Should Whale Clients Be Part Of Your Service Mix Right Now?
Conventional advice from pundits says never serve “whales” in your consulting business. But what if they’re wrong? (Hint: they are.) A whale model CAN work in the right circumstances, provided it’s a fit with how you like to work and you design and price them correctly. Here’s my advice on whether (and how) to add whale clients to your service mix:
What exactly makes a client a whale?
A few examples of highly successful whale business models—how they’re structured and how much revenue they deliver.
Why conventional “wisdom” about whales doesn’t apply when you structure and price them correctly.
The three challenges you’ll need to address to make sure whales will work for your particular business.
Where to start if you decide adding whale clients makes sense.
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TRANSCRIPT
Rochelle Moulton
00:00 – 00:47
You just want to make sure that your whale clients fit neatly into at least one of your sweet spots, like the type of work, the industry, your client profile, et cetera. Otherwise, each one will feel like a supremely heavy lift, and that’s the last thing that you want. Hello, hello. Welcome to the SOA’s Life Podcast, where we’re all about turning your expertise into wealth, impact, and power. I’m Rachelle Moulton, and today I want to talk to you about whether it makes sense to include whale clients as part of your service mix right now. I sent out an email to my list about this last week, and I got quite a few responses as well as a few questions.
Rochelle Moulton
00:47 – 01:27
So we’re going to do a deeper dive on this today. Let’s start with what I mean by whale client. They don’t have to be a giant company or a huge organization. The whale refers to how much of your revenue they represent. So I’d call any client that is 15 to 20% or more of your annual revenue a whale. Now, there is this assumption in certain circles that a whale client model is bad. That the best goal is to build revenue streams where you can sell smaller things to more people. That that is less risky over time.
Rochelle Moulton
01:28 – 02:12
While there’s nothing wrong with creating a diversified business, it isn’t for everyone. Many consultants and advisors who are delivering major value to their institutional clients have built significant revenue and wealth using a whale model. So I’ll give you a few examples. Number one, a specialty marketing consultant to big corporates who has a consulting book speaking model, earns $500,000 plus per year. They usually do a handful of $100,000 to $150,000 consulting projects and speak maybe half a dozen times a year, plus they earn royalties from their books. Now their downside is the travel required for speaking.
Rochelle Moulton
02:12 – 02:57
So this would be hard to master in say 20 or probably even 30 hours a week. Two, a retainer expertise model where the consultant sells $100,000 plus annual retainers to three to five companies. They typically are retained for a few years, you know, with annual renewals with the need and the fees tapering off as they go. So maintaining a pipeline of future clients to replace the old ones as they roll off is critical to make this model work. Three, a change consultant who does one or two giant projects per year along with usually a few smaller productized service offerings that often lead to the big assignments like say an assessment.
Rochelle Moulton
02:58 – 03:44
Now this is the most dangerous whale model because if even one project goes off the rails, you’re at risk. And yet, it can also be the most lucrative. I’ve had clients routinely earning $500,000, $750,000, and even a million dollars as a soloist without employees or contractors. Now, I know I’m tossing around some big numbers, but we’re talking about soloists who’ve got significant experience and are delivering a very specific high value transformation. Most of them didn’t start there, but they migrated over time as they experimented with their work, figuring out who their best clients are and their most valuable to the client outcomes.
Rochelle Moulton
03:45 – 04:25
So a lot of consultants and advisors don’t even think about a whale model because it so goes against the grain of the typical advice out there. Build a huge audience, sell low price point products, right? But if you position yourself correctly, Price yourself right and carefully build a system that delivers a pipeline of future clients to you. This can be not only a lucrative practice, but one where you don’t have to work 60 plus hours a week to make it happen. Now, as always, the devil’s in the details. So I see three main challenges you’ll want to address.
Rochelle Moulton
04:26 – 05:07
Challenge number one, you have to deliver a transformation that is high value enough that a handful or two of clients can bring you some seriously significant revenue. Because it’s not worth your time to focus in on a few whales if altogether they deliver disappointing revenue. So if you had five $30,000 whales when you were first starting out, that would be incredible. But when you’ve been doing that same work, same volume for five years, not so much. If you’re committed to the model, you’ll want to keep honing the client outcomes as you go so they deliver higher and higher value outcomes.
Rochelle Moulton
05:07 – 05:55
So that $30,000 that you started with might become $50,000, $100,000, or even more as you keep zeroing in on your sweet spot. So challenge number two is positioning yourself correctly. You need to be in a big enough category to ensure there’s sufficient demand for your thing, but you want to occupy your very own authority space. A generic communication consultant probably won’t be able to hit those big numbers, but an M&A specialist might easily command them. And this too is going to evolve over time as you decide where you want to focus. And challenge number three is price yourself like the rock star you are.
Rochelle Moulton
05:55 – 06:39
And if you aren’t a rock star yet, then figure out the highest, best value you can deliver so that your ideal clients come to see you as their rock star. Now with pricing, you’ve got to experiment to find your sweet spot and then experiment some more because it’s an ongoing process. It never ends. I’ve told the story in my book and here on this podcast about the client selling an assessment that was jam-packed with value for $15,000. All we did was bump it up by $10,000 each time until their ideal buyers said no. We found the ceiling, and then we experimented with providing more value so we could raise it again.
Rochelle Moulton
06:40 – 07:15
Now, I get that blithely increasing fees by $10,000 a clip is hard when times are tough, but if you’re having enough sales conversations, it’s pretty easy to try it out for yourself. Which leads me to the question I really want you to consider today, and that’s this. Should Whale clients be part of your service mix right now if they aren’t already? Times are pretty weird right now. We are teetering on the edge of a recession, some are saying that we’re already in one, and lots of buyers are pulling back or putting off big decisions until they have more clarity.
Rochelle Moulton
07:16 – 08:02
Those buyers are less likely to reach out to someone new when they’re in stress mode. But your clients, former and current, know what you can do, right? That makes them an easy starting point to lock in some revenue now on open items you know that they’re going to need. Or you could start discussions for bread and butter type work that they’re likely to green light once the dust clears. Concentrating on a few significant clients allows you to focus your sales, marketing, and relationship building intimately while keeping your revenue flowing and growing. And it limits any flailing around you might do if you get worried about the direction of your revenue line.
Rochelle Moulton
08:03 – 08:42
You just want to make sure that your whale clients fit neatly into at least one of your sweet spots, like the type of work, the industry, your client profile, et cetera. Otherwise, each one will feel like a supremely heavy lift, and that’s the last thing that you want. You never want to have just one client because that’s usually not a sustainable business model. The only exception, and it’s quite rare, where this can work is when you’re doing intensive one-to-one work where you can only serve one client at a time. and you’re billing them what feels like a crazy big amount, i.e.
Rochelle Moulton
08:42 – 09:27
enough revenue to make for an outrageously successful year. Even then though, you’ve got to have a system that delivers you leads or you will spend way too much time sitting on the bench waiting for your next whale. Also want to make sure that any whale is worthy of investment, that they are good people with achievable goals who will view you as a trusted resource. Anyone who doesn’t meet that standard is never worth your time and energy. They must value your services and be willing to pay for the value received. You only want whales who appreciate you, who see you as the rock star to midwife them to that big transformation they’re looking for.
Rochelle Moulton
09:28 – 10:15
You also want to be able to grow together or part company respectfully if your goals go in different directions. I’m going to argue that that means you like them, you like how they work, and you’re aligned with their worldview. Anyone not meeting that standard cannot become a whale because I will, they cannot become your whale because I guarantee you’ll regret it every single day you work with them. So you can probably tell I like a good whale model when it suits your skills, deliverables, temperament, and business and revenue goals. It doesn’t work for everyone, but if your current business model isn’t working for you in this kind of crazy business environment, it might be time to give a whale a try.
Rochelle Moulton
10:16 – 10:51
You don’t need to upend your entire business. Just try it with one current or past client, someone who knows you and trusts you and see where it leads. Because even if serving a handful of whales is not your long term vision, it can act as a lucrative placeholder while you navigate your business through this uncertainty. Just construct them thoughtfully and only let the very best folks on the train with you. Alrighty then, that’s it for whale models today. I’ll see you next time on The Soloist Live. Bye-bye.
