Revenue Growth Engine Audioblog

Mar 13, 2023

Why Your Largest Clients Are Not Always Your Ideal Clients

When you hear the words Ideal Client, what do you think? Many entrepreneurs, sales professionals, and marketing leaders immediately think of their largest client. However, in many cases, the Ideal Client is not your largest client. Ideal Clients need everything you sell, value what you do, and fit with your culture. This creates a flywheel of growth with net-new and cross-sell revenue. Because they fit with your culture there is a good chance they will stay around for the long term. This isn’t always the case with your largest clients. They may not need everything that you sell. While the people on your buying team may appreciate your company and feel some loyalty, frequent changes in the org chart as people climb the corporate ladder may complicate the matter. Here are six reasons why your largest clients may not be your ideal clients. Your Largest Clients May Not Need Everything You Sell Your largest clients often don’t need everything you sell. They may look to you for one of your core products or services but not be open to additional things you offer. Often, this is because they build these products or perform the service internally. For example, an office technology company that provides hardware, managed services, and software may have a major account that buys hardware from them. But because they are a large company, they have an internal IT department that handles technology management and software support. While that company may purchase a lot of hardware, it will likely never purchase software or services. Ideal Clients are able to create a flywheel of net-new and cross-sell revenue for your company. As Mark Hunter says, “You don’t just close the sale, you open a relationship.” The goal is to climb the ladder of value as you deliver multiple levels of value to these clients. (See Why You Need Ideal Clients to Create a Revenue Flywheel.) Large clients simply may not be able to provide this value ladder. Your Largest Clients May Not Value You or Your Company Larger clients often have purchasing departments with RFPs that tend to go to the lowest bidder. While sales teams develop skills to get around this, the reality is that they often look to vendors to provide commodities. 25 years ago I remember visiting the purchasing office of Walmart’s corporate headquarters. The company I worked for provided some communication technology to several divisions of the enterprise. While many of my clients looked to me for advice, the only thing this large company wanted was a lower price on our equipment. In fact, they told me what they were willing to pay and basically said, “take it or leave it.” There was no value placed on the advice or services myself or my company could provide. It was a pure transaction. In this type of situation, you remain vulnerable to the next vendor that is willing to shave a little more off of their price. Your Largest Clients May Not Be Profitable Over the years, I’ve heard the joke, “We’re losing money but we’ll make it up in volume.” Larger clients that bring in a low margin may not be very profitable compared to your Ideal Clients. Considering the time and energy it takes to manage these accounts, the profits may seem even less attractive. Your Largest Clients May Not Be Able To Be Loyal Larger companies tend to have a lot of turnover. People promote inside the organization. Others leave to pursue career opportunities either voluntarily or because of layoffs. Add in the presence of a purchasing or materials management department which we discussed above, and the reality is that many of your largest clients may not be able to be loyal to you, even if some of their people want to be. Your Largest Clients Can Make You Vulnerable When large clients change vendors it leaves a big revenue hole. Over-dependence on large clients can make or break a year. The challenge is that when they leave, there often isn’t much you can do about it. Your Largest Clients Can Make You Distracted We get obsessed with our largest clients. We tend to plan our year around them. If we are not careful we can end up focusing too much energy and attention on these clients to the detriment of our actual ideal clients and prospects. Get Clear On Who Your Ideal Clients (and Prospects) Are Every business is different. Your largest clients (and some even larger than them) may be your Ideal Client. However, for many companies, Ideal Clients are often found in the middle range of your client base. They are probably not your smallest or your largest clients. They are the ones in the middle that fit just right. Be careful to not fall into the trap of always chasing the largest clients. Make sure to know who your Ideal Clients and Prospects are. Focus your attention on landing and cross-selling them to maximize your revenue. In this, you’ll create a revenue stream that is much more consistent, predictable, and enjoyable to manage.

5 min