This week’s short (6 minute) video for professional service firms is “Introducing client portfolio management with dinosaurs – Be more T Rex”. So whether thinking about the client portfolio of the firm, a team or a professional you need to be more T Rex.
Hi I’m Kim Tasso
Today we are going to think about client analysis and client portfolio management. This is a vital step towards improving profitability and releasing time to developing our most important clients. And I’ll be using dinosaurs and drawing to illustrate my point.
Here’s a diplodocus and a T Rex.
A starting point is financial analysis. And not just revenue. We have to analyse the profitability of our clients. The largest clients aren’t always the most profitable. Although they will be important for cash flow.
This is a diplodocus. It plods along slowly…
Remember the Monty Python sketch where John Cleese plays Anne Elk describing her new theory of the brontosaurus – she they are thin at one end, much thicker in the middle and then thin again at the other end.
Let me attempt to draw a diplodocus – imagine we have done a client profitability analysis…
Remember Pareto that 80% of profit comes from 20% of clients?
So – the head are the few critical clients generating most profit. The crown jewel clients. It’s instant death if you lose one of these.
The body is the majority of clients generating a reasonable profit… No doubt cross-selling will be an aim and activity here if appropriate.
And all of these clients should be part of a client listening programme.
The tail is all those clients that can take a whole bunch of your time but generate very little profit.
These are the clients that often cause most hassle – the ones where your shoulders go down when they call. They can be demanding and quarrelsome – and may resist paying a fair price – and then delay paying their bills – and they can eat your time and demoralise you and your staff…Adding insult to injury.
SO LET’S THINK ABOUT HOW TO ACTIVELY MANAGE OUR CLIENT PORTFOLIO
First we need to increase the size of the head – to invest time and attention on those most profitable clients to grow them so that we have a larger head – we might do this with a KAM or ABM programme. There’s lots of info on my web site about key account management and account-based marketing.
You might have a risk policy that no one client can generate more than a certain amount of revenue and profit.
All this takes a lot of time. But professionals tell me that they are already busy and don’t have time to devote to existing clients…
Then we look at the middle body section clients and see where we can prioritise investing time and resource to growing these into head clients. This will take more time…
Then we cut off the tail of those small and unprofitable and unlikely to grow clients – either by raising the price so that they become middle size, body clients or by releasing them to go and upset the profitability of one of our competitors. This releases your time to devote to head and body section clients
And how much lighter and more energised would you feel without that long, heavy tail….
Some people may fear cutting off the tail in case they can’t generate new big head or body clients – but then you need to look at improving your marketing and sales strategies or increasing your business development skills.
Remember that reptiles regrow their tails so review those small, unprofitable clients regularly…and trim the tail
ENTER THE T REX
So – bigger head, more slim line body and a shorter tail and we have a T Rex! You can eat your less nimble diplodocus competitors now.
So – for client portfolio management – Be more T Rex!
Thank you very much for watching and listening…
Further links on client portfolio management:
Be More T Rex – Client management with dinosaurs (October 2015)
Client Experience Management (June 2019)
Key Account Management – Managing key client meetings (July 2017)
Account Based Marketing book review (February 2020)
Client relationship management – how many close relationships can you manage? (May 2017)
Profiling clients for KAM (December 2006)
I provide public training courses on KAM, referrer management and related topics through PM Forum and MBL Please contact me for details of inhouse courses.
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