What to do before and after your biggest client leaves?

Part I — The Stories (skip to part 2 for the takeaways)

2 clients have recently ended their relationship with Seer. I feel like we learn a lot from these and I feel some agencies somewhere must talk about this reality, its not all “Crushing It” this is part of the agency life too. It’s a big part, but I feel like its hard to find people talking about it. So here goes.

Client #1, we worked with for 9 years, Seer has changed a lot in 9 years and it means so much when a client stayed with us / we grew together. They were acquired, so it was painful when we got the call with them saying we’re sticking with our team, in spite of your numbers and past relationship. Instead of thinking about my company, I thought of my clients situation, they were worried about their jobs, their families, etc.

Here is one of the notes I got from this client.

Subject: Farewell {redacted — client name}
Today is so bittersweet for me… Twenty-one years ago I took a job at {Redacted} and in the first week I went to learn about the World Wide Web and how to make websites (remember this is 1997). I developed sites for the four main products and one of those was {redacted}.

Through the years I have continued to be a major part of this sites development, so it is fitting that I am here to see it off into the sunset.

I want to thank each and every one of you for the contributions you’ve made to the success of this site and the {redacted} business in general. I can’t help but imagine what we might have become given more time.

This isn’t goodbye as I will keep in contact with you all via LinkedIn and visits to local pubs ;)

Thank You!!!!

Sometimes its not your fault, so much as your client get acquired and they bring in their crew.

When we lose a client in these circumstances I always remind myself / my team that we are so often brought in by former clients when they move on to new places, so that means we have been the company brought in by our POC to replace the encumbant, right? So when we’re high fiving that we won that deal well the other firm was losing a client, making tough decisions, whom to keep, how long to keep them, severance, etc? Sometimes its our turn to take the hit.

Client #2 The 5 year run with one of the largest companies on the planet, growing faster than almost any other company on the planet.

How did it start?

So I refreshed my inbox, boom a lead, great I opened it and was like…uh what! This can’t be real, it was! We were referred in by a former client who moved on to “BigCo”.

Originally we were hired to run 4 Million in annual spend in the US & UK, over time the client compared our results to their “Boots on the Ground” teams in 100+ countries, and decided that our PPC team could outperform global teams who had local contextual knowledge. Over 5 years we went from running 4 million in < 10 countries to 35 Million in 100+ countries. Needless to say this client got BIG. But we kept them under 10% of Seer’s total revenue.

They recently came to us telling us they were RFP’ing a project after 5 years of working together as they needed more support globally. We also had made some small to medium sized mistakes along the way, but that was not the driver.

I wasn’t thrilled but I was grateful that our client was giving us a heads up many months out that they might be looking at other options. That was a huge vote of trust. Trust that we wouldn’t start performing poorly if we got the hint that they might move elsewhere.

We also had client relationship managers in place, as a growing agency, you hit a point at which consultants keep working on getting good at the skills for the job, but ask yourself who is sharpening their saw on managing relationships, asking the bigger questions, etc.

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Part II — What do you do?

1 — When is your biggest client TOO BIG?

Early on within my first 2–3 years of running Seer (around 2005) I decided that I never wanted to have a client be more than 12% of our revenue, I don’t know why 12. It just felt right.

You have to decide this as well (or choose not to make a limitation). But this limitation helped drive a lot of future decisions. For instance when we closed a massive deal and that client became more than 12%, we’d celebrate, but then quickly get back to finding another big deal / growing a client to offset this new big client. We really never let ourselves get excited about the big deal, we got excited when they were diluted below 12%.

Of all the reports I would get from finance this was the one I looked at most closely. As I never wanted to be a client’s bitch, I never wanted a client to be too much of our revenue, where we couldn’t choose to walk away someday is the relationship got abusive / too one sided. I feel that the “we lost a client, we must cut people to maintain margin” approach isn’t for me, but sometimes high concentration of a client could lead to layoffs, for instance here you see 2 clients left, 40 people lost their jobs. Or in this example where 1 client left 82 people lost their gig. If you are interviewing at a company, find out their concentration risk, helps you determine YOUR risk.

2 — Layoffs & how long are you willing to hold down losses / lack of profit?

Lose a client, do layoffs, must maintain margins. Its how agencies work. I disagree, I think we can do better. As an executive you have to decide, if you have a large client who leaves, are you going to do layoffs immediately, 4 weeks, 4 months? If you keep your largest client to a small part of your revenue, it makes it easier, but if a client is 20–50% of your rev (which I see at a lot of agencies) it creates a squeeze you can NOT hold down with savings 99%opf the time. Knowing in advance how you want to deal with this situation is key. When you lose your largest client are you willing to have a break even year w/ no profit, or to cut benefits, or have no raises across the company to save 5–8–80 jobs?

I’ll discuss that in #3 below.

2a — be CAREFUL if you are growing fast

I once got caught and I learned a big lesson. If you are smaller and your largest client is 50k/year and your average project is 25,000. There is a good chance that in your mind you can reasonably go close a 50k deal or (2) 25k deals so holding down the team for a month or two while you swoop in, close deals and save the day is possible, you can probbaly look back at your past data and see times when you’ve done that before. BUUUUT!….

What happens when you closed a 50k/year deal 5 years ago and your average project back then was 25,000 and today your average project is 35k… BUT that 50k largest client 5 years ago has grown 10x. So over 5 years your largest client went from 50k/year to 500k/year and sure your average deal has increased from 25k to 35k, which is GREAT! When you look back, have you ever closed a 500k deal in your life? Shit have you ever closed 5 100k deals in 1 month? Doubt it. This is where you get stuck, and this is where a great sales and marketing team is an insurance policy eve if in good times you have to turn away a lof of the business they bring you. I have been in this situation once and HOLY CRAP was it hard to overcome the big client loss 6–7 years ago, I went to put on my cape and close 2–3 deals and realized that in closeing those 2–3 deals I was only making up 35% of what I needed. That made for some long exhuasting nights.

3 — What to do with the unbillable people?

Personally for me, I take the hit in margin b/c it’s not about the money. It’s about doing great work with great people. You have options here, layoffs are one. We covered that above. You can also consider the following:

How replaceable do you see your team? If you believe you can go back in the market and pick people up later, layoffs might be easier to process if you want to maintain margins. For me, I believe that every day part of our job is to retain these folks and give them a reason to bring their skills and talents here, that is our greatest challenge. Finding another client is easier than finding another great teammate for us.

How strongly do you believe in your sales & marketing staff to get deals done? Can they turn things around and start replacing that revenue overnight? Do they have a plan that they pull out any time large client leaves? Or are the scrambling to make up a plan in the midst of the loss? (chaos). How bought in are they, are they willing to put in those extra hours to save someone’s job? Are you?

Do you have other areas of your business that are growing? If that answer is yes, might you be able to shift people from one division to the next? Do you have an innovation area that is growing your next big thing? Which people on that team are aligned with your future? Retain them as long as you can.

Turn your freed up staff on business development. But keep in mind some people have a nose for opportunity and want to blow that up, others are great consultants but they don’t get tthat dopamine hit when they close a deal. So just saying “we’ll put you on BD isn’t always wise, have a plan on how to take someone who thinks sales is “scary” or uncomfortable, and have ways they can really contribute or keeping them around might not be the best call.

Double down on your other clients who might grow someday to offset that revenue. Give them a call and say:

Hey I noticed you have XYZ in your backlog, and we want to get that done for you, I’m going to get you X more hours per month to help us get through that backlog, no charge. Then you can turn around and say hey, I got people here I gotta feed, could we increase our out clause to 60 days, even if just in spirit (not contractual) that if you think you are outgrowing us, or you can’t use us that you’ll let me know early so I can make sure we do right by our people?

4 — Make a plan TODAY on what you’ll do

Where is your break in case of emergency plan on what will we do if we lose our largest client? Not having a plan, means you are making it up under panic & duress, which is the wrong time to do it.

What you will do on the day your largest client leaves? Panic? Or Break out that plan and execute?

Note: Put a re-occurring reminder in your calendar every 6 months (something we didn’t do) to review the plan. I got this idea reading a book 5 years ago on vacation, needless to say, we hadn’t lost our largest client in 5 years, so when we went to open them plan, it was not applicable to the company we had become over 5 years.

There’s a reason why in school you had fire drills, so in the case that someday a fire happens, you’ve practiced over and over again what to do. You don’t want to lose your client and start planning at that moment.

5 — Team Transparency, how much is too much?

When you get a major heads up from your client, that is a good thing. What are you going to do with that information? You can tell your team early and you might spook them, they might resent the client, etc — all of which impacts the relationship.

No transparency? One day you walk in and tell the team, you’ve had this information for weeks or months and didn’t tell them. I bet in that time you were acting different, yet by you holding more information than the team for that long, you left it to them to try to figure out what is going on. I talked about this “distance” in this video:

Not telling your team what is up once you have a solid understanding sucks, you are able to prepare, you and your executive team might be thinking, now isn’t a good time to buy that new car or splurge on that vacation as my raise / bonus might not happen, but your team DOES NOT know that, so they could be making financial decisions that might hurt in the long haul b/c you had more information than they did. Just consider this, and try to be transparent as early as you can be.

6 — Who is forward looking for the client / industry?

When your largest fastest growing client is undergoing change at an insane pace.

Whose job is it to see those changes coming and pivot projects or prep the team?
Whose job is it to get the spidey senses that something is off and dig in on that or know that their competitor took 15 points of their market share year over year?
Whose job is it to be planning for 12 months from now, TODAY?

Your team of consultants? Rarely.

At Seer as we gained larger clients we realized it was a separate role to have someone whose job it is to get that client out of the day to day tasks coming from the consultants and to manage the relationship, and also be on the lookout asking questions like are people & tools we have today are what that client will need in 6 months, 12 months and beyond?

I’ll tell you your consultants are spending most of their day trying to keep up with the client and all their day to day changes, that is a HUGE ask. Rarely do they have the time to look out 6 months and ask those questions. Get a separate person who manages the relationship, not at a tactical day to day level, but also at a if they keep growing, why won’t they do this themselves level?

7 — Contractors Mitigate Risk

I could have hugged Crystal the day she dropped this idea on me, I was in San Diego working from our office there, she was in Philly.

She was calculating how much of our team members were deployed on this one client, as that number got bigger and bigger it created 2 issues.

1 — Keeping up with a client growing this fast is TOUGH on your team members, while its exciting it also is just hard when a company is growing this fast and pivoting daily. But the bigger issue is

2 — If the client leaves you have a HUGE chunk of your expected costs tied up into one project.

Once she calculated that she got with our client relationship lead Dana and Dana asked the client if we could add in contractors for certain parts of the project, which would mean we would the offset some of our risk to a team of people who are used to managing that risk, contractors.

This approach also helped us ramp up resources as the client keeps growing in new areas. Fast growing clients move fast and break things, today’s priority is tomorrow’s let’s hold off a year, and to ramp up and down with those requests and changes requires a strong bench at the ready. This lets us continue being a strong & responsive partner and to help us live into what we felt we needed to do should we continue working w/them longer term.

I also LOVE how Crystal managed it, she wanted us to see these team members as just that TEAM MEMBERS, not disposable contractors. So for instance I meet with everyone in the company when they start, she wanted me to meet with the contractors too (which I think is in process), she wanted to chat with them too the same way she does for new hires. She wanted us to be 100% transparent with them about the client situations, etc.

When it came time and we got that news from the client, we were able to give our contractors the heads up too, some even asked, how can we help Seer recoup some of that loss. (A blog post for another day is about how often people who are jilted about agency life sometimes turn into teammates)

8 — Never be afraid to say “We don’t do that”

In early 2018 we started discussions with this client about their itch for local boots on the ground in all these countries. We felt that they needed it, and we reminded them that we wouldn’t likely be the right partner for them if that was the need. 9 months later here we are, they are moving on.

If your client is outgrowing your offering, that might be OK, maybe you are not the right company to take them from B to C, but you were the perfect company to take them from A to B. You lose trust when you start pitching your client on areas that are explicit needs for them and it is a major stretch to deliver. We stretched a LOT with this client, but we were always honest with them.

Keep in mind people wil judge you by your weakest offering, not your strongest, even if your weakest is only 2% of the project. Be careful, that little 2% stretch could become their sole focus, taking their attention away from the 98% where you are killing it. BE CARFUL!

Here is an example of how these requetss went down: The client would say, hey can you run these XYZ campaigns for us. We would vet our capabilities and come back with something like: (1)Yes, (2) NOT Today, but we feel we can learn over 3 weeks and ramp up quick, which then the client was empowered to say, sure we’d rather you all keep doing this for us, or NO this is critical, so thank you for the honesty but we gotta go elsewhere for this or (3) No — we aren’t the best fit here for you. Every request was met with this approach, it helped them know what to expect and it kept us honest, and our team, members were shown that we were OK saying no to some things, which I think is important.

Ultimately that was our undoing here, the clients newest set of needs, we could only do 20% of well, the other 80% was not our strong suit, Dana, an exec at Seer (along with some help from executive Larry) built this dispassionate exercise, we stripped out the emotion of “we’d like to keep the client / we like working with them” and lead with what is best for the client.

We went through an exercise with the client (they liked how we distilled the decisions down into 1 chart decided to use this in their new agency evaluation), here is it:

Dispassionately, we had to look at what Seer could do for them based on their new needs (and yes we shared this with our client as part of the exercise):

We had to say, if we’re making our true north what is best for the client, we could only take a sliver of their business, the vast majority we were not able to reasonably cover / perform well.

9 — Celebrate, YES Celebrate & Learn.

Don’t celebrate for long, but never lose sight that your company was able to:

A) Land a client of this size
B) Keep up with them during one of their fastest growing phases for YEARS
C) Maintain a relationship for YEARS!
D) Learn from it

Your company, for both good and maybe some bad too, learned a lot in the process, shame if you allow this opportunity to become 100% about the loss and 0% about the learning. You had to have learned a ton, watch for emerging leaders on the team that lost the client, they might say “I’ll take responsibility for helping us to learn what to keep doing, what to do differently, what can our BD & marketing teams learn about the dynamics of a company like this, how they make decisions, etc, what can my HR team learn about staffing up for these companies while they are growing.” If you have to make a choice about who to keep and who to let go, those who think “whew, that’s over” might have a different long term value to your business than those who think, “what can we learn, and how can I help make this company better?”

We even have this client coming in to invest time on what they think we should do more of, less of, etc. A sign of a great partnership is even when leaving they are dedicated to helping us get better.

So cheers to you if you were able to hold on and thrive with a client, CRUSHING their goals quarter after quarter after quarter, esp when that client is WAY outside of your typical deal range & especially when you can do it for an extended period of time. If you lose them in a year maybe not so much.

10 — Offboard w/ integrity, live to fight another day

Your financial model will tell you to shift hours, trim back, cut, redeploy the team. Maybe you are angry, you are right to feel that, all of that. DO NOT LET THAT KEEP YOU FROM DOING THE RIGHT THING FOR YOUR CLIENT!

How you exit a client sends signals, signals to your team. Are we the kind of company who gets mad and stops doing great work? Or do we cross the finish line running as hard as we started the race? That’s integrity, pride in your work, signal that to your team.

Be good to the new agency too!
Not only are we working on with the new agency on transitions, but we also outlined for our client what parts of the project to offboard first given their needs & where we weren’t the strongest fit, this helped them ramp up the other agency FIRST on areas where Seer wasn’t as strong, again another signal of putting the client needs first.

You’ll also be signaling that to your client! They’ll remember you as someone with integrity, that kept to your word and saw things through, which has lead to 2 referrals from this client to other divisions while they are offboarding us.

While I could write another post about crushing it, do we really need another one of those? I am intentionally trying to write more and more about the parts that I wish were out there more, running an agency isn’t easy, losing your largest client isn’t easy, and I hope that by sharing this, more agencies learn from what we’ve learned and more agencies feel OK sharing the struggle. Losing your largest client has put MANY agencies completely out of business or created a downsizing they never could recover from, I fully expect Seer to grow again next year and given how much we crushed goals this year we’ve made up well over 75% of this clients revenue already.