How do I grow further?

by Adina Luca, November 4, 2015

Growth can mean many things and can come from many directions.

The easy route: increase the value offered to your existing clients and get more business from them. Why is this easy? Because you need to know your clients inside out and have great relationships with them to be able to uncover additional needs. Which you already do, otherwise you would not be in business. This is a long term winning route as your clients will ‘push’ you to expand while supporting you financially.

The healthy route: recover lost clients and awaken dormant ones.  Why is that healthy? Because you will need to review your past relationships, including past mistakes. Use this information wisely and learn from the past.

The risky route: raise your prices. Small businesses usually under-value their services because they are, well, small. A 5% increase in prices may be nothing for your clients, especially if you are selling to the big corporate world. But it can mean a lot to you. However, this is a risky strategy if your service quality is not getting better, so plan to invest your surplus into more qualified staff or better technology.

Client Churn – this is the difference between number of new clients and number of lost clients in a year. Negative churn is a sign of problems in delivery and client service. Unless you are embarking on a strategy to eliminate the small value clients and that particular year you consciously accept a negative churn. Otherwise, more clients are leaving you than you are able to sell to.

Number of Odd Requests – monitor your pipeline and count clients’ requests for services that you don’t currently offer. They start with ‘I know you don’t offer this, but we also need…’ Check what they have in common and you might be sitting on a new service line that your current market is ready to buy.

Share of Wallet – find out how much annual budget your clients allocate for your type of service. Divide how much they give you against that budget and you get your ‘share of wallet’ percentage. A very small percentage says that you have room to ‘grow’ within your current client base. Or you are in danger of being pushed out if a bigger competitor, already working with your client, decides to offer what you are offering.

Always start from what you have. Analyse your current clients on criteria that makes sense for your business. For example, number of employees if your business depends on how many employees your client has.  Area and location, if your business delivers an ‘on-site’ service.

Talk to your clients regularly and document their views. Even better, design and implement an annual or project-end service evaluation form. It can be an annual qualitative interview as quantitative forms can easily become a ticking-through exercise. Open the conversation with clients that do not like you very much. Don’t talk only with the ones that love you to reconfirm how great you are.

Then go back to your past data. Check the last couple of years’ trends in value per unit, such as value per billed day or per project. What is happening, what decisions triggered the differences? How does your value per unit compare to direct competitors’ numbers? What about to the big competitors’ value, those you don’t get to run against but aspire to be like? What type of clients gets a higher discount from you?

Check your client churn and look at what the new clients have in common based on criteria above – are you attracting a new segment? Look at what lost clients have in common based on criteria above – are you losing a certain segment of the market? Check your pipeline – what proposals are you making these days? Are they different from years before?

Talk to your lost clients. Someone who worked with you and no longer does has no reason to cushion the feedback and may have many valuable insights to offer on how your service comes across.  Use that feedback to check whether you have been improving or identify areas for future improvement.

Then decide on a strategy for growth.

Choose to grow from existing client base if your client churn is positive and your pipeline uncovers multiple requests for new services that you are not offering.

Choose to grow from past clients if your client churn is negative. You may need an internal review of your services before you start re-kindling the past relationships. Use the lost clients’ feedback for that.

Choose to increase your prices and improve your services if your value per unit is comparatively lower for clients with a big budget for your service and a medium share of wallet. They value you, this is what they give you a bigger share of wallet, and they can pay higher for added value.

Can you combine the strategies? Maybe. Map out a matrix for each client segment and strategy and think about the consequences. It may be difficult to offer your service at a higher price to a past client who used to pay a lower fee.  Introducing a new service to smaller clients where you already have a very big share of wallet may not be successful. There is no more room no matter how much they like your new service.

Then do your projections to set up the targets and be able to monitor your success.