How Big Clients Can Break Your Business

Today, we're going to talk about how big clients can break your business. So let's just give an example right here. So let's say you're running a consulting company and most of your clients are paying you $1,000 a month. And then you have one client that's paying you maybe $10,000 a month, right? So they're a 10x customer than your average. That's an example of a big client. So we want to talk about our experiences. We'll do some experience shares and then maybe talk about what you can do to avoid having your business broken by big clients.

The thing that I really learned early on is if you're not set up to handle it, what it can do is it can detract from your core customer base and you could start end up affecting them in a negative way. I know an agency that literally just closed one of the biggest TV channels and they have a big budget from them. All it's doing is breaking their business. Funny enough, they're a competitor to Eric and I. They're still doing well, They're a big agency, but that one customer is really hurting their business, taking away a lot of their resources. They're struggling to service it well, and it's causing it where some of the other customers are suffering as well. And in the long run, they may not just lose that big client, they're also going to lose potentially, if they don't figure things out, they're going to also lose a lot of their smaller clients that are their bread and butter.

Yep. I think it's important to understand the long-term ramifications around a service business or a product business. This actually applies more to a service business, but most people don't think about it. And most people think short-term. They're like, okay, I can realize a lot of profits around this, a lot of revenues, and it's going to be great. It's going to— I'm going to hit numbers and all that. But what about your people? How are your people going to be feeling? Are they going to be stressed? And so you got to think about that because at the end of the day, if you're doing services, it's your people that are doing the work. And the number one priority is actually to keep your people happy. If you keep your people happy, then the clients will be serviced. There's a service and there's a trickle-down effect there. And the other risk here is client concentration. So if this client is maybe 20, 30, 40% of your business, and if they decide to go away and your team's stressed, all of a sudden 40% of your business is gone. And you're, you've leveled up all of a sudden to doing all this revenue. And then all of a sudden you have to level down, right? You have to tear everything down because you had to hire all this headcount and then people are super stressed and all that. It's just not worth it. So what you should be thinking about is what is your ideal client profile and what will you tolerate and what will you not tolerate? When I think about working with people in general, whether it's clients or hiring people, they have to be humble, they have to be hungry, and they have to be smart. And then they have to fit everything else. So for us primarily, we would like to work with SaaS companies. We like to work with e-commerce and to an extent travel now too. But that's who we like to focus on. And we're not going to try to be everything to everyone. And I think If you do, then everything gets out of hand quickly because what's going to happen is if you have a big client, they're going to dictate, hey, we need the service, we want this. And you just keep saying, yes, I do this, I do this. The stress levels keep building for everyone else. And then all of a sudden your company just falls apart and that's not worth it.

And what I would recommend is stop it right at the start. What I mean by that is if you can potentially lock in a big client and they came in as a lead, or you can sell them, don't sell them if they're not a fit, go refer them out to someone else. Maybe you can even work out a deal where they'll give you a commission if they close them. And that can be healthier for you. The other thing that you also do need to consider is if you have a lot of clients paying you $1,000 a month and you do want to scale up, you should. There's nothing wrong with closing bigger clients, but you may not want to jump from $1,000 a month clients and having tons of them to going to $10,000 a month. You may want to start off and try to go from $1,000 to $3,000 a month and slowly work your way up so you can get the experience, figure out how you need to adapt to keep those clients happy and reduce your churn as well. But it really can break your business and derail your growth. And short-term, yes, you can make more money, but long-term it can really hurt you. And the same goes not just with big clients, but closing clients that are toxic for your company. Like we've had a client in the past that we no longer work with that when they would just get on the phone, they would just yell at some of my team members. And I'm like, why? Don't have this. I'm like, let's just not work with them and refund their money. It's just like, why create something that's going to be really toxic and it's just going to hurt the morale of the company?

Yeah. Life's too short to work with people that are mean. And so Neil's point too, this is in terms of leveling up slowly in terms of your price increases, that definitely helps. And you should be thinking about that. And maybe we'll do an episode on price increasing again, but taking small steps with, from a land and expand approach. Right. So a while back when we worked with Amazon, it started really small. It was like, okay, let's just run one portion of your ads. And then it got bigger. It got bigger. And then they need more. They need more. They want to grow with you. Right? And so think about that. If you're hell-bent on working with them, say, hey, let's take a flyer. Maybe let's do like a, an engagement for a couple months or so and see how it goes. And then we can expand from there, but you don't need to take it all at once because if you take it all at once, again, you're gonna bring a lot of undue stress and you have to be thinking about the long term. So that is it for today. Go to marketingschool.io/live. That's L-I-V to learn about our virtual and our live events. We'll love to see you there. We've got some amazing speakers coming and it's gonna help you grow.