Pop Quiz Question: How much more did your web designer charge you for the high-value client you got from the website over the lower-value clients you’ve gotten in the past? How much more did the post office charge you to send the sales letter that got the HVC versus the non-buyers and cheapskates? How about Google PPC? Facebook?
The Answer: Not a penny more, but HVCs can be worth 2x, 5x, or 10x what most other regular clients are worth.
If you know this, here’s a good follow-up question: What are you doing specifically to attract, close, and develop more HVCs (High-Value Clients)?
What Is An HVC?
A high-value client is different for everyone, but in general, they represent far more PROFIT (not revenue) than your average client. They’re also easy to service where you can do your best work because their needs and your capabilities align. They appreciate what you do and don’t see what they spend with you as “a LOT of money.”
Typically, in IT services, they are a growing company with constantly expanding needs, creating more opportunities for you. Their needs are frequent, not sporadic. They pay on time, comply with your advice, and refer.
The 80/20 Rule Broken Down Further
I’m sure you’ve heard of the 80-20 Rule or Pareto Principle. It’s a natural law discovered in the late 1800s by the Italian economist Vilfredo Pareto, who was attempting to uncover why 80% of the wealth (which at the time was land) was owned by 20% of the people. Since his discovery of this natural law, it’s been studied and discovered to apply to all things in our lives from the mass of stars and the size of cities to the clothes you wear and the carpets in your house (20% of the clothes in your closet get 80% of the wear … same with your carpets).
These numbers break down even more, which means that 1% of your client base are your “whales,” 4% your baby whales, and 15% your top clients. From there, 60% of your clients are “average” in spend, and the bottom 20% need to be fired. Therefore, it’s very likely 80% of your PROFITS are coming from those top 20% of your clients.
You might already know this, but the more important questions are what are you doing about it? What are you doing to attract more of the 20%? To develop the clients you have to be HVCs? What are you doing with the 20% to continue to expand that relationship? To get them to refer you to others like them? To simply show them more appreciation?
In most cases, the answer is nothing. You have democratized support, effort, attention, and spend to ALL clients, and ALL marketing, when it would be a heck of a lot smarter to figure out what’s common about the top 20% and use that information to attract more like them versus more of “everyone.”
Why It’s More Critical Than Ever To Get High-Value Clients
Inflation and a tough labor market require a different, more strategic approach to expansion than “more” clients. Since your business growth, revenue, and profits are directly tied to a need to hire employees, and those employees are becoming harder to find and more expensive to pay, you’ve GOT to be smarter about not accepting just anyone as a client. Otherwise, you have very expensive talent working on low-money clients and low-leverage opportunities, which is a recipe for low margins and problems multiplied.
I have a beach home in Florida in 30A. One of the problems I’ve noticed over the summer is that many of the restaurants are only operating at 70% capacity — meaning they have about 30% of their tables open with no patrons, yet demand is higher than ever with people waiting in line out front and reservations booked weeks in advance.
When I’ve inquired as to what’s going on, ALL have said it’s because they can’t get the workers for the kitchen or the wait staff to serve the customers. Knowing this, they ALL should be gathering the contact information of any patron who comes in and spends an above-average amount on dinner, drinks, and desserts and work to get THOSE people back into their establishment versus just letting anyone book a table. Of course, none of them are doing that.
I’m a big spender when I go out to eat because I always order expensive wine, appetizers, AND desserts. I also tip big. I tend to host big parties and bring the family, running up high tabs — yet none of the restaurant managers approach me about selling a membership or putting me on a special VIP notification list of “jump the line” seating. And because I have a house there, I frequent a few of the restaurants more often than people who are there for a week’s vacation, then leave.
The point is that if your capacity is limited, you need to make sure you ONLY stock the pond with big fish and not minnows because the MORE clients you NEED to hit your revenue, growth, or income goals, the more complicated, stressful, and problem-riddled your business becomes.
What Do High-Value Clients Want, And How To Attract More Of Them
As I said, high-value clients are going to be slightly different for each person. But if we stick to the common denominator, which is HIGH PROFITS with a BIG SPEND, then we can assume HVCs are people who are willing AND able to spend a higher amount of money on IT services and support.
Given that fact, they are also far more likely to seek the advice of trusted advisors. They make their decisions on WHOM to buy from, not WHAT to buy, and not on price or the features and benefits of the service or product.
For example, we recently had to have our pool rebuilt because the previous builder was a complete doofus who screwed up multiple things with our home.
A lower-income person might have found someone to come out and put a patch on the leaks, ignoring the sinking pool deck and cracks.
A middle-income person may have called a few pool companies and made the decision on whom to hire based on who answered the phones live and/or returned their calls (sadly, this is rampant). They might talk to a few about “what it would cost” to fix the pool and choose the company based on whom they felt wasn’t “too expensive” and would do a “good” job.
But a wealthy person is going to FIRST find the BEST pool company in town. They are going to ask their other high-net worth neighbors whom they trusted with their pools — then hire THAT guy, regardless of what it costs. That’s why referrals and networking are so critical to getting HVCs. In my case, I have a new builder who specializes in custom, high-end homes who I trust, and called him to get a recommendation. I’m also PAYING him to oversee the job so I knew it would be done right. I didn’t make my decision on price, but on hiring the best person.
So, What Does An HVC Want In An IT Company?
They want someone they can TRUST to have a high level of competence and expertise. HVCs make their decisions based on WHO is providing the service more than what the service is or the price. They want a highly competent person handling their IT because they want to lower their RISK of a cyberattack, rogue employee, or compliance violation. They know they are a target and do NOT want to be embarrassed and appear incompetent or taken advantage of out of their ignorance and stupidity of making a bad decision or hiring the wrong person.
THIS DRIVES THEIR SPENDING.
They want someone who will make their life EASY. HVCs tend to be running growing companies and need a vendor who can keep up with their growth. They want someone who doesn’t need to be reminded or managed to do the job they were hired to do. These clients know their time IS money (unlike most who say that but behave entirely differently) and hate to be stalled, inconvenienced, or aggravated by someone complicating their life.
High-value clients want someone who is highly compensated. HVCs are very accustomed to spending money on advisors, and “cheap” is a RED FLAG to them. They expect the price to go up with competence. Think about Rolex watches or Rolls Royce cars. They don’t sell these items using a “Labor Day weekend sale!” with balloons and clowns and cheap markdowns spray painted on the windshield.
In general, we all associate “expensive” with higher value. If your prices are too cheap, you’re actually losing face with HVCs. They want appreciation and special treatment. HVCs know they are HVCs and want to be recognized as such. If they feel appreciated, they will spend more and refer more often.
You Must Learn How To Implement A Marketing Plan Designed To Secure More High-Value Clients.
If you want to know the secrets, strategies, and approaches to design your business, sales process, and marketing to attract high-value clients, then consider scheduling a FREE one-on-one phone call to talk with one of our consultants. Click Here To Schedule