In my last post, I promised to tell you of 5 ways you can generate…
The dangers of over reliance on one key customer
Does your agency have one or two ‘superstar’ clients that keep the bills paid and your team busy each month?
While a large client or account can feel like a windfall that regularly pays off and keeps your company afloat, over reliance on key customers is actually a very dangerous thing. If this client were to leave, or go out of business, or suffer some other financial set back, they will drag you down with them. But how can you avoid over reliance?
Why does over reliance on one key client happen?
The good news is that if you have one or more large, ongoing and profitable account(s) with key clients, your agency and your team are doing something right. Your customer service, output and quality are exactly what this customer is looking for, and you can be reasonably sure that, while there is always room for improvement, you are doing your job well. The attributes that make this such a positive relationship can be applied to many other clients.
What could go wrong if you over rely on one client?
- Your client may take on new management or board members who prefer to use a different creative solution
- A trusted contact at the firm may become discredited or leave their position
- The company may experience financial hardship and delegate the tasks you are employed to do to an in house team
- The client may undergo a scandal or legal issue, and your reputation may be sullied by ongoing business with them
- The company may file for bankruptcy or cease production for other reasons
- A creative difference between you and the client could cause irreconcilable differences
How to prepare yourself for the worst case scenario
- Nurture your existing client list – ensure that you are giving the same love, care and attention that you are lavishing upon your star client. Remember, the small start up of today could be a huge industry leader of the future, and they will reward your loyalty and longevity.
- Be on the hunt for new clients – consider hiring a dedicated salesperson whose job consists of meeting with new potential clients and getting them on board with your organisation.
- Diversify – while your agency may specialise in a small niche area, diversifying can help you to be prepared in case your industry suffers and you lose those big clients. This will enable you to attract a larger pool of potential customers.
A smart way to take a look at your current customer base is to employ software that will enable you to view your numbers at a glance. A program like Xero helps you to not only track your clients, but to view the different aspects of their profiles and compare year on year results, trends and opportunities. This is important, as you can remove the data from your key clients to see what the effects on your overall business would be if they were to leave, and to help you plan for a worst case scenario.