While there may be some truth to the saying “any press is good press,” the same philosophy doesn’t apply when it comes to the saying “any client is a good client.” Just because a potential prospect is willing to say yes, that doesn’t make them a valuable asset to your business. This is where you need to make sure you’ve determined who your ideal client actually is, and not just the usual easy to work with, doesn’t complain, etc. The real determining factor should be whether they are bringing in true value to your bottom line.
Some clients may be too small or even too big to help your business actually grow. You might find that while the money that comes with a big client is attractive, the effort you’d need to expend to provide a good product isn’t worth the money. The same goes for smaller clients. You might think multiple clients at a lower price will help you grow. However, if you are spending too much time trying to deliver the product for small profit margins, you may be better off raising prices in order to do less work for the same profits.
There are a lot of factors that go into figuring out your ideal client. To help you determine your sweet spot, consider these three tips:
If you raised your prices by 25% what difference would it make?
Would it take you out of range of qualified prospects? Would you lose customers, but still keep the same profits? When it comes to multiple clients at lower prices, it’s important to really keep track of the time and energy you are spending on each client. You might find that if you offer more services to less clients at a higher price you would actually end up doing less work since you already know that particular clients needs and wants.
As an example, let’s say you have five active clients you are working with – you are not only doing the work for each one, but also handling any communication and admin associated with them. Add five more, and you now have the work of ten clients plus the need to communicate with and keep track of administrative tasks related to each one.
However, if you increase your services for an additional fee to a few clients and drop the rest, you might be increasing your workload by a percentage, but you will be removing needless communication and admin time. This could result in a huge change in not only your profit margin, but your energy levels as well. You’ll be able to focus on less clients and do better work, which will enable to charge more premium rates as time goes on.
What size clients can you create the most value for?
Take a look at your staff and the resources available to you. What is the best work you can do with those resources? How much time and money is involved with creating this type of work? If a client wants to pay you 25% less for this, is it still worth the effort? If a client wants to pay you 25% more for 50% more work, do you have the resources and time to pull it off?
The best client opportunities are the ones where you are both creating value for each other. When it becomes unbalanced, one party will always be dissatisfied. If it’s the client, you lose the possibility of future referrals. If it’s you, your work experience with that client will become miserable, which affects your quality of life.
Don’t be afraid to say no.
When it comes to sales, we all want the yes. It makes our day, builds our confidence and hopefully contributes to the bottom line. However, the best way to make sure you are working with your ideal client is being able to recognize when they aren’t. Make sure you have your own list of red flags or criteria to help you make this determination. You don’t need to be spending time and resources handling issues with clients that aren’t contributing to your overall business success. That starts with understanding what that means for your business and being willing to turn down someone who wants to say yes.
