MARKETING TOOLBOX
Let me ask you a question. If you had one single customer who generated 95 percent of your new leads and sales, would you have a real business? Of course not! You’d basically be an employee of that large customer, regardless of how you organized your business legally. Let me ask another question. If you have one media source that generates 95 percent of your new leads and sales (or even 40 percent), do you have a real business? Could you rely on that lead source and trust that your business would be okay tomorrow? The answer for most people, even if we were talking about just 40 percent of new leads and sales, is no. You couldn’t afford to lose that lead source without, at a minimum, a decrease in work force. The reality is that most businesses cannot lose 40 percent of their incoming leads and sales and still be in business. THE STRATEGY OF ONE
the largest customer for day-to-day expenses. Use those profits to invest in growing the company, purchasing new equipment, etc. Rule 2: No customer can be greater than 10 percent of your revenue. If I end up with a customer greater than 10 percent, I must be willing to grow the business large enough to make sure that customer is no more than 10 percent — preferably 7 percent or less. Rule 3: No lead source can be greater than 25 percent of new incoming leads and sales. If one source becomes greater than that, I must invest to find additional sources of leads and sales. As an entrepreneur, I’m not saying you shouldn’t seize opportunities. Feel free to grab each new opportunity and run with it, then get ready to work hard to bring it into alignment with the above rules. Only with this approach will your business see sustainable growth and success.
Lead sources go bad and large customers cancel. You can’t bet your business on these things. So many people are in so much danger right now with Facebook. Like Adwords and SEO before it, one day, Facebook will make a change, and it will, in all likelihood, affect your business. You have to know that Facebook can giveth, and Facebook can taketh away. The moment your dollars are no longer in their user’s best interests, you are gone.
But when you look at many businesses, they employ a strategy of one:
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One primary lead source
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One large customer
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One employee in a critical area of the business
One is a horrible number, unless it is followed by many, many zeros. And even then, I’d prefer a two followed by many, many zeros. When I first started this company, a full 75 percent of my leads came from one lead source. In the beginning, when we were small (under $1 million in revenue), it seemed to work for us. But as we grew to nearly a million in revenue and greater, we realized we needed to diversify.
What is an entrepreneur to do?
I live by three rules when it comes large customers and lead sources. Rule 1: Don’t eat from your largest customer. What I mean by this is, at a minimum, don’t use the profits from
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