You Wanna Be A Timeshare? Or Earn Client Loyalty?

I'm going to talk out of both sides of my mouth in a short note today.

On the one hand, if/when you ever go to sell your firm, the buyer (especially one from outside the industry) will place significant value on seeing recurring revenue relationships with your clients. I've explained what they look for and also talked about recurring revenue before. It's unfortunate but it's true.

On the other hand, what's in the client's best interest? Are there good arguments for why they would want to be locked into recurring revenue arrangements? Yes, as it turns out:

  1. They may want to be certain that you are setting aside capacity on their behalf, ready to be used at any point, with a real reservation. By the way, time is not a renewable resource, so dispense with this notion of rolling unused time forward. And of course you might not want to be selling hours, regardless.
  2. Some of the work that you do requires time to grow. You can make instant oatmeal with water and heat, but you can't plant an oat seed, pour water on it, and expect to harvest oat right away. An arrangement like this sets expectations appropriately and ensures that the client is serious.

But otherwise, these "sticky" relationships are really for you...and not for them. That's just true, and it's okay to admit that. It's actually better to admit that. You could say something like this:

"We only have a specific number of slots on our roster, and we usually prefer to reserve them for clients who are looking for a deeper relationship. This billing arrangement helps us manage staffing, outlays, and workflow. We'll sometimes slide a project or two in when we have the capacity, but that's an exception to the way we normally do things."

So both sides of this argument have merit. But let's not:

  • Try to keep bad clients around.
  • Burn bridges with punitive policies.
  • Passively-aggressively work out our emotional frustrations and hurt, masked as corporate policies.

My opinion of elected officials shot from 1.2 to 1.7 (on a scale of 10.0) after hearing that the FTC is considering a regulation that will make it as easy to cancel a subscription as it is to sign up for it in the first place! How frustrating is it when they gladly take your credit card online to sign up for a monthly something or other...and then require you to call a phone number during business hours to cancel something, only to be faced with idiots trying to talk you out of it?

Let's balance what's good for us with what's good for the client. Earn loyalty...and don't be a timeshare.

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