I believe in the leaky bucket theory and 80/20 marketing rules in selling professional services.
If we lived in an ideal world, all of our clients would be loyal and stay with us forever. In addition, these clients would have new projects for us every year. Unfortunately, the market doesn’t work this way.
Clients leave us for a host of reasons. Sometimes it is our fault in the delivery of services or client’s perception that we should have done more. Competition is another reason. However, most clients don’t have a project for us every year. This dynamic is the basis for the leaky bucket theory.
We must be constantly pouring new clients and projects into the bucket in order to grow the business or at least maintain equilibrium with the clients that flow out through the holes. When we understand this dynamic, we can take a careful look at the 80/20 marketing rule. The bottom line is that we need to find 20% of our business each year in new clients. Since the cost of obtaining a new client is upwards of 6 times the cost of keeping an existing client, we devote 80% of our marketing resources to obtaining new clients. Although the percentages will not be the same for every firm, it is safe to say that there are no firms using a 100/0 marketing rule.
Even in the age of social media and technology these rules are still in play. If you disagree, please let me know. That gets me to the point of marketing process. We all want to work smarter not harder. Every firm needs to make effective client touches in order to be successful in obtaining new business and seeing a return on their marketing investment.
A few weeks ago the SMPS LinkedIn group had an interesting discussion centered on the question of how many client touches are enough. One of the members questioned the need for client touches. He implied they were something like window dressing that wasn’t needed if the client gave you his personal phone number or you asked the right questions. There is a big difference
between maintaining continuity with an existing client and building a relationship with a new client.
A county executive once asked me why I needed to know which local architects were in line for an important project. I represented Walker Parking Consultants at the time and was doing research on which architect we should team with. He said, “ You guys are the best in the country. Teaming with any local architect is like rolling the dice.” I replied, “If we don’t team, we won’t have any dice to roll.”
On one level touches are a lot like rolling the dice. I think the member who downplayed touches only saw them on this level. In practice touches are marketing tools like dice that allow us to stay in the game.
Outside of the context of a strategic marketing plan a single touch doesn’t seem like an effective way to fill the leaky bucket. Combined with a comprehensive marketing plan, client research and a process, each touch brings you closer to top of mind with the client.
The magic number is simply whatever it takes to win the client’s business. It might be three or it might be 23. As you extend the number of touches there comes a point of diminishing returns. First, firms don’t have unlimited resources so decisions have to be made as to the value of pursuing a particular client. When in doubt, go back to the marketing plan. Don’t forget the residual value touches have on other clients you are chasing. Most client touches impact multiple potential and existing clients.
Second, there has to be a method to the madness of client touches. They aren’t included because they sounded good at the time the annual marketing plan was being developed. For example, did you know all of the potential new clients and projects that were going forward prior to completing the annual marketing plan? Probably not. Yet, the plan is flexible enough to accommodate new entries. How many marketing plans changed when the “dot com” bubble burst or the real estate bubble burst? Are you prepared for the next bubble to burst?
In other words, if the mission is to keep the bucket filled, you shouldn’t spend resources chasing projects that aren’t going to happen.
This is why traditional marketing theories and rules are still in play today. Social media is the great connector of people. However, it is still what you do with the connection that counts. More importantly, as far as new business is concerned, it is what you do FOR the connection that makes all the difference in keeping buckets filled, maximizing marketing resources and improving your return on investment.