Don’t Trade Up
There is a common practice in the world of service providers – the idea of “trading up.” Basically, work with a smaller fish at a lower budget to get the skills and then trade up to a bigger fish with more money. From the looks of things, it sounds like the best possible way to grow a business but people should really give it more thought before they are blinded by the extra zeros.
The first thing to consider is how much you love working with the starter client. Do the folks involved enjoy the work? Is the creative energy flowing? Is amazing stuff happening for both businesses involved based on the relationship? Is it profitable all around? Many PR firms (and I’m sure other service firms fall into the same trap) ignore these questions when the seemingly greener pastures of a larger account or bigger name company come along. They set parameters around “minimum budgets” that are not logical and are only based on anecdotal data or ego – not hard facts. And, worst of all, they don’t talk to the team working on the business day-in and day-out about what they should do next. Most often, they make a unilateral decision and opt to end a relationship with what could be an amazing partner for a little more dough.
This is, as they say, jumping out of the frying pan and into the fire. Beyond not knowing how this new partner will be to work with – and understanding if their expectations are in line with reality – these larger budgeted clients usually tend to be the most over-serviced and therefore the least profitable. This leads to a team of overworked employees who hate their job, hate their client and hate you for putting them in the position.
Here’s a quick list of things you should do/questions you should ask before you decide to jump ship on a long time partner and trade up for a bigger fish:
- Look at their profit/loss margin over the course of the relationship – how many times have you over-serviced them without being able to recoup the money at another time? Talk to your finance people – has the relationship been a profitable one, regardless of the size of the budget?
- Look back at the results of working together. Do you have amazing, award-winning work to show for your partnership thus far? Has the work with this partner gotten your team thinking more broadly and building relationships in your ecosystem that they would not have otherwise?
- Talk to the team – every single one of them individually to avoid group think – about their experience with the current partner. Have them give you both quantifiable and anecdotal feedback. Get them to give you a 1-10 rating on how much they want to keep working with the current partner. Then, at a different time so they don’t know you are comparing the ratings, get the same 1-10 on the bigger fish.
- Think about the way the current partner works with your company. Are they grateful when you do good work or give it extra effort? Do they understand what you do and see the value you bring? Are they committed to the process and willing to put in the time to make the overall relationship a success?
- Think about the actual people – not just the company and the work. Would you want to grab a beer with the folks from the current partner company on the weekend without charging them by the hour?
What am I missing, y’all? What other things should people consider before they trade up?