There’s a common saying in business that “it takes three times more effort to get business from a new customer than from an existing customer.” I believe that to be true, regardless of your industry.
Yet, we’re all consumed with pursuing the next deal. Why is this? If your Web development company has dozens of hungry clients, clamoring for your time, why is there always so much emphasis on new business? Why do current clients tend to get neglected or placed in line behind new business which comes in the door?
Last month, I read the fantastic book “Managing the Professional Service Firm” by David Maister. It’s geared toward the traditional professional services — accountants and lawyers, mainly — but the lessons in it are widely applicable to any “I’ll do X for money” type of firm.
Though long, this quote is worth reading, regarding why firms are so obsessive about new business:
I have learned from numerous conversations on this topic with consultants, lawyers, accountants, actuaries, and other professionals that primary among all the reasons for the relative overemphasis on new clients is the simple fact that pursuing and getting a new client is more fun. New clients provide the “thrill of the chase” in a way that maturing existing relationships does not. Pursuing a new client proposal opportunity usually has the characteristics of a well-defined, finite, project with relatively clear tasks and specific deadlines. Nurturing an existing relationship often has few inherent deadlines, little obvious structure, and more ambiguous tasks. Consequently, it is reported to me, it is a less “satisfying” activity: It doesn’t provide the same “rush of adrenaline.”
It’s so true. New projects are perfect, in the sense that everything is theoretical. In your mind, the project is unsullied by reality. You envision perfect execution, and relish the chance to attack a new challenge.
Sadly, it’s a lot like relationships — the grass is always greener and whatnot. New business validates you as a company. Getting new work means someone said, “Yes, you are good enough to hire.” Not getting the new work — even if you have more than enough existing work — is like someone saying, “Stick with what you know. I’m rejecting you in favor of someone else.”
Sometimes, I’m convinced we over-emphasize new work to shore up our self-esteem and sense of worth as professionals.
Acknowledging this fact doesn’t solve the problem, but it makes you more aware of it and how destructive it is. Being cognizant of this — even just for the last month — has positively affected the way I do business.