60% of Your New Rev Should Be Coming From Existing Clients
When business owners are brainstorming new ways to grow their revenue, they first jump to their prospective new client list. Prospective clients who become new clients of yours are great for building revenue, but I argue to look at your current clients instead. Most of your new revenue should come from your existing clients, approximately 60-70%. Here are a few reasons why:
- You’ve already earned their trust.
- They’re accustomed to sending you money every month or every quarter.
- You’ve already demonstrated how smart you are and how much value you are providing.
- You are embedded within business on some level, and you have an opportunity to show how you could grow their business.
These four things will add up to become an easier and faster sale than seeking out new clients. One of your responsibilities as a business owner is to teach your Account Executives (AEs) how to grow their book of business. Think of every AE as a franchisee and yourself as the franchisor; this will help open their eyes to this growth process. AEs will start thinking of how to grow their book of business instead of just maintaining it so that all of your clients are happy and satisfied with your services as they currently are. Additionally, they will start to see that if they are growing your business with the clients they are currently managing, you will give that AE more accounts and clients to manage—which helps them in the long run.
There will be some pushback at first, feeling overwhelmed with their current workload. Start by breaking down agency math for them, showing them how much of the agency’s revenue goes towards adjusted growth income (AGI)—the money the agency gets to keep. AGI goes towards not only salaries and benefits, but overhead and profit as well. Adjusted growth income is what your AEs should care about.
Next, help them understand their own data. What is the AGI of their current book? As owners, we must share some of our financials with these key employees. Remember that your AEs have the most direct income on your profitability; they need to know how this works, down to the nitty gritty. Give them an AGI update month to month so they can track the growth of their clients. Every good AE should grow their book of business by 10% per year. Keep in mind that this growth will not be even among their clients, but their entire book together should reflect this annual growth.
Then, give them room to think. Give them time to understand their clients’ industries so that they may offer good counsel to their clients. They also just need room to plan and think ahead. Allow them time to read trade publications, go to conferences with experts in those fields, etc. Help them do this while also developing new business plans. The end goal here is to have a plan for each client on how to grow that book of business that is reviewed by a higher-up and assessed as to whether it is working well or not.
Also, help them understand how to grow that book of business. Remind them that they can see their clients’ businesses and industries with fresh eyes, sometimes better than their clients can see it. Being on the outside looking in is to your AEs advantage. This is a gift that your AEs have that they must lean on. However, they still must invest time on learning their clients’ industries well. Suggest things outside of their office, such as going on site and shadowing a team member of their clients or going on a sales call with them. Seeing how their clients interact with their clients, your AEs will return with great ideas on how they can sell better in order to help their client grow their clients’ business as well as your own.
Taking these steps will help your AEs understand that it is their job to retain their clients and grow their book of business, and the best way to do that is to help their clients grow their business. You will see new revenue increase in no time!
This podcast was originally posted on sweetfishmedia.com on December 18, 2019.
Drew McLellan, with Agency Management Institute, produces a weekly newsletter with updates, tips, and market information of value to marketing agencies, owners, and employees. If you'd like to receive the weekly newsletter, follow this link to subscribe.