How Are You Evaluating Your Clients?

However, when a client is wrong for us, we end up suffering in various ways. Ill-suited clients can strain us financially, waste time that would be better used on other clients, and disrupt team morale, creating a negative energy that harms our work and our culture.

The question is, how do you spot the bad ones sooner (and snap the good ones up first)?

While I’d like to think we make good decisions based entirely on gut instinct, there are often hidden red flags. One tool we have implemented with success in our company is a client scorecard that rates our clients and their fit for us, past and prospective. This gives us a good feel for the client’s strengths and weaknesses early on, and we can pick the clients that best suit us moving forward.

The scorecard we developed is a predictive model that takes into account our past successes and failures, then weighs the client factors that we have found most positively and negatively affect our client relationships. We continually test and re-test our past performances, focusing on which variables led to the best partnerships and putting more weight on those variables. We look at specific factors that determine if a client is right for us, and weigh it appropriately on the scorecard. When a factor leads to better client relations, we put more weight on it in the scorecard—as it proves to be a better indicator of the type of client we prefer.

Here are some of the factors we use:

• Financial benchmarks (i.e. topline revenue): We know from experience that our work has a better ROI at a certain revenue level, so we seek clients that have already reached a certain size and are investing to grow to the next level.
• Relationships with other vendors: Does the company have a history of vendor turnover? This is often a huge red flag.
• Key contact: Do we like the key contact or point person? Do they want this project, or is it being forced upon them? The persona and motivation of the person we’ll be working with day-to-day is a top priority for us.
• Proposal process: We have found that if you can’t get a contract done easily or have to chase down a deposit, it’s a bad sign of things to come.
• Implementation: How much of implementation will be out of our control? We have found that the less control we have, they more issues will arise, leading to early roadblocks.

Assigning a number to all of these factors creates an overall score. With the right weights in place, our best clients receive the highest scores. We can now predict a prospective client’s success based on where they fall in the scorecard.

Furthermore, each new lead is scored in the same system, allowing us to see which prospects should work out, and which prospects should not be pursued. We then focus most of our sales efforts on the highest-scoring prospects, hoping to create the best partnerships possible.

Naturally, this model is constantly changing. From year to year, different factors impact our client relationships, and we constantly have to take them into account. Our steady back-testing ensures that our newest clients always match up to us as well as possible. And we adjust the scorecard for recent successes, as well as partnerships that do not work out mutually. As we continue to revamp and enhance the scorecard, we rate prospective clients better, take on better business, and profit significantly.

A small services business such as ours is exceptionally dependent on finding the right clients. Our client scorecard helps us identify the best companies to work with before we start the engagement, so we can develop lasting partnerships that benefit both parties.