How much is a client worth?
One feature of my new web app is the evaluation and ranking of clients (it's aimed at small service providers). At the moment I have the following criteria:
- Size of billing
- Payment speed
- Amount learned on their projects
- Fun had on their projects
- Effective rate on their projects
Am I missing anything? Does anyone have any thoughts on how these criteria should be ranked?
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what is the purpose? To treat some clients better than others? I would imagine that each user of your system would want to prioritize each differently and maybe have their own additions. But I have to question the need for this. – Tim J 13 years ago
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Do you think this will help you identify the type of clients you want to pursue? – Jeff O 13 years ago
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The purpose is to find out which of your clients (and projects) are actually profitable. I started doing some detailed (and fairly labor intensive) tracking of everything this past year and was surprised to find out how wrong I was on a lot of things. – Steve French 13 years ago
2 Answers
You won't like my answer, but I'm old school.
All new clients are treated equally, like royalty. Over time you discover some are easy to work with and treat the relationship as a two-way street. It's a win win when both sides get what they need and enjoy working together.
Then you have the other end of the spectrum with clients that don't have a clue but expect the world. It's hard to make money from these clients as they monopolize your time and often order the wrong product. They take offense if you try to educate them to keep from making the same mistake twice. Although these types are few and far between, I run them off.
As Ryan noted above it really comes down to risk. Most people don't understand risk and how it affects the bottom line. For example, my employees often get exicted when they quote a large order because the profits could be large too, but it makes me nervous. If a small order goes bad it won't ruin your company. But when we quote a large order I go over it with a fine tooth comb because the risk is great.
A simple method for looking at a client is the "boredom factor". My ideal customer is mind numbingly boring. They order the same product on a regular basis and every order is just a repeat of what came before. Do it again, over and over. Pure gold.
- Income from the client, more importantly - Profit margin
- (Payment speed isn't usually a factor for my biz but I could see that being important)
- How fun will the project be
- Does the client respect my opinion and use my expertise or just want someone to do what they want
- How fun will the client be (you can spot potential PITA clients immediately)
- Creative freedom on how to solve the problems
- How much the client aligns with my overal company goals. Is it truly the type of projects we are the best at, or is it stretching us into an area that we can do but isn't our core competency
- How much maintenance is it going to be afterwards
- Risk - how risky is the project, is it very simple low risk, or are we doing things no one has done before and it could be stressful or be tough to estimate
