“Client maintenance” marketing and budget: Should you have a number for this?

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A well-respected Society for Marketing Professional Services (SMPS) member recently posted this question on an internal SMPS social media board:

Working on a client maintenance/strategic plan for 2014. Any examples that you are willing to share?

This is a simple question, but one which raises some important ongoing marketing questions. If virtually all of our business arises from repeat and referral clients, should we allocate a significant portion of our marketing budget to existing client maintenance/nurturing?

Consultant Bernie Siben responded with these thoughts (although the communication here is on an internal server, I think the content is generic enough that no one will be offended if I post it publicly):

If you have ever identified which of your firm’s clients are strategic clients (“A” clients, rather than “B” or “C”), make/print the list.

If you have ever identified which 20% of your clients are responsible for 80% of your revenues, make/print the list.

If your accounting system will allow you to figure out the 20% of your clients responsible for 80% of your PROFITS, make/print the list.

Any client that appears on one of these lists should be budgeted for a HIGHER level of attention (i.e more time/money spent). Any client that appears on more than one of these lists should be budgeted for the HIGHEST level of attention (i.e. most time/money spent).

Siben, of course, is correct in his assertion that different clients have different relative value, and the level of attention and resources you spend on your best clients should be significantly higher than the others. But he doesn’t address a couple of other follow-up questions in his brief remarks:

How should you actually spend that marketing budget?

If the clients are public-sector, for example, excessive generosity might stretch over ethical lines and even result in significant conflicts. This generosity, if used for client entertainment, may be less severe in the private sector. (I remember a story of a clothing manufacturer who had a contract with a major retailer. The manufacturer’s sales representative’s main task was to wine and dine the retailer’s buyer — and he did.) Of course, you may find value in working with the client’s community service/charitable initiatives and possibly relevant associations.

What should you do if the “20 per cent” is aligned to one or at most just a few clients?

There are few things more dangerous than to be overly dependent on a single or narrow source of business revenue. Yes, we want to be focused and known for our specialities, but if everything is too concentrated, our business is at great risk.

I don’t have magic answers for these two questions, but would add these to the ones that Siben rightfully raises in his observations.

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