Most high-tech distribution and service supply chains are built around a small number of clients. These clients typically generate 80 percent (or more) of revenue -- the classic 80/20 rule.
Rather than ignore the elephant in the room, it is important to be open about this, and to build a culture that acknowledges and addresses this reality. This will enable you to mitigate risk and also better manage time and resources within your company.
The first step is to build a culture of intellectually honesty. It is important for the entire company to acknowledge and to be open about the fact that the majority of revenue is generated from a small number of clients. This enables management to implement effective and appropriate risk and management structures to be put in place. Additionally, it empowers employees, because it allows employees to better understand why certain systems and structures have been established.
With respect to your big clients, you need to exceed their expectations and anticipate their needs. Just because you have a strong relationship with them, maybe even a relationship that has been in place for years, you never know what the future will bring. New management, an acquisition, merger... there are several events that could end the relationship.
Don't get lazy. Be proactive. Every time you pick up the phone to talk with the client or every time to you meet with them -- impress. You need to know their strategy and know their needs -- immediate, mid-, and long-term. It is also important to be open with the client. Let them know they are important to you. Ask them for feedback, listen, and be responsive -- address their concerns in a timely fashion. Finally, follow up with the client to make sure they feel their concerns were addressed.
Many companies get in the trap of assigning a large number of employees to big clients. If the client terminates their relationship with you, you may be forced to lay off talent -- good talent. Additionally, this type of structure is generally fraught with bureaucracy. Instead, assign a small, focused team to the client. This type of team will have fewer bureaucratic hurdles and will do far better than a bloated team that has to battle red tape. Furthermore, if you lose the client, you may be able to reallocate quality team members.
Regarding the smaller clients, it is important to have a defined and accountable process in place that evaluates why they are part of the 80 percent. If the client is not a good fit to your model, manage them out of your base. If they are a good fit, delight the client and treat them as if they were the big fish -- you never know, one day they could be your biggest client.
Finally, it is essential to put a leader in charge of client acquisition. By putting someone in charge who understands your company culture, the business model, and the company needs, client acquisition will be more effective and more efficient.
What do you think? Share your thoughts below.