Landing a large client can sound like a great goal. After all, the boost this can bring to a company’s reputation is worth more than any marketing effort. This could be why so many small businesses focus on gaining that one big client. Some small businesses get their start by working with one large customer. This usually happens when an employee is let go or decides to venture off on their own. They work with the company leadership to shift the employee position to an outsource vendor relationship.
This can seem like a win/win situation. However, it puts the vendor in a precarious position. No company should concentrate more than 20% of their revenue on just one client. The most obvious reason is sustainability. The more you rely on one client for your revenue, the less stable your company. Imagine if that customer went away. How would that loss of revenue impact your company?
Consider all of the resources you have to put toward a large client. Large clients typically consume a great deal of attention and energy from your staff. They may have a dedicated representative who is assigned to the account. The bigger the client, the more product you are selling or services you are providing. That takes manpower and logistics. Often times, the needs of the large clients overshadow the needs of the other clients.
In addition, it is typical for a large client to bring in little to no profit. This is because larger customers can demand lower prices. Gaining the client simply for the reputation builder can work against you. You may find you don’t have time or bandwidth to add other customers to your base. Moreover, the higher level of resources devoted to a large client usually equals higher costs associated with that account. If the price point is low, but the cost is high, it is actually detrimental to your business to engage a large client.
On the flip side, when you diversify your client base the impact is positive. Your profit margins will be higher. The amount of time and resources needed for each customer will be more evenly divided. The risk if a customer leaves is greatly diminished. You will gain a better reputation when people see that a good number of companies want to do business with your company.
Take the energy you would like to invest in gaining a big, known, client and spend it on building a solid foundation of client variety. There truly is strength in numbers. You will have a healthier, more profitable business.
©2022 Helbig Enterprises
