Q: In looking at our clients over the last six years, about 40 percent are in the architectural, engineering and construction (AEC) industries. While not a majority, we really enjoy working with these clients and they pay well. Should we drop our generalist approach (we're a marketing agency) and focus on this niche, or should we just keep taking whatever comes in the door?
CHRIS, Post Modern Marketing
A: A number of critical considerations might impact your decision, some of which might lead to conflicting measures.
Start with the idea that this subset of clients "pays well." Does that mean the gross revenue is good compared to other clients, or have you looked at all the factors to determine that the gross profit on this work returns a higher return on investment (ROI) than other work? If it is the latter, and if profit maximization is your goal, start looking for more clients like them.
However, if part of ROI for the work stems from the fact that you "really enjoy" working with them, how does that reward balance against financial factors? Perhaps by working with the "fun" clients (assuming the margins are even with clients in other industries), your key employees work harder and stay with the firm longer — employee satisfaction just turned this space into one that might have more long-term ROI.
Another factor has to do with managing your firm's brand and reputation. Must the firm formally "specialize" in order to maximize serving these industries? If not, increasing the percentage of work in that market will allow you to let some of your less profitable clients go. When you do, make sure you help them find replacement resources that meet your standards. You will find that this will have a positive effect on your investment of time in many ways, especially regarding your reputation as a firm.
If transforming into a player that serves these few categories delivers on profitability, satisfaction and reputation, the decision becomes easy. If one stands out more than the others, the decision comes down to what you want the business to be.
Regardless, as a marketing company, you should stop settling for "whatever comes in the door."
Mike Porter, Ed.D., is the faculty director of the MS in Health Care Communication at the University of St. Thomas Opus College of Business.
