Pareto Principle: A Profitable Client Acquisition Strategy for Architects

Happy New Year, friend!

Let’s talk about your favorite topic: bad clients. (Okay, it’s not your favorite topic. But what if I help you elevate your client quality?!)

Many architectural firms face the familiar challenge of dealing with these less-than-ideal clients. While it’s easy to grumble about client-related issues, the real solution lies in a strategic shift: actively seeking and retaining high-quality clients that align with your business goals.

Defining High-Quality Architecture Clients

To know what makes a bad client, you have to identify what makes a good client.

Every firm is different, but understanding what constitutes a high-quality client is crucial for sustainable business growth that avoids bad clients.

This is how I define a high-quality client:

1. Respectful: Recognizing and valuing the architect's time, knowledge, and the intricacies involved in the architectural process.

2. Pays on time: Ensuring the financial health of the architectural firm through prompt payments.

3. Aligned values: Brings exciting projects that resonate with the firm’s architectural values and long-term goals.

4. Advocacy: Actively refers the architecture firm to potential clients and helps to expand your network.

5. Mutually beneficial: Engaging in projects that are not only creatively fulfilling but also financially beneficial for both parties.

But here’s the real question:

How do you get more high-quality clients and avoid low-quality clients?

Enter the Pareto Principle, also known as the 80/20 rule.

The Pareto Principle for Architects

The Pareto Principle helps architects improve their client acquisition strategies and efforts. This principle suggests that 80% of a firm’s outcomes are derived from 20% of its causes, such as client interactions and project selections.

The Pareto Principle doesn’t only apply to client acquisition. Theoretically, you can apply it to any aspect of your life or business. For example, it applies to design principles, time management, finances, etc. - but I think it’s most useful for evaluating clients. Why?

1. Targeted efficiency: Focusing on clients and projects that offer the most significant benefits can greatly improve an architecture firm's efficiency and resource allocation.

2. Strategic revenue growth: Understanding which clients contribute most to the firm’s revenue stream is key to a healthy and sustainable business strategy.

Let’s jump into how you can apply the Pareto Principle immediately!

Steps for effective client acquisition

01 // Client value assessment

Not all clients offer the same level of benefits. Some may bring more revenue, significant architectural projects, or valuable referrals. This is when a simple spreadsheet can be helpful!

• Evaluate client contribution: List out all of your clients over the past year as well as your current clients. Answer 2 yes or no questions for each:

  1. Are they easy to work with?

  2. Are their projects financially beneficial to the business?

02 // Client value matrix

Develop a matrix to evaluate clients based on two key factors: client quality and revenue contribution to your architectural practice. Divide each client into one of four distinct categories:

1. Good Client, Good Revenue: Ideal clients who are easy to work with and bring healthy profit.

2. Good Client, Bad Revenue: Clients who are easy to work with but offer lower financial returns.

3. Bad Client, Good Revenue: High-revenue clients who may be challenging to work with.

4. Bad Client, Bad Revenue: The least desirable quadrant, representing clients who are difficult and not profitable.

In the spreadsheet, you can create a new column for “Client Grade” and then include the appropriate grade for each client like this:

03 // Targeted client engagement

The order above is how your clients should be prioritized. Analyze the characteristics of the ‘Good Client, Good Revenue’ grade. Consider questions like:

• What types of projects do they bring?

• What are their common challenges?

• Where can I find more clients like this?

And equally as important, avoid grades 2, 3, and 4 whenever possible. These clients and projects are rarely worth your time and energy.

TL;DR

The beginning of the year is the perfect time for architects to refine their client acquisition strategies.

Leverage the Pareto Principle with:

1. Client value assessment: Identify whether clients are easy to work with and financially beneficial.

2. Client value matrix: Grade each client based on their impact, both positive and negative, to your business.

3. Targeted client engagement: Focus your efforts on good clients that bring in healthy revenue for your firm.

And you can grab your copy of the Client Value Matrix HERE. Go to File > Make a Copy so that you can edit it with your own clients 🙂