Small is beautiful: Rethinking client acquisition

Whether in the advisory space, marketing or communications: service providers, agencies and consultants work hard to win over the right clients. Of course, multinational corporations are among the most sought-after prospects. And for good reason: big, internationally operating companies face interesting challenges, employ sophisticated and qualified people and – most importantly – have the resources to pay top dollar for external contractors. But maybe there’s more to the story than meets the eye.

In areas like marketing or change implementation, multinationals have their priorities straight, knowing that it’s much better to invest now than to try to put out fires and mitigate damage down the road. For advisory contractors, getting listed with a major company is a seal of approval, and an open door to a steady stream of projects. As a rule, such business relationships work well. Except when they don’t.

Just about every service provider I know who is listed with a large corporation has experienced the same thing: client-side pressure to meet unrealistic cost-reduction demands, and the contractor caving in just to stay on board. Once these concessions have been made, it’s generally unusual for the client to say at some point, “Thanks for your flexibility. Our numbers are looking better now, so we can return to your regular fee schedule.” (If this were a TV sitcom, the laugh track would chime in now.)

Don’t get me wrong, globally operating organizations are fascinating and rewarding to work with. But maybe – just maybe – focusing on the big guns alone is too narrow an approach. After all, there are smaller and younger organizations, in many cases from “emerging” economies, that need professional advisory, marketing and communications services to scale and pursue a global agenda. A further consideration is that big multinationals are generally headquartered in mature economies. Despite their presence in less mature geographies around the world, the role of big European or American companies in elevating living standards is small compared to what regional business growth and entrepreneurship can accomplish. I contend that they deserve attention.

In praise of newcomers, smaller players and emerging economies

These players usually can’t – and shouldn’t – pay top dollar. Startups, for example, typically have zero, negative or at best limited revenue streams. They also often have budget constraints dictated by investors, and many demands on whatever limited resources they do have. And yet … in most cases, these clients end up paying quite reasonably for services. But, above all, such small and upcoming players tend to have innovative and interesting business models that present new and exciting challenges. They also often pursue a purpose worthy of support, like gender parity, social and financial inclusion or environmental objectives. In fact, as asserted in the policy paper Entrepreneurship 4.0: Setting the Stage, published by The Digital Economist (an abridged version appeared here under the title Old World, New Drive: Entrepreneurship in Europe), the creativity and innovative drive of young entrepreneurs is an essential piece of the puzzle humankind needs to solve to ensure our future wellbeing. This applies especially to social entrepreneurs. The paper makes a case for policymaking that attracts, supports and encourages entrepreneurship, citing examples like Estonia. But the incumbent business community can also contribute to an entrepreneur-friendly environment.

Add to this the fact that, for those of us with gray hair and track records reaching back decades, interacting with dynamic newcomers and entrepreneurs from all over the world is a breath of fresh air. I can attest that working with people who have creative business ideas in Africa, India and Southeast Asia is motivating and downright fun. And – again, I can speak from personal experience only – these clients tend to be very grateful, loyal and prompt with payments.

This last observation should come as no surprise: Grameen Bank, the microcredit institute founded by Bangladeshi Nobel Laureate Muhammad Yunus, reports repayment rates of between 95% and 98%. Contrast that with S&P statistics that show US corporate credit default rates fluctuating wildly and occasionally hitting double digits.

It’s also worth noting that establishing a foothold in so-called “emerging” economies may not be such a bad idea in terms of future economic development anyway. In 2019, Vietnam – to name just one example – clocked 7% GDP growth, according to the World Bank.

A few thoughts to bear in mind:

• Clients from emerging economies and/or with new ideas might just make up for their limited resources with ingenuity, excitement and a sense of purpose
• Taking on newcomer clients opens up the opportunity to get on board early in enterprises with high growth potential
• Smaller companies are more likely to interact from the management level directly, enabling high-quality advisory work on important topics
• Dynamic interaction and opportunities for real change and growth add meaning to our work
• The growing sector of social entrepreneurship deserves special attention – by definition, these are enterprises that tackle pressing social and environmental challenges

To sum up, we all love our big-name clients for the fascinating and challenging tasks they hand us, their ability to take on major projects and, not least, for the street credentials we gain by having them in our portfolios. But the next time you have a conversation with someone who has a crazy idea to change the world or with an ambitious entrepreneur from a place you’ve never heard of, don’t forget to listen to that soft and so easily misinterpreted sound of opportunity knocking. And above all, follow your heart. Who knows where it may lead you?

This article was authored by Mike Durrie, Owner and Director, Key Messages