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Your average client is so important

Updated: Sep 1, 2019

I speak to many businesses who want to begin talks about a new business strategy for their firm as they are currently lacking in this area.

The question put forward to them is always the same: “What does your current client look like?"

The response is usually an semi-confident shot in the dark about who they are. I say to them that there needs to be analysis done on your current clients before you can actively go out and hunt for new ones. Why?

Because you need to understand what your average client looks like (not just the ideal client), and tailor your approach accordingly once you have done the analysis.

“So why the average client? I want big clients not just average ones”

This always brings it to the 80/20 rule, 80% of my revenue comes from 20% of my clients. This is generalising but is fairly accurate across the spectrum, at least in many firms I have dealt with. So the reason why you need to know who your average client is, is because they are your best clients to obtain and nurture for additional services, turning them into a recurring client well into the future.

Large clients are large for a reason; they know what they want and generally already have it from you so there is limited growth.

The second reason why you need to know who your average client is, is because this is where you can get more new clients in and build up the middle range to reduce your dependency on the larger clients.

“10 clients worth $1000 a year is a smarter way than one client worth $10,000 a year.

Why? Because you can grow with the smaller clients and increase that number without the added risk of losing a large chunk of revenue should the large client leave. Secondly, you can drive referral business with more clients again increasing your customer base.

I have seen companies fold based on two or three large clients leaving as the dependency they had on them for revenue was massive, not to mention additional overhead costs taken on based on servicing them. So having this information gives you a great start to understand what clients you need to look for.

Whatever the information is that is relevant to your business be it age, location, client needs or something else, have a think about how you can obtain this information to give you a clearer understanding.

Finally, identifying average client revenue offers a great starting point to begin the process of lifting the average through new clients or additional services to your current clients. Repeating this exercise every 3-6 months shows you if your value is increasing or decreasing.

Give it a try, it’s a great exercise that can give you some insight for your business anytime you need.


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