Why 35% is too big

Do you want a big client?

Having a big client is great isn’t it?

A big name that other prospects should have heard of when you tell stories about your current clients

They spend a lot with you, allowing you to grow the business

However, there are some issues to think about.

Very early on in the relationship with any new client, we analyse their business and marketing performance. As well as understanding what marketing is and isn’t working, we look at your share of available wallet and how much of an impact clients have on your business.

Our general rule of thumb is no single client should be more than 35% and ideally not more than 25%, let us explain why.

Why a big client isn’t good for your business.

There really is just one reason: if you lose them as a client, it will decimate your business!

When we analyse client impact, very few clients escape from Pareto’s Law. 80% of turnover is delivered by 20% of clients. Although we rarely have sufficient data to see client profitability, it is highly likely that the bigger the client, one of two things happens:

a client delivering 35+% of turnover delivers even more of the profits, or

far too much resource is committed to that client and so they become unprofitable.

Whichever of these happens, if this client decides to use another supplier, you lose a huge amount of the cash coming into your business. You then cannot meet your commitments. If they are an unprofitable client, there is a chance you can survive as a business. However, you need to make the cost cuts quickly in order to continue.

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