Gold Mine in Your Database

You already know your five best new clients
by Randy Shattuck, The Shattuck Group

Gold Mine

“So if we can keep all of our existing clients and add the
new ones we’ve projected from our business development plan, I think 2010 will
be a decent year for us,” the VP of business development said. “We might even
realize double-digit growth again for the first time in several quarters.”

For the previous hour, I had listened intently as she explained how the right
set of tactics would bring in the right new clients. Her comprehensive plan
impressed me. She clearly had listened to the marketing gurus. But then it
dawned on me to ask an important question.

“Can you realize your growth goals without adding new clients?”

“How can we do that?” she asked.

Your best new client might be an old client

As professional services (PS) firms struggle with the impact of this deep
recession, leaders at these companies seem to have a singular focus — acquire
new clients. When we talk to PS firm leaders, this is nearly their only goal,
almost to the exclusion of other important goals. The research we conducted with
Professional Services Journal earlier in 2009 demonstrates this.

We asked 207 PS executives what was most important to them. “Acquiring new
clients,” 95 percent of them said, was either “very important” or “important.”
“Retaining existing clients,” another 93 percent said, was either “very
important” or “important.” “Generating leads,” an additional 90 percent said,
was either “very important” or “important” to them.

Now it may appear obvious to some that this emphasis on new clients, client
retention and lead generation is only appropriate. After all, we are in the
throes of the worst recession that today’s working adults have ever witnessed.
But I’m not convinced.

I’m concerned that many PS executives are obfuscating, and potentially
substituting, “client acquisition” with “revenue generation.” To me, the two are
not the same. New clients often come with high risk and may not remain good
clients over time. New clients are far more likely, in our experience, to
negatively impact profitability and create management headaches. There is
usually a significant “energy expenditure” that accompanies new clients as PS
firms learn how to manage the personalities of decision-makers and ramp up on
the unique nuances of these clients. This can be very time consuming. More often
than not, existing clients are the best source of quick new revenue.

I believe there is wisdom in the proverb: “It’s easier to sell something new
to an old client than it is to sell something old to a new client.” Numerous
research studies have shown that the cost of acquiring new clients is
exorbitantly high and full of risk.

So if generating new revenue streams is really the main goal, and retaining
existing clients is a business driver, can your firm accomplish both goals with
one strategy? I think you can. Let’s explore how to do that.

Gold in the trends

The goal of this exercise is to rationalize the requirements for a new
service that you can offer a substantial number of your clients, all while
making a solid profit.

The first step in this process is to sit down with your top five to 10
clients and have an exploratory meeting. Ask them a broad range of questions
about where they are experiencing successes and challenges right now. Keep an
open mind and try not to ask leading questions. Document the conversations and
even record them if your clients will allow it.

Once you document the conversations, sit with the interviews for a while and
try to identify a few common themes. In our experience, these themes or trends
typically arise in one of two ways: challenges a business is trying to address
or opportunities it is trying to exploit. Oftentimes the business driver behind
challenges is a desire to reduce costs or achieve certain efficiency levels. But
the business driver behind an opportunity is often growth or market expansion.

Once you identify a common theme or two, ask yourself how your firm is
positioned to address the challenges and opportunities. Some key questions to
ask include:

• Which of these challenges or opportunities pose the greatest value to
  our clients?
• Which of these will our clients spend money on?
• How many clients are concerned with these challenges and opportunities?
  Is there truly a trend here, and can we sell this broadly?
• What would be our approach to solving these challenges or exploiting
  these opportunities?
• What would be our cost of operations to ramp up and deliver this
  service?
• How long would it take us to develop this service?
• How much profit per engagement can we generate?
• How many client engagements would we need to realize profits that exceed
  the start-up costs for this service? In other words, what is our break-even
  point?
• What is the profit potential from low, medium and best-case client
  engagement scenarios for the coming four to 12 quarters?

Test the waters

Once you have a good sense of which opportunities or challenges you want to
address and how you would go about doing so, get some feedback from the market.
This is where a friendly existing client is absolutely invaluable, especially
when compared to prospects that does not know you and will not likely give you
the time of day unless there’s something in it for them.

Schedule a follow-up call with a few clients and explain the potential new
service to them. Remind them that they have helped shape your thinking and key
aspects of the new offering. This will give them a sense of ownership in the
process and cause them to want to help you more. During the meeting, ask them
these key questions:

• Is this new service we’re thinking about offering interesting to you?
• Do you think you would buy this service?
• Do you think other people with similar job responsibilities at other
  companies would buy this service?
• What value do you think you would realize from this service — reduced
  costs, increased productivity, improved profits, decreased time to market,
  etc.? Ask them to be as specific as possible.
• Here is the big question — How much would you expect to pay for this
  service?
• What deliverables would you expect to receive in exchange for this fee?

With this valuable information in hand, you are now ready to make a judgment
call. Is this the right new service for you to offer, and can it impact revenue
the way you want it to? Ultimately, only you can answer this question.

Package it up

If you decide to offer the new service to your market, I recommend that you
use the information you gathered in the discovery phase to package the service
presentation. You can say things like “Our clients have asked us to help them
with …” or “You’ve told us you’re looking for ….” The more the offering
appears to arise from client-defined objectives, the greater the likelihood that
existing clients will buy it.

Two birds, one stone

I have seen strategies like this not only generate fantastic new revenue
streams, but also revitalize sagging relationships. When you come to an existing
client with a new idea that helps that company achieve an important goal,
suddenly the client sees you in a whole new light — a source of meaningful
solutions. And isn’t that the way we all want to be perceived?

About the Author

Randy Shattuck is a senior marketing executive and founder of

The Shattuck Group, a full-service marketing firm that specializes in
growing professional services organizations. You can reach him at

randy@theshattuckgroup.com.