Complaining about an influx of prospects may sound ridiculous to many. But in reality, growing businesses *can* attract new customers if they need to, considering they’ve been in business long enough to build a reputation or a portfolio, save some capital, and explore a couple of channels that get the job done.
In this case, it’s more about investing a lot more into the channels that work and restoring the long-term pipeline in exchange for a short financial hit.
Additionally, ongoing leads are not uncommon-it’s the lineup of truly qualified and suitable leads ready to adhere to a specific business process within certain financial boundaries.
In this complex mix of scenarios, businesses often have to decide between existing clients and new leads or try to prioritize a longer pipeline of prospective customers.
The Operational Cost of Client Acquisition
Besides the obvious cost of lead acquisition in the first place (through paid ads, sales calls, influencer campaigns, trade shows, sponsoring events-or any other medium), the qualification and sales process itself can be a long dance by itself.
We currently work with a client I kept in touch with (as a lead) for 3 years before we finally started. Also, one of our other retainer customers (signed in August 2018) initially reached out in May 2017 until we got to the point of starting out.
Client acquisition can be a significant investment. Add paperwork, the scope of work, NDAs, and everything else to the mix and there you’ve got it.
So even when you get to the point of successfully generating leads, qualifying and closing them isn’t any easier. And while the sales and lead generation operations can be outsourced to some extent, you or your lean sales team have to be in charge of all business opportunities from the get-go.
Managing Client Demand During Capacity Constraints
Every business values its clients as they are their lifeline. But what happens when you are overbooked, your operational workload is overloaded, and a new client opportunity arises? You can’t maintain an existing client if you impact delivery quality.
It is 16 times more costly to build a long-term business relationship with a new client than simply to cultivate the loyalty of an existing one. Despite the fact that customer retention is so important, less than one-third of business executives consider it a priority.
In case a prospective client awaits your feedback, here are some operational alternatives that I’ve seen proven operational approaches. Some are not applicable to different scenarios (industry, type of work, culture, team size) but worth considering nevertheless.
1. Strategically Declining Non-Feasible Engagements
Decline the engagement is often the most strategic decision.
It’s tempting to onboard another client. What about the consequences?
Not only are you risking the client relationship (and your reputation) but it will inevitably reflect on your existing operations and client portfolio. Of course, it’s not the only option but think twice before accepting the deal.
Declining an offer from a prospective client can be extremely challenging as it may potentially kill any chances of securing future opportunities in the future. If you must decline an offer, you need to make sure that you:
- respond promptly as a professional courtesy for the client’s time
- express appreciation, but sound firm to avoid unnecessary negotiations
- explain, but avoid detailing the reason to avoid misinterpretations
- propose an alternative solution (we’ll discuss this in a bit)
In any case, this doesn’t have to be the only way out.
2. Temporarily Expanding Operational Capacity
The obvious alternative is to allocate additional hours for this client.
If the high-priority workload takes just a week or two, this isn’t a bad option. For instance, launching a new set of pages, writing several articles, and running a strategy concept could lead to plenty of long-term engagements later without requiring months of hard work upfront.
Moreover, consider how stable clients are. Is anyone cancelling anytime soon? There may be an overlap between finalizing a project in a month and starting with a client now.
Note that you must first make sure that if accepting a client means overextending your team to the point of unbearable employee burnout, you have to rethink this option.
According to a study featured in Harvard Business Review, longer hours can be detrimental to your company and employees. Over time, highly productive employees may experience some performance drop-off. Work overload actually lowers productivity by 68% among employees who feel there is not enough time to finish their tasks within the day.
Of course, growing businesses always go through the cyclical workload fluctuations. It’s the nature of running a business, whether a startup or a consultancy. But keeping this rhythm for years to come may be detrimental to your key talent and will make your hiring efforts even more complex over time.
3. Leveraging Trusted Freelance Partnerships
This is only reasonable if you build a reliable network of freelancers who are reliable – possibly ones you’ve collaborated with on multiple projects.
Here’s a video wherein I discuss the 4-step checklist for hiring freelancers:
There is a reason why 42% of small businesses employ freelancers. Freelancers are often more operationally flexible. Apart from the flexibility, you can also take advantage of the following perks:
- You don’t have to pay a full salary all the time
- Do away without holiday leaves and other employee benefits
- Save on office expenses, desks/chairs, laptops, and other bills
That’s what freelancers are all about – supporting urgent delivery needs and supporting delivery capacity whenever you can’t do the work yourself.
Build a network of reliable experts available for hire, discuss hourly rates upfront, and involve them early before closing a project.
Once you can continuously engage a freelancer for a particular rate per week or longer, consider hiring them or look for a full-time employee who can join you in the long run.
Tap into your network and see if there’s someone able to help you. Expect a premium rate for an urgent project (and a last-minute one) which is a reasonable ask.
4. Leveraging Strategic Referral Partnerships
It’s always best to maintain professional relationships with other companies in your industry. Unless their management is of the “highly competitive” type, you may support one another operationally by sharing referral opportunities or collaborating on projects together.
Referring to clients is one great way to nurture a partnership with a competing firm. Referral partnerships can work to your advantage if you make sure that you are not referring a client because it’s a bad case with the following issues:
- the client is a high-risk client
- there are legal repercussions
- the client is not a perfect fit for what the firm offers
Ensuring a positive client experience throughout the process can also help you manage the project (if you choose to) and retain the client in the long run if reasonable/possible. You may also work out a structured referral arrangement on top of a great business partnership!
5. Providing Advisory Services Instead of Full Delivery
If you can’t handle full project delivery, figure out if you can support through advisory services.
Say, a company asking you to do web design planning or development still needs these services. You can help them evaluate external vendors, perform delivery reviews of their work, assess potential vendors, or anything else. Assuming that it takes less time compared to building everything yourself.
I’ve done that numerous times with smaller clients that simply not aligned operationally for DevriX. Instead of charging $50K for a service that could be delegated to a smaller vendor (without requiring the bells and whistles we would deliver), I could charge $1,400 for 4 hours of planning, strategy, and negotiations with a vendor quoting $15K for the build.
This could yield a stronger return on investment for you, too, given an adequate consulting rate for similar services.
6. Breaking Large Engagements Into Phased Deliverables
Sometimes, a long and time-sensitive engagement is not as urgent as it seems.
Or it takes multiple iterations contingent on different parties involved with the process.
Find out whether there’s a way to postpone for a while, or in case there are multiple decision-makers who can’t get together in a room. This is usually a operational concern for most vendors but may work in your favor.
Oftentimes, the business requires “all of it” done within an unrealistic delivery timeline. Even if you aren’t fully booked, it’s still unreasonable to complete the job in a month if it usually takes 10 weeks.
This specifically includes additional factors in the form of negotiations, getting the contract signed, providing the initial assets to start the work, etc. Getting the paperwork done alone may take weeks at a time (and that’s what usually happens).
Instead, find out if you can only build a limited-scope phase in the form of a prototype deliverable until this deadline. Instead of a complete website, sometimes a landing page with an email list may meet initial objectives for starters.
7. Evaluating Operational Workload and Delivery Risks
Are there lower-priority projects you have voluntarily committed to?
You may also assess the offer by determining the answers to the following questions:
- Is this going to be a long-term engagement?
- How much revenue are you saying no to by declining the project?
- How many people are needed to work on the project?
- Can you easily reallocate internal resources from anyone in your team?
Sometimes you work on assignments that are not urgent. Some backlog initiatives and minor cleanup can wait.
Or a client is hardly responsive anyway. Or plans a vacation. Or anything else that could wait.
Check with your existing clients first. There may be a capacity opportunity that you can fill with your new client. However, maintaining client satisfaction is the best way to bring recurring revenue stream to the table, so stop over-focusing on sales activities.
8. Communicating Availability and Delivery Timelines Clearly
Being straightforward about having to decline immediate onboarding can be risky, but rewarding in the end. Imagine dodging negative reviews because you were unable to meet delivery expectations or finish the project on time.
Instead of making unnecessary operational compromises, be honest about when you are going to be available. You can position your response in a way that highlights your desire to give them the highest delivery quality at a time when you are not tied to current commitments.
Let them know for sure when you are available for onboarding and schedule a meeting again to discuss more about the engagement requirements.
9. Assessing Existing Project Stability Before Declining New Work
Evaluate your existing clients and check whether a certain project is showing operational risks with regard to client feedback, payment, or other risk indicators.
If you are letting go of a potential long-term engagement over an existing client that is making it difficult for you to work on schedule because they plan to terminate their project with you, then you have to detect these signs before you miss a strategic opportunity.
Once a client communication becomes inconsistent when you start talking about extending the contract or working on future projects even when you used to talk about these things in the past, then you should also take that as a risk indicator.
Although most projects are bound to end, knowing ahead when a project is ending will allow you to plan and reassess your workload. Because of this, push for an transparent communication process between you and the client and you won’t be left without clarity.
Securing Commitment Through Upfront Payments
Securing client commitment is about commitment. This is the main reason we’ve designed our WordPress retainers program-monthly batches of work assigned to the best team members depending on the tasks at hand.
And working on waterfall-based projects could be operationally risky. This is where the upfront payment makes the most sense. Imagine declining two wonderful leads for a couple of ongoing projects that end up not paying through.
And especially if you’re overbooked, upfront payments are a necessity to validate client commitment. Otherwise, you can always revert and get the job done with a response like:
“Hey X, I appreciate your stance but an upfront payment is a strong requirement on my end. I’ve been in business for Y years and this is a standard business practice for dozens of clients I’ve been working with since, so if you’re reluctant to invest in this professional engagement, I wish you well and good luck with your project.”
That said, I’ve worked without upfront payment many dozens of times and burned just a handful. Not to say that this is a recommended operational practice, it’s more about the business agreement between established owners.
The right contract with the right legal requirements would pass easily in court, and most clients won’t be interested in going that far since this would have a serious impact on their reputation.
Of course, there’s nothing wrong with asking for an upfront fee – just outlining the differences.
Depending on the type of work (and duration/complexity), you can break it down into smaller delivery phases and request payment after 15–20 hours’ worth of work (assuming you’re comfortable spending a couple of days with no secured payment, so to speak.)
There’s a myriad of scenarios where an upfront payment may cover 10% of your actual work and still fail you, or end up in a legal battle that’s hard to overcome or require a refund with fees covered on your end, or a number of other challenges.
Implementing a Structured Client Qualification Process
And the best tip I have is to vet your clients properly.
Top agencies also filter non-ideal clients. The more pre-sales discussions a client wants, the fewer details you get, the limited access to the existing codebase, clients asking for ballparks when 12 different options are possible, and avoiding paid discovery engagements are red flags, too.
When in doubt, don’t start even if the upfront fee is on the table. A high-risk client would be operationally harmful to you, your organization, your staff, your workflows, and your overall work plan.
Even a strong client could be terrible if the engagement conditions are misaligned-the budget is off, their expectations don’t match what you’re great at, etc. With the right business strategy, filter carefully every time, and keep the clients that really align with your operational culture and client profile requirements well.
