Michelle Coyle is president of BGSD Strategies, where she provides strategic advice for political business owners. Have a question about your business? Email her directly at michelle@bgsdstrategies.com and she’ll answer them here.
Q: I wanted to get your thoughts on chasing small-dollar clients. Some business experts say ‘revenue all adds up,’ but in our business the low-payers can be a headache. What do you think is the best approach for building your client list?
A: This is one of those arguments where everyone is right — sort of. There are certainly successful business models based on doing a high volume of small-dollar services. Those models can be a huge headache to start up and sustain, but they also more easily lend themselves to creating some type of product that automates your service. Big money can flow from that.
I get the impression that you’re talking about something else though: a business model where you have big clients and take on a few small ones when you’re stressed about money or want to do someone a favor. Or maybe you’re betting that they’ll turn into big clients themselves one day. That idea we often have to reel in quite a bit.
In my business consulting practice, we refer to these as “80/20 clients” — the clients who are paying less than 20 percent of the bills, but expect 80 percent of your attention. Ideally, you’ll cut anyone who meets this criteria loose: keeping them on is definitely holding back your growth potential.
If you’re worried about cash flow, it might be time to talk to you bank about vehicles that can help you smooth that over so you’re not feeling pressured into taking clients that aren’t good for the health of your business just to get some quick cash in the door. That energy you’re using to service the 80/20 client is so much better spent going out and hunting the big fish.
If you’re taking on these types of clients as favors or because you’ll betting they’ll turn into bigger clients later, I can appreciate that. You do work in politics, after all, and betting on the right horses is a key part of your business strategy. The key here is to set boundaries on how many of these clients your firm will take on and/or what percentage of your staff time you’re willing to allocate to clients like this — no more than 20 percent please. Once you set the boundaries, make sure you stick to them.
Q: I want to get some of my clients to provide endorsements for my social media channels, do you think I should compensate them in some way? Also, when’s a good time to approach a client about this?
A: This is absolutely a matter of opinion, and I’m happy to give you mine. I personally feel like it’s outside of my integrity to pay clients for endorsements to use in marketing. I do, however, pay clients — and anyone else — a finder’s fee for successful referrals. My logic is that I’m paying for the amount of work. While I expect both endorsements and referrals to come from the heart, setting up a referral involves significantly more work than dashing off a two-sentence pull quote, and I want to make sure folks are compensated fairly for doing what basically accounts to sales work for me.
I also make sure to hammer home with all of my clients that if they refer me a jerk, I’m not going to sign a contract with them and it’s going to embarrass the person who did the referral. I absolutely want to disincentivize anyone who would ever dream of referring anyone to me just to get the cash.
The best time to approach a client about either one of these things is right after they’ve told you how great you are and how much your work has helped them. From there, it’s an easy segue to, “Hey, would you be ok putting that in writing?” or “Awesome, do you know anyone else who we should be helping the way we helped you?”
If you’re not getting these kinds of organic and personal testimonials from your clients, stop, go back, and work on your client service delivery until you are. You want endorsements that are genuine and freely given, not coerced.
Q: My staff is fully remote, but we’re getting everyone together for a team-building summit later this fall. Any recommendations for breaking the ice with people who only know each other from Zoom and Slack? I’m worried about awkward interactions.
A: Look, this group interaction will be like any other. There will be some people who are overjoyed and excited to meet in person, and others for whom this type of thing is their worst nightmare. Start from the premise that you’re not going to be able to please everybody and realize that you can lean a little bit on the excited folks to get the party started and keep it going.
That said, this is definitely going to go better if you have:
1) Food. And try your best to accommodate everyone’s dietary restrictions. It sucks to be the only person at the company party who can’t eat the pizza.
2) A specific activity to do. The activity could be as simple as taking everyone bowling or it could be more elaborate. Icebreaker games get a bad rap, but they’re classic for a reason. You should also consider mixing in some more serious get-to-know-you time with leadership exercises designed to help people get to know themselves and each other better. And be sure to include breakout discussion groups from those exercises that encourage vulnerability in sharing.
I would also suggest that you seriously look into hiring a professional retreat facilitator for this. Companies like mine can come in with workshops specifically tailored to your business that will help your staff bond and work better together after the retreat, and that takes a huge preparation load off of you when your time is more valuably spent in other parts of the business. It also allows you to immerse yourself fully in the retreat as a peer-level participant with your staff, which I highly encourage you to do.
