My large clients are stalling. Should I chase small fry?

Dear Aunty B,

My client base is mainly made up of large clients. Given that we are a small business (18 full time staff) this has worked well because we can lock them into long term contracts and service them properly.

However several came up for renewal late last year and these clients are delaying and delaying.

I suggested to my sales team that we start to chase smaller customers, but the cost per acquistion is enormous and as you, your good self, have pointed out, many a business has gone broke chasing small business. Also many of those will be suffering in the downturn and won’t make such good clients.

Any suggestions?

Neil D,
NSW

Deal Neil,

Business owners go broke chasing small business because they stupidly think every small business comes from some kind of small business cookie cutter and are all the same and hence will all buy their products.

The small business market can be an excellent one to get – just ask MYOB (in the old days.)

Here is why. First your business is more secure. Lose a big customer and you can lose a large chunk of revenue. Also if you do more than 30% to 40% of sales with one large customer, you had better make sure that the customer – and your bank – are pretty happy!

Small businesses are also as loyal as terriers. (Are they loyal? I don’t know. I’m not a dog person.)

A small business owner, if getting the right service, will stay with you forever – mainly because they don’t have the resources to run around the whole time looking for cheaper, better deals, like large businesses. Also not that many companies chase small businesses so there often aren’t better deals around!

And here is one last excellent reason. You can charge them more. The time poor desperate small business owner (bless you all) just wants a quality service. You can increase your margins; something you can’t do with large clients.

So do a marketing plan, look carefully at the costs, and imagine sleeping at night instead of being a slave to large giants.

Good luck!

Your Aunty B.