Use this Timeless Principle of Life to Develop Your Client Base
As a small enterprise entrepreneur, a key skill to possess is the ability to continually attract and maintain great clients as efficiently as possible. One of the most important and immutable business development principals that you can apply as a business owner is the 80/20 rule — also known as the Pareto Principal — which states that about 80 percent of your business stems from about 20 percent of your clients.
Something separating the best from the rest in entrepreneurship is that the best do not major in minor activities, but instead focus on the activities that utilize their time and money effectively. A great way to breakthrough in your business in order to take profitability to the next level is to invest 80 percent of your time in the 20 percent of your clients who are generating 80 percent of your business. Not only is this the first stepping stone towards competitor-proofing your best clients and revealing additional untapped business from them, but it will also enable you to consistently attract superior client referrals.
Defining Your Ideal Client
There is an old marketing maxim which states that it is more important to reach people who count than it is to count the number of people you are reaching. Most entrepreneurs aren’t very deliberate in terms of how they generate referrals. Very few have an actual plan in place, and most are simply happy to get a referral, of any kind, regardless of the actual quality. Consistently generating quality referrals is achieved by design, not by chance, and therefore it is critical to identify the specific qualities your ideal client should encompass. A simple way to execute this is via the triple “A” format.
Triple “A” Format
The first “A” speaks to Action. Describe the degree of action the ideal client takes to generate the level of revenue you are striving for. The key here is to position yourself as a specialist who works with high caliber clients, rather than as a generalist who will work with just about anyone. By distinguishing yourself as an expert professional in specified areas, you are able to project scarcity to the marketplace and give clarity to potential clients — since your focus will be on attracting and working with clients whose specific needs fit for your precise skills set and values. A specialist is far more attractive to higher caliber clients than a generalist, and is compensated accordingly.
The second “A” speaks to Attitude. Describe the attitudinal qualities your ideal client possesses. For example, the ideal client doesn’t focus on what you cost, but rather on what you are worth — that is an enlightened attitude. Far too many entrepreneurs work with clients who take the right Action yet have the wrong Attitude, which can end up costing more than it’s worth in the long haul. You must have rules of engagement in place to ensure that you continually attract clients who have a good attitude over the lifetime of your relationship with them. It is imperative to establish the right Attitude from the very beginning. After all, how you start a relationship directly impacts how it will unfold over the long haul.
The third “A” speaks to Advocacy. The ideal client isn’t really a client at all — he/she is an advocate. Such clients are fiercely loyal, empower you fully, and, best of all, are not just buying something from you – they are buying into something with you. They value your professional relationship, and therefore, they brag about you to those that are in their circles — other high-quality potential clients.
Developing Your Client Classification
Once you’ve created your profile, you then need to examine your existing clients and classify them in accordance to their degree of fit with you — how well they align with your values and skills set. Again, if 80% of your revenue comes from 20% of your clients, you must invest 80% of your time and effort into the clients within the 20 percentile. If you don’t, chances are that the 80% of your clients who generate 20% of your revenue will do most of the referring. And more often than not, they will refer clients who, like them, are only looking for the bare minimum. While on the surface this of course means more clients for you, they are not the caliber you are striving for — those that would generate more business and revenue — but rather they would be of less quality that will ultimately create more hassle factors that outweigh profitability.
Many entrepreneurs have a vast array of clients across a wide spectrum, including few triple “A” clients, some double “A” clients, and single “A.” You’ll probably even have some “B” clients who do not meet your criteria in any of the 3 categories. When a prospective client realizes that you are more fixated on the lifetime value of a relationship than on an immediate commission, you project scarcity and captivate him/her to the point that they are far more predisposed. This not only positions you as a superior alternative, but it also enables you to respond to the inevitable when a potential client tells you that he/she has met with some of your competitors who have offered to lower their fees.
At this critical moment of truth, you have to convey your rules of engagement with an understated calm and explain that you understand where they are coming from and the inclination to be shrewd in terms of how they invest their money, especially in today’s market. At this point, you can highlight your quality services by telling the potential client that your approach is not to negotiate your value in order to close a sale, but to instead focus on the mutual benefits that a long-term business relationship can provide to both parties.
The key is to gain clarity in terms of the clients you have now and then determine how you are going to allocate your time. Perhaps you will professionally disassociate from some clients who do not meet your business profile moving forward or perhaps you will sell a portion of your business to free up time so that you can dedicate more time to your ideal clients. Whatever approach you take, the goal is to ensure that you never spend time with lower caliber clients at the expense of the ideal clients you are striving to replicate.
Creating and Implementing Your Advocate Service Matrix
In order to make yourself more referable, you and your team should create a comprehensive listing of all of your proactive and reactive service deliverables. Set aside some time to list out everything you and your team provide in terms of service —from call rotations, newsletters, review meetings, client advisory councils, birthday cards, etc. — list everything you do. This process will reveal the value you and your company bring to your clients, and will also remind you that you can’t try to be all things to all people. Remember, a specialist strives to be all things to some people — their ideal clients.
Once you’ve created a listing of service deliverables, you should devote a column for triple “A” and double “A” clients who receive all of your service deliverables at the appropriate time and in a consistent manner; double “A” clients receive all service deliverables because of their potential upside for advocacy. You and your team absolutely must invest 80 percent of your time on your core clients within the 20 percentile — this is a crucial component to ensuring you are referable to those clients.
Introduction Process for New Clients – No Mixed Messages
Once you’ve created your ideal client profile, classified your clients, and then plugged them into your service matrix, you will have laid down a foundation for attracting a higher quality and quantity of referrals from existing clients. During your next service phone call with a client, plant the seed that you accept referrals. The key to success is to not look needy or to put your client on the spot with an expectation that they must respond. Rather, this should simply be a gentle, yet professional reminder.
Keep in mind that your most valuable prospects, or “MVPs,” are the friends and family members of your existing clients, and your clients will have more persuasive impact on their friends than you ever will, or your competitor for that matter. The key is to ensure that you have professionally coached your clients to understand the why and how for making an introduction.
Position the concept of referrals as a service you are providing rather than as a favor you are requesting of your clients. Explain to clients that as a value-added service you provide, you are available to act as a sounding board to friends or family members. This way, you project the professionalism of a consultant rather than the desperation of a salesperson. A consultant is far more refer-able than a salesperson. Prospective clients, who spend more time contrasting potential new service providers and businesses, can use this reality as an opportunity to differentiate your business from competitors. Chances are, competitors will amplify their salesmanship and in the process convey a high degree of neediness and desperation to prospective clients. A more professional consultative approach, focusing more on mutual fit rather than simply on making a sale, is far more attractive especially to potential high caliber clients. Keep in mind, top business professionals don’t chase new clients, they attract them!
The Pareto Principle is an ideal foundation for which all entrepreneurs should base their businesses. By implementing minor pragmatic and cost free adjustments into your business model, you can experience major breakthroughs in your business.