Do you remember the old style horror movies? You know the ones with gothic vampires that liked to suck their victim’s blood whilst they slept, leaving them no knowledge of the attack? In the business world, you can still find such vampires that love to prey on your business without you knowing it.
Yet unlike the victims in these films, who were naive and innocent, you don’t have to remain oblivious to their misdeeds, but can instead take the active steps towards identifying these vampire clients and the horrors they may be hiding beneath the surface.
What are vampire clients?
In all my years of working with agencies, I have noticed that you’ll find at least one Profit or Resource Vampire client hiding in the woodwork.
Yet, what exactly is a Vampire Client? And how can they harm your business?
In my experience they are often clients:
- That bring in little to no profit, despite the work you supply.
- That seem to drain your earnings as they are costly to service.
- Where you have ended up paying for the ‘privilege’ of having them in your portfolio.
- That are known as ‘problem clients’ and groans are heard when discussed internally.
- Who create a lot of noise and manage to demoralise staff within the agency.
- That waste time which could be better spent on newer or more profitable clients.
The biggest sign of a Vampire Client, is someone whose expectations and resources don’t match the revenue generated. So whilst they don’t figuratively suck your blood, they can be incredibly draining to your agency.
So why tolerate them?
For many agencies the answer is simple: you didn’t realise they were one, as you fell into the trap of measuring their profitability based solely on their spend with you.
Yet, this is a big mistake.
To achieve a more accurate picture of their profitability, you also need to measure the amount of time you spend on the project – the longer you take to complete it, the less you earn per hour.
But that is not all…
Any of the following, can transform a client into a bloodsucker:
- You set your prices too low. Whether this stems from lack of confidence or a hesitation on your part to charge premium prices; by historically charging clients too little, it can make it difficult for you to raise your prices in the future.
- Aggressive pricing and competition from other agencies can cause you to drop your prices in a bid to win new clients. Yet your price is not the only thing potential clients will consider during the decision process. They will look at the WHOLE package, meaning the only thing your prices are doing is harming yourself.
- Changes in work requirements. It is important that if a client changes the specifications of a project, that you accordingly adjust your prices to match the demand of the job.
- Fear of rocking the boat, or believing that the increase is too small/not worth it; can prove costly to your profits.
- Seduced by a big name client. Whilst they may look great on your client list, the increased credibility that they can bring to your business is not always worth the time dedicated to meeting their needs. Especially if they are paying less than premium rates.
- You need to ask yourself: how much are you willing to pay to add a trophy client to your portfolio? More importantly, how much are you willing to lose to keep them close?
Slay or stay
Like any good vampire slayer, you can’t just leave their ‘nest’ (expenses) to grow. You need to have a plan of action in place to help keep them in check whilst stopping them from draining you straight from the vein.
To help you keep their fangs at bay you can try any of the following options:
Option 1: Outsource
White Label Services are a fantastic way to free up your team’s time so that they can focus on more profitable clients, whom they enjoy working with.
By outsourcing these Vampire clients to a partner like Logic Digital, we can work closely with you to manage or improve this relationship, and ensure a positive outcome for all.
Option 2: Channel these clients internally
If you don’t fancy outsourcing these vampire clients to a white label service, then you can adopt the following approach whilst working with them:
- Make a list of your clients and then identify any profit vampire clients within the group (also make a note of the reasons why they fall into this group). Once identified, try to develop an individual plan to improve the situation. If this is not possible, then look to replace them with a more lucrative client. Alternatively, you can try option 1.
- Take a look at each of your clients and determine what strategies are required to help maintain, improve or amend their client position.
- Next, review your pricing strategy and think about how you can optimise your profitability by pricing your services better. It is important to get your pricing right as it can critically affect your profitability. For this reason, you should come up with a variety of different techniques that can help you to strategically boost your profits.
- Consider the long term implications that come with a client and remember that the price you quote today, is not just for today, but will affect profits in the future. Charge them wrong from the beginning and it will influence how they are charged year after year.
- Broaden your team’s knowledge and appreciation of: profitability; what it can impact, and how you can look beyond topline revenue.
Most importantly you shouldn’t be afraid to make courageous decisions or think outside of the box. By focusing on making the right decisions and being brave enough to ask for the right prices, based on the quality and value provided, you can reduce the impact of vampire clients and achieve long term financial gains.
For more information or a conversation on how to ‘slay or stay’ with your vampire clients, contact us today.