In this part of the series: “How Small and Mid Sized Firms Grow” we’ll discuss how to retain clients.

The key to growth is first to retain ones existing client base, even before they look for prospects to convert into clients. Unless you are a public utility or have some sort of monopoly you always have competitors looking to grow by wooing away your clients. And it is far easier to hold onto your clients if you do things right then penetrating a new account.

So how does one retain clients? Here is a top 10 list, though one can add many more.

1. They can simply do any thing the client asks for, including lowering prices. This however may lead to retaining unprofitable business, particularly when one dominant client knows how valuable they are to you and continues to demand lower and lower prices.

2. They can volunteer price reductions, before the client requests them; lock them up.

3. They can negotiate trade offs for price concessions, such as higher volume.

4.  They can provide value added services to cost justify their prices, similar to what the airlines do with their frequent flyer programs, with various perks.

5. They can concentrate on building a special relationship so that pricing is not nearly as important as the quality, service, reliability and other factors that they provide. Building a relationship requires having the quality staff to be there for your client, providing constant attention to their needs, making sure you are asking for honest feedback so you can fix any perceived problems before they become an issue, attending to their needs and making them feel special, being a fountain of knowledge for them, etc.

6. They can quantify and document the value of their service in absolute dollar terms, so that their client fully understands that they are profit center for the client and not a cost center.

7. They can become an extension of their client business and make themselves critical and invaluable, so the client could not even think about separating themselves from you.

8. They can provide things to their client that their competitors can not; this may include creating important proprietary intellectual property.

9.  They can identify and protect their client from all sorts of legal and financial risks and do so more effectively then their competitors.

10. They can simply be the best competitor out there and make their client aware of this fact so they are not seriously tempted to look else ware for the products and services you provide.

Our next blog will discuss how to win over prospects.

To see all articles in this series please go to  http://optimal-mgt.com/blog.

Optimal Management is the premier management consulting company to the staffing industry. We act as mentors to owners and managers to maximize their sales, profits and value of their company. We become an extension of our clients operations and are there for all of their staffing and business needs, from sales, marketing and compensation plans, to finance, M&A, general management and everything in between.

 We welcome your questions as to personal and business challenges you face in order to grow.

In this part of the series: How Small and Mid Sized Firms Grow discusses determining when it is time to expand and how to do this effectively.

 It is hard enough to run one operation, so why add to your misery and expand? The answer is that this may be true but if you want to become a large company you will have to do this and the more times you expand the easier it is to do so. So how does one go about growing? The first thing is to secure your base operation so that it is running well and you will not have to drop everything during an expansion to fix your core business. Having said that, nothing is ever perfect, but if it is running well enough you can start to consider growing. If things are under control you can expand business in your home base as well as start a new location.

There are a variety of ways to expand. Typically a company either sees a good business opportunity in a growing and underserved market, they have an anchor client that takes them there and expanded from there, or has an employee or solid person who knows that market and is a natural fit to start it up. Sometimes it is just a place one want to be and says lets go. Any of these can work provided that one does their homework first. On the negative side for example, if their new client is the only game in town and that is not enough to sustain them that would be nice to know. If they run the numbers and they will need $150,000 in terms of cash flow and they have only $100,000 with no wiggle room that should tell them don’t even start unless you can make ends meet.

Alternatively if they need $100,000 and have $150, 000 to invest then we have satisfied the first criteria, survival. They then need a game plan with specific responsibilities, due dates and facts to be confirmed, etc.

Next they need to verify if it will be worth all the effort to expand. If their base sales are $10,000,000 and the market potential if they get everything right is $400,000 in a flat market with severe price competition, a potential for a 2% return on sales (or $8,000 a year in incremental profit) and a loyal client base, there has to be better fishing grounds and the search for an expansion opportunity should continue. It is usually not that difficult to get a handle on the numbers and do some what if analysis to see how you can tweak the numbers to see if there is a way to make something work or satisfy yourself that its not worth the effort and risk.

Our next blog will discuss how to retain clients.

To see all articles in this series please go to  http://optimal-mgt.com/blog

Optimal Management is the premier management consulting company to the staffing industry. We act as mentors to owners and managers to maximize their sales, profits and value of their company. We become an extension of our clients operations and are there for all of their staffing and business needs, from sales, marketing and compensation plans, to finance, M&A, general management and everything in between.

In this part of the series: “How Small and Mid Sized Firms Grow” we discuss recruiters and HR managers.

As Gerber used to say “Babies are our business and our only business”. Well, in most companies today people are the lifeblood of their companies. Without good people whatever else the company does will not be done right. This can be applied to business in general as to the staff you hire from sales to maintenance workers. Some companies hire their staff based on the most cursory of interviewing, reference checking and testing. Others go through such a lengthy procedure that by the time they are ready to extend an offer the candidate may be long gone and has taken a job with a company that did not make interviewing a career. Some companies hire on the spot while others have well over a dozen interviews before making an offer. There is a happy median in finding the right people that vets them in a reasonable period of time with the right procedures and tools. That number varies depending on the degree of difficulty in finding the right candidate and the importance of the job itself. But three to six interviews should be sufficient for most situations. According to the BLS the average turnover rates vary from 1.3% for government jobs to some 6% for construction. But that is just an average. Many companies who do a poor job can see a turnover in excess of 100% annually. In addition the cost of turnover had been determined to be 200% of a person’s annual salary (+/- 50 points depending on the position). These concepts would apply to recruiters and HR managers alike.

Staffing companies of course have a unique situation as their recruiters find candidates for their clients needs, be they temporaries or direct hires (including executive search). Successful recruiters here most understand the client’s needs and match that with the candidates they recruit. Using these numbers a good direct hire recruiter can reduce turnover. For a client with a 50% turnover they can reduce this rate in half. For a $75K/year person they can save over $37,000 annually. For a temporary or contract recruiter there is on average a 13% annual cost savings vs. a direct hire employee. This person would save the client some $10,000 a year while on assignment and if and when converted the same $37,000/year savings would apply.

The combination of these factors has led to temps and contractors becoming one of the fastest growing segments of the economy, with temps rising from 1.6 % of the private labor force in April 1999 to 2.3% last month, and should top 3% in about another 2 ½ years.

Hiring, managing and motivating is very similar to the steps covered in Part 11 of this series.

Our next blog will discuss determining when it’s time to expand and how to do that effectively.

To see all articles in this series please go to  http://optimal-mgt.com/blog

Optimal Management is the premier management consulting company to the staffing industry. We act as mentors to owners and managers to maximize their sales, profits and value of their company. We become an extension of our clients operations and are there for all of their staffing and business needs, from sales, marketing and compensation plans, to finance, M&A, general management and everything in between.

We welcome your questions as to personal and business challenges you face in order to grow.

In this part of the series: How Small and Mid Sized Firms Grow discusses how to hire, manage and motivate sales reps, account reps and business developers.

In most all companies everything starts with sales. Unless you have a monopoly, work for the government or have an endowment you need to obtain and retain customers and clients. In some organizations sales is done via marketing such as advertising, emails, or some other indirect sales approach, but this is still a sales function. Others use good old fashioned sales tools such as telemarketing, field sales calls, networking, sales seminars and the like. We are not going to deal with the pros and cons of theses approaches, but rather what it takes for the person in sales to do their job well. That means to obtain and retain customers and clients by whichever means are used. Customers usually connote someone who buys your products or services; a client usually means having a closer relationship and some degree of loyalty. Please note that in this brief commentary we can only provide some highlights and this is far from all there is on this subject.

Here are some facts to bear in mind when thinking about hiring and retaining the best sales reps:

• The average turnover rate of sales reps is 26%
• 10% of the sales force is actively disengaged
• Jack Welch’s, the highly effective chairman of GE terminated the bottom 10% of his Reps each year
• The total cost of replacing a sales rep is 38% of their salary
• The top ¼ of sales reps generates 57% of new business, as the lower ¼ lost more business than they gained

HIRE So what does one need to do when hiring good sales reps? Many companies find that referrals from existing staff tends to be a very good source as they already fit the mold and are likely to have acquaintances with similar traits. There is also no substitute for in depth interviews to get beneath the veneer of someone who makes a good first impression, although companies like Google take this to an extreme of a dozen interviews or more.

TRAIN When bringing someone new onboard manage and train them in the ways that fit in well with your culture and current methods. Someone new trying to change things that are already working well does not usually work. Train new sales reps along side an experienced solid producer, bring them along slowly and monitor their productivity and efficiency. After they understand your organization they should then be able to make positive changes to the ways things are done.

MOTIVATE Everyone needs something to turn them on. For some it’s money, others recognition, others it’s the knowledge of a job well done, others it’s competition, etc. For sales reps it is usually a blend of these with money being the primary item, with a healthy mix of recognition and perks. We recommend having a modest base with a high commission, usually with steps and risers with higher rates for the best people you can’t afford to lose.

Our next blog will discuss hiring, managing and motivating recruiters.

To see all articles in this series please go to  http://optimal-mgt.com/blog

Optimal Management is the premier management consulting company to the staffing industry. We act as mentors to owners and managers to maximize their sales, profits and value of their company. We become an extension of our clients operations and are there for all of their staffing and business needs, from sales, marketing and compensation plans, to finance, M&A, general management and everything in between.

We welcome your questions as to personal and business challenges you face in order to grow.