one entity

In general, commit to an ongoing business development effort to ensure that should when your one big client goes away or the referrals slow down or your key contact retires, the impact is dramatically lessened. Do that and you’ll be relying on only one entity to be successful: your own firm.

Good luck and good marketing.

This article was originally published in Quirk’s.

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