Shrink and Grow Rich

Posted by on July 21, 2008 in Business Management [ 0 Comments ]

Naturally, the revenue of your business should grow year after year, but that does not mean that the number of relationships you manage must increase too. In fact, when it comes to relationships, the goal is not to see how large your client-base can reach, but rather how small it can remain. Many entrepreneurs tend to hit a plateau because they subscribe to the precept that you must continually “grow or perish” in order to succeed and maximize bottom line profits. “Right sizing” is a critical step in moving to the next level. I can’t begin to tell you how many thought-for-profit entrepreneurs I’ve witnessed benefit enormously from taking a proverbial step back.

As a general rule, 20% of any business’ clients generate 80% of the revenue. The question you should ask yourself is this: do you invest 80% of your time on those 20%?

Getting Started: Client Classification & the Ideal Client Profile

The first action to take in right sizing your practice is to classify your clients. Through this process, you will create an ideal client profile which will allow you to identify the type of future clients that you wish to work with. I encourage you to create a detailed client classification by using the Triple-A approach.

In this model, AAA clients are the best-rated clients, performing exceptionally in the following three criteria: Assets, Attitude, and Advocacy. AAA clients meet asset criteria, have positive attitudes that are most enjoyable to work with, and frequently work as advocates who widely recommend your services.

AA clients are almost, but not quite, at the AAA level. These clients have sufficient assets to be an A level client, but also seem pleased with your service and have a good attitude. However, for whatever reason, AA clients are not sending introductions your way. The goal with an AA client is to encourage them to reach the AAA level by offering superb client service. At the same time, it is also important to show AA clients how to introduce others into your ‘exclusive club.’ This often takes time and patience, but the results are well worth it.

An A designation denotes a client that you know has A-level assets, but who is simply a ‘customer,’ and not yet a true client. It is crucial to demonstrate to A clients that you are a superior professional who they can trust. The good news is that these clients are typically the best prospects since they are already partially committed to your services; therefore, you don’t have to start from scratch in winning them over as clients. The remaining classes of clients (B, C, D etc.) don’t have immediate potential but are not to be entirely overlooked.

You’re Not Firing them, You’re Respectfully Disassociating

The next step in the right sizing process is to call the clients on your list. When speaking to each client, it is essential that you are forthright and rational:

Up until recently, I’ve been trying to be all things to all people, and over time, I found myself becoming a generalist. Going forward, I’ve decided to become a specialist who strives to be all things to some people. I know my capacity, and in order to offer superior service, I have to make some changes to my practice. Part of that includes using an ideal client profile that reflects the type of client who is a good fit for my team and me. (Outline AAA). Based on this profile and our history together, I feel that going forward there probably isn’t a good fit. However as a value added service, I have identified someone who I feel would be a better fit for you.

The point of right sizing is to build a clientèle made up exclusively of clients you want to work with, because these are the clients who will become raving fans and sing your praises to their friends, family and associates. These clients are the key to building a successful, profitable practice. Remember, it’s more important to reach people who count, than to count the people you reach.

Duncan MacPherson is co-author of Breakthrough Business Development: A 90 Day Plan to Build Your Client Base And Take Your Business To The Next Level” and co-founder of Pareto Platform, an industry leading business development firm that helps entrepreneurs improve their practice management and business development systems. For more actionable templates and other resources, visit www.paretoplatform.com.


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