“Whatever you are by nature, keep at it; never desert your line of talent. Be what nature intended you for and you will succeed.” Sydney Smith
Positioning impacts the value you generate from clients and is critical on the path to creating the best version of your business. No matter what your business Utopia looks like, you’ll find that moving toward a target client mix will play a big part in getting there. As summed up by creative industry positioning guru Blair Enns: “What we call positioning, others more serious about the business of their craft call fundamental business strategy”. Have you thought about it in those terms: Positioning as fundamental business strategy?
The metrics outlined below are intended to help you track your fundamental business strategy – what business you are in – and how that strategy converts to a healthy bank balance.
Exercise: Establish your Target Client Mix:
Knowing your current client mix and creating a target mix for the future is an empowering and motivating exercise. We find that very few freelancers and studio founders step back and take a look at the mix of clients that makes up their business. In order to establish a strong position in the market, you’ll need to frame-up your focus client and how you’re going to move in that direction. However, you’re not going to flip a switch and fill your business with focus clients tomorrow – so it’s important to know which clients outside of your focus are a clear “Yes”, “Maybe” or “No” over the next 1-2 years. Very often, the most important category to understand is those you’ll say no to. Here are a few steps to create your target client mix: [Tools – Client Mix Table]
Break your current clients into 4-5 distinct categories. Identify:
– Type of Work: (i.e. Packaging or Digital or Industrial or Lifestyle)
– A defining description (high value, or fully integrated or crap for culture)
– Revenue $ per client
– Number of clients per category
– Total annual revenue as a $ and %
Fill out your client mix as it exists today
– Which clients should you continue to service to “fund” your pivot into the future
– Which clients add the least revenue per client to your studio (aim to drop this crew)
– Which clients suck time/energy/culture from your studio (aim to drop this crew)
– Rebuild a new client mix table for the next 12 months
– Have 4-5 new categories with the same labels:
1. Focus – clients in our new pivot direction:
2. Yes #1 – current clients you’ll continue to bring on
3. Yes #2 – current clients you’ll continue to bring on
4. Maybe – current clients you’ll asses on a 1 by 1 basis
5. No – current clients you’ll most definitely say no to
Dial-in the Right Metrics:
Your target client mix created above makes up a set of goals for your clients and value. It is now possible to parse out specific metrics to support these goals. Here are some to consider:
Client Mix Metrics:
Target Client Revenue %: Percentage of your revenue that comes from the target clients. If your positioning strategy is effective, you would want to see this increasing over time.
Calculation: Target client $revenue / total $revenue
Revenue per Client: metric indicating your value per client. This should increase as your positioning strategy unleashes your value to clients.
Calculation: Total $revenue / # of clients
Monthly Open Clients: number of clients with open projects in any given month. The fewer, high value client you take on per month – the more efficient and profitable your business will be.
Other Positioning Metrics:
Target New Business Pipeline %: the percentage of clients in your new business pipeline that are within the focus category. A pipeline is an important business development tool to track your leads. Download here: [Tools]
Calculation: Target clients $revenue in pipeline / total pipeline $revenue
Target New Business Referrals %: the percentage of clients referred to you that are part of your focus category. This indicates whether or not past clients understand your position in the market and referrals to you in that focus area.
Calculation: Target referral $revenue / total referral $revenue
Target Client Pitch Win Rate %: the percentage of leads that are won, within your focus category.
Calculation: target projects won / total project quotes
# of Expertise Opportunities: the number of times you have the opportunity to contribute content that represents expertise in your focus area. Example: invited to talk at a seminar related to your marketing beer products.
# of Expertise Content Publications: the number of content pieces you publish related to your focus area. Example: an article on your website or webinar demonstrating expertise to your target client audience.
# of Targeted Media Mentions: the number of times you are mentioned in publications related to your focus area.
Current Performance Deep Dive:
Once you’ve invested time into your client mix and created metrics to support it, dive into your current performance in those areas.
Client Mix: Look at last year. How has your client mix evolved over the last 12-18 months? Does your target client mix still make sense? Too aggressive? Not aggressive enough?
New Business Pipeline: Look at your new business pipeline. Create a list of prospects and compare against your client mix categories. Where is your energy and attention currently placed for generating new business?
Review 1 Year of Referrals: On your new business pipeline, and over the last year, where are your referrals coming from? Your focus area? Your “No” category?
Review Your Content Plan: Do you write content to declare your focus or expertise? If so, does it support your target client in your focus area?
Compare Revenue per Segment %: Currently, what is your revenue per segment in your target client mix? Do you have any clients in your target focus segment? How many “No’s” do you have that need to be phased out?
Compare # of clients: How many clients do you service in 1 month today? How many clients per month make up your target client mix?
Lock in Your Goals:
Alright, it’s time to lock-in your goals in each of the above mentioned categories. Use your target client mix and new business pipeline to set 1 year goals that are challenging yet achievable, that nice balance that yields motivation. There are no baseline or industry standards here – it is entirely dependent on your current business positioning. A pivot to a targeted client mix is a transition, look at moving your business forward this year, not perfection.
– Target Client Revenue %
– Revenue per Client
– Target New Business %
– Target Referrals %
– Monthly Open Clients
– # of Expertise Opportunities
– # of Expertise Content Publications
– # of Targeted Media
Track & Calibrate:
Building true value and making great decisions comes down to tracking your actual performance against these goals. Mine your data in these metrics every month and compare both the current month and year-to-date performance to your goals. Learn and adapt. If you’re weak in an area – put an increase level of focus and intention into improvement. If strong – learn what you can do to maintain that level of strength.
A couple of tips to track these metrics:
Bookkeeping: Identify invoices in your system by your target client mix and inform your bookkeeper to track revenue based on your categories
Pipeline: Identify new business opportunities by your target client mix and track referrals by type
And there it is. You’re set-up to track the effectiveness of your operations and learn and adapt on your way to creating the best version of your business.