Maybe the most challenging part of the conversation
I do want to prepare you for an unexpected part of this compensation conversation.
If your book of business is like most, it is entirely out of balance. The chances are that half of your clients (by case count) are only generating 6% - 7% of your revenue. Yet, at the same time, the top 5% of your clients likely generate 30% of your income.
When you start to look at the amount of compensation you receive for each client, you will face a very harsh reality. In many books of business, it is not uncommon that the revenue for the largest clients is 100X (or more) that of the smallest clients. Not that the largest clients don’t demand more attention and resources, but you likely have some clients for whom you are overpaid. However, you likely have substantially more on which you are grossly underpaid.
The harshest reality of all is your largest clients are financially subsidizing your smallest clients.
If a client is genuinely overpaying you, get the amount of compensation in line with the value you deliver. Perhaps there are additional services you can provide them, or maybe you do need to offer to reduce your commission. This will be a rare situation for most.
Much more common will be a need to go to your smallest clients and ask to be paid more. Many of them are likely paying you less than $1,000/year. Asking them to pay some minimum monthly retainer, maybe $250, for the service you provide will be seen as reasonable by most. They will be more than surprised when they learn how little you receive on their behalf. And, for those who don't see it that way, well, you're losing money by holding on to them.
I can see clearly now
I do understand the anxiety that comes with the thought of this conversation. But it is a meaningful and healthy move in the right direction.
How liberating will it be to have relationships with your clients based on full disclosure of value delivered and compensation received?
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