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All of Your Eggs in One Basket Trap

Too many companies have seen an untimely demise due to basing their business on one large client or one specific industry. I once had a belting and hosing client who evaluated their marketing strategy and realized that they really only had two specific client groups, mining companies and pulp and paper companies. With both of these industries having a potentially volatile future the CEO began to research new markets. He found this opportunity in the Wine Industry.

With dozens of large vineyards in his market he began to make custom belting and hosing products for this industry where he had little to no competition. His competitors continued to undercut each other into bankruptcy, when the mineral and logging industries suffered his company profited as the British Columbia Wine Industry Flourished. Had he hedged his bets on just two markets he’d be out of business like a lot of other people. He now supplies all three markets and is has expanded into other geographical regions.

You may have one client that eats up the majority of your time but also provides you a solid bountiful income in the process. Several days a month on the golf course with the CEO seems to ensure future orders. My suggestion is be careful, make sure you continue to prospect, invest in your relationship with other clients even if you don’t have the time to really grow the account yet. What if the CEO sells the company? Will the next CEO utilize what it is that you offer? What if the client has a bad quarter and reduces purchases? What will happen to your sales volume then? The title “Account Manager” can be a misleading title, yes we’re there to manage accounts but we are really “Cash Flow” managers, and our job as sales people is to ensure that the cash flow stays steady and grows.

Another form of putting all of our eggs in one basket is only investing in a couple of relationships in our client company. Often it is the person we perceive as the decision maker that we invest heavily in, ignoring secretaries, Vice Presidents, end users, and others that may contribute to the purchase of your product.

If your contact for some reason loses their political clout, gets fired, or decides they don’t like you anymore, do you have strong enough relationships with the other people in the company to maintain the business? Many sales people are only one person away from losing the client, invest in relationships with everyone to ensure you keep that key account!

Here’s how to navigate our way out of the “All of Our Eggs in One Basket Trap”:

1. Invest time everyday in prospecting for new business, no matter how busy you are there is always room for a big profitable opportunity.

2. 20% of your clients should produce 80% of your income, if that ratio is lower than 20% start looking for new business to insure your long term survival.

3. Network into and develop relationships within your large client companies to ensure that you are connected at several levels.

4. Monitor your big clients closely and watch for signs of danger; you are at risk of losing them if:

a. Competitors are aggressively pursuing them

b. There’s been a change in management

c. Your key contact has been fired, left the company or moved to another department

d. Their industry or their clients are about to experience an economic downturn

e. You or someone within your organization has made a mistake, error, or offended someone within their organization

f. (Brainstorm some more signs of danger specific to your business!)

5. Research new emerging markets and client groups.

6. Monitor your competitors’ movements closely!

Join the Discussion: Prospecting vs. Maintaining Clients, How Much Time Do You Spend?

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