Growing your business with Client Capital
The following is based on one of The Covenant Group’s clients. All of the names and telling details have been changed.
On August 1st Barbara Poole realized an incredible dream – to grow her business by 200% in only two years. That was an ambitious goal. Two years ago, Barbara had completed her third year as an advisor and had reached a revenue ceiling she simply couldn’t breakthrough. She was making $65,000 a year but had been at that level for almost a year and a half, with no growth in sight. She was working extremely hard, six days a week, and knew that if growing her business meant putting in more time, she just couldn’t do it. She was frustrated because she had joined the business inspired by the success stories of some of the big producers in the industry. These stories now seemed mythical and beyond her grasp. She didn’t know what the industry leaders were doing differently. In fact, Barbara came to The Covenant Group for help, because she knew we had spent years studying top producers and had identified the 8 Best Practices that make them so successful. One of those best practices would change her career.
I have met many people like Barbara, who have run up against their ceiling of complexity. After three years, Barbara had developed a large enough client base that the real growth in her business would come, not so much from expanding her client base, but from harvesting her current relationships. The problem was Barbara was still in a heavy prospecting mode. To grow, she would have to rethink her approach to her business. If Barbara didn’t adapt to the fact that she was entering a new stage in her career, she would risk jeopardizing her business. Clients who had been with her for two or three years would now be judging her. Was she giving them the level of service she had promised, or that they had expected? If the answers turned out to be negative, she risked losing them to competitors. However, if she could deliver excellent service to her clients, she would reaffirm the value of the relationship and open the door to future sales. It is always easier to sell to existing clients than to search for prospects and convince them to become clients. This was especially important to Barbara at this stage in her career when her time was at a premium.
This analysis of her business made a lot of sense to Barbara. She agreed that there was a lot of wealth within her existing client base that was undeveloped. The way to tap into this wealth is through one of the 8 Best Practices – Best Practice Number 5: Create Client Capital. Let us illustrate a crucial case that shows how creating client capital helped Barbara break through her income barrier.
Within six weeks of meeting with The Covenant Group, Barbara had visited all of her top clients to review their portfolios. She was glad to reaffirm her relationships with them and had already opened up several new cases. However, one client had proved hard to meet with. His name was Raymond Stiller, owner of Stiller Audio House, a small company that produced audio and videotapes. After she left numerous messages for him, Raymond finally agreed to set aside half an hour for her.
When Barbara entered Raymond’s office, he was busy at his computer. She had to wait a moment before he even looked up.
“Hi, Barbara, grab a seat,” he said.
She pulled up a wooden chair and waited. Raymond, a stout, fifty-year-old with white hair, continued to type away. Raymond was a tough client, referred to her by her brother, who was one of Raymond’s customers. Two years ago, she had set up an investment plan for him. It had been a lucrative case for her, but whenever she called to follow up, he brushed her off. Because she didn’t like dealing with him, she never pursued it, until now.
After he finished typing, they began going through his portfolio. Barbara’s stomach began to sink. Each time she reported any results, he would nod curtly. She felt she was losing his confidence, rather than gaining it. When the review was finished, she asked him outright whether he was happy with her service. To her relief, he told her he was pleased but explained that he was preoccupied with a serious business matter. He had been expanding his staff recently, and desperately needed to relocate to a larger space. He had looked at a couple of spaces, but none were right. He needed a certain kind of space. Because business was booming, he didn’t have time to devote to the problem.
Barbara listened intently. Raymond was confiding in her about problems in his business. This was a clear opportunity to create client capital, which is what she had come to do. A year ago, she probably would have let this opportunity pass. But now, as Raymond talked, she put her mind to work, trying to figure out a way to help him. She recalled a recent meeting with Dave Wylie, a commercial real estate broker and one of her other top clients. She remembered Dave telling her about a development he had been trying to fill. The space Dave had described seemed to match what Raymond was looking for. She knew that building client capital with Raymond, and with Dave for that matter, relied on getting the two of them together.
When Barbara told Raymond about Dave, he was sceptical. However, Raymond was so desperate he agreed to listen to any proposal Dave was willing to make. Over the next couple of months, Barbara sat on the sidelines as the deal came together, then fell apart, then came together again. When Raymond and Dave did close a deal, Barbara knew she had created a significant amount of client capital for her to harvest. Afterwards, when she spoke to Raymond again, she sensed a change in their relationship. It was clear Raymond was showing her considerably more respect. He was excited about his new location and grateful for her help. She knew this was her chance to capitalize on the goodwill. She set up a meeting with Raymond to discuss expanding his portfolio, as well as setting up plans for his wife and their children. Eventually, Raymond put a series of family plans in place.
She was also able to capitalize on her relationship with Dave and developed more business with him. Now, a couple of years later, Barbara’s significant business growth is testimony to the value of the client capital she has managed to create. Raymond and Dave belong to a growing list of top clients who individually account for more than 5% of her annual revenue. The more closely she works with each of these clients, the stronger the relationship gets. Their attachment and loyalty to Barbara grows, and so does the potential for future business.
Lessons Learned
The case with Raymond and Dave is an example of the client capital Barbara was able to create with a number of her top clients. The case shows Barbara applying the two main strategies for creating client capital:
1) Commit to ongoing service, and 2) Provide added value to your clients. In our study of high-performing salespeople, we have discovered that all of them do both of these strategies extremely well. By calling a meeting to review Raymond’s portfolio and by developing plans for the rest of his family, Barbara demonstrated to Raymond her commitment to providing ongoing service. The original sale to Raymond was not a one-off. When Barbara introduced Raymond to Dave to help him with his business, she was providing a service over and above what Raymond would have expected from her. This clearly showed Raymond that she could provide added value to him. She would be somebody who could help him achieve his goals in numerous ways. By doing all of this Barbara developed a bond with Raymond that would be hard to break, insuring her against competitors who would not be able to match her value to him. The strong client relationships that Barbara continues to develop give her confidence in the growth of her business. As her clients grow, she knows she will grow too.
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The Covenant Group is referred to by many as the place entrepreneurs go to become Business Builders. They are considered to be thought leaders and have authored the best-selling books, The 8 Best Practices of High- Performing Salespeople, The Entrepreneurial Journey, and The Business Builder.