In the early days of our corporate events business, my team and I jumped at every new lead that came through the door. We were hungry for revenue and resume-building opportunities.
This was a great strategy in the short term, because we didn’t have anything else competing for our time. As our company moved from startup mode into growth mode, however, our lead-chasing became a hard habit to break. After all, who wants to turn away business? All of our clients loved us, so landing more loving clients would be a good thing, right?
We quickly learned time is a precious resource, one that is not renewable. More clients is not always better. In fact, it can even be worse for small businesses.
More of the right clients, on the other hand, can be the perfect catalyst for your small business’s growth. You want to pursue the kind of clients that won’t drain your resources — especially your time — and will provide a relative amount of profitability that will further your success. When your company is growing fast, your time and your human capital are at a premium. Continued growth depends on how well you steward these resources.
In our business of corporate and incentive travel, an enormous amount of labor goes into creating a sales proposal that is customized for each client’s specific objectives. In many cases, that cost isn’t considered when the client looks at your value proposition. Instead the client compares what we charge for full service to what they can get piecemeal on the internet. Certain segments of the market are high maintenance and low margin, and others understand the value business events companies bring to the equation and the costs involved with delivering that value.
As our company grew, I identified the market segments that understood our value and were willing to pay for it, and I made the decision to focus our sales efforts in those segments. We would not pursue any players I identified as low margin, and if they came looking for us, we would politely decline to bid on their business. This was not always well-received. However, in my view, if I approach a provider and they tell me they don’t want or cannot take my business, the provider has saved us both some time.
Here are just a few ways I can identify whether a client is probably right for our business:
1. The Client Knows What They’re Looking For
Clients who know what they need in a service provider will do research before sending a request for proposal, identifying two or three companies at most that are the best potential fits for them. When that list is longer than three, you know the client has not done their due diligence; they may simply be looking to do just that in speaking with you. That is not a good use of your time.
2. Client Is Open to Hopping on a Phone Call With Us
Every event is unique, and the better our business understands your goals and objectives, the better our proposal will be. If you can’t take 30 minutes to discuss your needs with us, you are likely just shopping price.
3. Client’s Budget Is Realistic
This speaks for itself. We are a high-level service provider, and we will never be the low-cost provider in any bid situation. We are wasting our time with any work spent in the low end of the pool.
4. Client’s Deadline to Create a Proposal Is Realistic
A quality proposal requires sufficient time for the provider. Clients who don’t understand the process or don’t respect our time may not be good partners in the short or long term.
While these markers are specific to my business, there are some sales universals that translate across industries.
Salespeople hate saying no to anybody, and they naturally want to win every opportunity that comes in the door. Ensuring your sales team is aligned with your goals may require a change in your incentive plan. In our case, we added a metric to incentivize client profitability in addition to top-line revenue. As a result, the sales team’s focus became so clear that when we had to reject a client, we were not derailed for long.
The only thing you cannot get back once it is lost is time, so invest your time with the preciousness it deserves. Lead your team to understand this, and you will see your profitability grow.
Jeff O’Hara, is president of PRA New Orleans and author of Have Fun, Fight Back and Keep the Party Going: Lessons from a New Orleans Entrepreneur’s Journey to the Inc. 5000 (Greenleaf, 2018).