When Kelly Borth’s boss at the time, Sandy Fekete of Fekete + Co., gave her a newsletter about agency management more than 10 years ago, she tucked it away.
Someday, Borth thought, she might use the information if she started her own marketing agency.
Since then, Fekete has merged her public relations and marketing company with The Axis Group and Borth has taken the reins at GREENCREST, but still the faded newsletter remains.
Inside is a description of an ideal client mix, complete with a pie chart suggesting client ratios: one client delivering 25 percent of total agency income, two delivering 12.5 percent each, four with 6.25 percent each and eight with 3.125 percent each.
Developed long ago by PR guru Chuck Bowes, it’s a formula for balance Borth uses to make sure she has a stable, steady income for her company. Although she declines to state revenue, she says the company’s average annual gross sales increase between 1997 and 2000 was 17.33 percent.
“You just don’t want to have any one client make up the majority of your sales base,” Borth says. “You don’t want that gorilla client.”
Of course, GREENCREST’s mix doesn’t match exactly because it has 50 clients rather than the 15 suggested in the chart, but Borth stays above the minimum and below the maximum client size. She’s constantly marketing the company and has potential clients in mind, so if she ever loses a client, she’s ready to fill the slot with another.
“We’ve developed enough of a reputation that we can at least meet face-to-face with a company we may like to do business with,” Borth says. “We’re firm believers that any company should be marketing themselves all the time — not just in bad times. If you’re doing that ,you always have opportunities pending.”
Using the formula for balance brings more than just a source of security for Borth:
* She’s able to offer more job security for employees.
“We have never hired a new employee because of a new account we’ve taken on. We’ve never laid off an employee because of a loss of business,” Borth says.
She also can maintain a fairly normal working day for the employees she has.
“You don’t find people working here until midnight or 10 o’clock or even 8 o’clock most of the time,” she says. “It gives them a better quality of life.”
* Focusing on the right client mix has enabled GREENCREST to offer higher quality work, Borth says.
“It allowed us to have time to be strategic and proactive, not reactive. We wanted to be their strategic partner, not their job house,” she explains.
The balance also helps Borth watch out for clients that might keep her employees too busy with smaller, more frequent tasks rather than strategic planning. For example, she’d likely turn down business from a car dealership that needed a retail ad placed in newspapers every week; it would be too disruptive for her company.
“We’ve been in situations where certain clients have caused us to put other clients on hold week after week after week,” she says.
* Following the formula forces Borth to take a frank look at what’s good for the business.
In 1998, for example, she realized that more than 25 percent of her clients, then numbering about 80, each gave her less than 3.125 percent of her sales base.
“We began to see there was some business we needed to let go of, and we needed to really search for those businesses that would fill the top,” she says.
From a new business standpoint, she began to turn away clients that were not looking for a full-service relationship with GREENCREST.
While she did not flat-out stop doing business with the clients giving her small pieces of business, she let them fall away over time.
“What you hear is true that sometimes the smaller the business, the more handholding, the more time it takes to service it, and you’re probably losing money on some of that,” she says. “What it does is it keeps you from really being able to focus on some of the business you really want — the business that’s going to help you grow your business.”
Instead, she’s referred that business elsewhere or offered advice pro bono over a lunch meeting.
She knows her limits in the other direction, too, however. If a new client would require her to staff up for its work, she’d probably turn the business away.
Using such a formula requires an intense review, which Borth does every January and July.
“You have to be conscious of where you’re at,” Borth says. “You have to be conscious of what you’re looking for in terms of new business.” How to reach: Kelly Borth, GREENCREST, 885-7921 or [email protected]
Joan Slattery Wall ([email protected]) is senior editor of SBN Magazine in Columbus.