Your Most High-Value Client may be a Surprise
We know and it’s pretty common knowledge that acquiring a new customer is exponentially more expensive than retaining a current customer. Forbes has even done a study about the cost specifics. Keep this in mind as you work to discover who your high-value client or clients are, you will begin the process of maintaining each one as your business depends on it because your business does depend on it! Before we jump into how to keep them as happy customers, let’s talk about how to figure out who they even are. It may surprise you to find out that the client with the highest monthly bill may not be your highest value client. That same client may also require more hours of work from you and your team, therefore not the most profitable client. A high-value client is one that has the highest return on your time and your money.
Your business depends on them; you answer their emails right away. You always answer the phone when they call. In fact, as a small business owner, your high-value clients often literally pay your mortgage. They are essential, and nurturing that relationship is crucial.
Discovering your High-Value Clients
The best and fastest way to figure out who falls into this category is to run a financial report or create a custom KPI. The numbers don’t lie. An accounts receivable aging report will give you the data you are wanting. Which KPI? There are a few to choose from, but creating a custom KPI is your best option.
Regardless if you are a QBO, QBD, or Xero user, the best place to create reports and custom KPIs is through Reach Reporting. Reach Reporting is a data analysis software, and our main goal is to absorb the complexity of your business finances and data so you can understand them. Reach Reporting creates visually enhanced reports that tell a story, not just spit out data. You can then use that information to answer questions you have about your business, like “Who are my high-value clients?”
Most often, the accounts receivable report is used during the collection process. It also has merits as a gauge to the health of your business and the health of your customers. This report classifies customers according to their outstanding balance and how long an invoice has been unpaid. Use it to see and understand three key metrics;
Who has paid you
When they paid you
How much they paid you
Combining these three key metrics and comparing them with hours spent on that client will determine your high-value clients. Creating a KPI and watching it closely will provide essential information on your high-value clients. You can use accounts receivable information or revenue gained data. The key is continually waiting to see trends and changes along the way.
Once you have run the report and created your KPI, two things may surprise you; who is actually at the top but also by how much one client or a few clients are above the others. While having money-making clients is always great news, there is a flip side. The “what if’s” come into play. What if your one big client cuts costs? Or goes out of business? Placing all your bets on one client will trickle down into trouble for yourself, your business, and your bottom line. If you find this is the case for your business, it may be wise to diversify. Spread the wealth a little more by working to grow some of your smaller or less profitable clients into those high-value ones. As Grandma used to say, “Don’t put all your eggs in one basket.”
Keeping High-Value Clients
Plain and simple, you have to become irreplaceable to them. Even if your biggest competitor comes calling, they couldn’t imagine leaving you. There are several ways to accomplish this mighty task, and unfortunately, it is not the same answer for each industry or even each client. Each high-value client requires and needs something different, but thankfully there is one underlying common thread. You must take the time to make sure your high-value clients know you are thinking about them. They need to be confident in the knowledge that you want nothing more than for them to be more successful. You want to express that it is merely at the core of who you are to care and that you genuinely value your clients. You want them to know they matter. That is a game-changer. I don’t care if you are talking about marriage, friendships, or any other kind of relationship. When a person or business wholeheartedly believes that you genuinely care, it changes everything.
Part of building that personal relationship is talking and, in return, LISTENING. That seems simplistic to say, but in this day and age, actual conversations have been replaced with email, texting, and instant messaging. These are lovely technologies that have a time and a place to be used. On the other hand, we CANNOT replace human relationships, human contact, and actual words with typed words. Pick up your phone and give them a call or, better yet, go and visit your clients! Have lunch or coffee and look them in the eye. You will be shocked at how this simple old school practice can set you apart from the rest of the pack. Of course, continue to back it up with your sound business practices and with a competitive price, and you will keep your VIP clients happy as a dog with two tails.
Going the Extra Mile
Think about a time a company went the extra mile for you? A few years back, my son’s car was barely (like 500 miles) out of warranty when smoked billowed out from under the hood, and he was stuck on the side of the road. The repair was going run somewhere around the $1500 range. To a young full-time working and full-time college student, this was devastating. The car company took a look at the repair and stepped up big time. They wrote it up as under warranty and paid for the repair. You can venture one guess where he went to buy his next car and what story he tells anyone who is looking for a good car with fantastic customer service!
Going the extra mile in the short run may cost a little extra or take a bit more time, but 9 out of 10 times it will pay off in the long term. These practices are what will set you apart from your competitors. One customer well taken care of could be more valuable than $10,000 worth of advertising.
While taking special care of your high-value clients is a critical practice, we mentioned this earlier, but don’t forget about your smaller clients. That high-value client probably started as a small client! Spread the love around to everyone, find out what is essential to your client, what makes them feel important? For some people, merely remembering birthdays or work milestones is what it takes. Others love the flattery and shmoozing. All these things can be learned by talking but, more importantly, LISTENING to your clients. Follow up with them about any questions they had or problems they encountered.
Once you learn which clients provide the most value to your business and which ones need to be nurtured into high-value clients, you can alter the way you do business. Take the time to figure it out and take the time to help them feel the love. You will know where to spend your time and your resources, and knowing is half the battle.