Eric Deeran warns that a single client can represent up to 60% of an agency's revenue and disappear overnight due to factors outside your control: in-house hiring, acquisition, budget cuts, or project completion. His rule: no client should exceed 20% of revenue. Build an inbound system with paid ads and an application funnel to generate new clients on demand.
My biggest client is leaving. If you've ever experienced this before, you know how stressful this is. 60% of your revenue can be gone overnight. And we talk to tons and tons of agency owners where this is the reality. But here's exactly what to do. The problem is obviously that you have 60% of your revenue as a single point of failure because most of your revenue is made up by one client. And this is exactly what most agencies do next is they panic post on LinkedIn, they email everyone from the last 3 years to work with them, they try to discount rates just to close something fast, they blame themselves for not seeing it coming, and then they repeat this cycle forever. But it's not bad luck, it's just bad design. Every agency we talk to everybody we talk to says the same thing. I knew the risk, but I didn't think it would happen to me. But this new model that I'm gonna show you guarantees that this never happens again. Now, here's why this always happens and why it has nothing to do with how good you are or how great of a service that you deliver. There's 4 main ways that clients disappear and none of them are your fault. Either they hire in-house, "Hey, we grew and we don't need you anymore." They get acquired, "Hey, our new parent company froze all of our vendors for right now." They have a budget cut, "Q1 was a tough year. Hey, sorry, we can't afford you anymore." Or the scope just ended, "Hey, we just finished the project and we don't need you anymore." Now, you can't prevent any of these. You can only control your exposure. And here's the math. If you have one client lost and you're making $10K a month, that's $6,000 a month that's automatically gone overnight. If you're making $25K a month, that's $15,000 a month gone overnight. Now, if only 20% of your revenue was in one client, then that would only mean that you lost $2,000 at $10K a month or $5,000 at $25K a month, which is a lot easier to stomach and not as big of a deal and not as big of a blow. Here's the golden rule of thumb. You want to keep all of your clients under 20% of your total revenue. The lower you can get this number, the safer you are and the more diversified you are because your best clients are your biggest risk. The fix is building an inbound system to diversify clients, and the trick is to build it before you need it. Now, if you had an inbound system in place, let's say you're running an ad and 1,000 people see it, 50 of them watch the VSL, 20 of them apply, 10 of them book a call, and you close 4 of those 10. And let's assume that this happens every single week, or every single month, or every couple of months, depending on how much ads you actually run. This means that you have a tap that you can turn on whenever you want it to continue to diversify your client load. And in this example, you had 4 closes at $10K a month, which is $40,000 a month in new MRR. In other words, you control the tap, and that's a real business, and that's something that's not going to keep you up at night because you know that you have a system to acquire new clients when you need them, and you have a diversified client pool where each client doesn't make up more than 20% of the revenue of the entire company, and you're not reliant on only one client. Now, this is one of the main things that we do and work with agency owners to do so they have more peace of mind and they're more diversified. If you wanna get our help, we have a short video on the next page, and there's an application to fill out if you wanna learn more about how You can work with us.
