There’s a common belief in staffing that creates a false sense of security.
“As long as we keep our top three clients happy, we’re good!”
It feels right.
It sounds true.
It makes sense.
Steady order flow, predictable revenue, and a relationship you’ve spent years building. That anchor account feels like the foundation that the entire firm rests on. But the client that feels like your solid foundation is often your single largest vulnerability.
Client concentration looks exactly like stability, until it goes away.
There are two ways to look at this:
1. A big client is an asset.
2. A big client you can’t afford to lose is a liability.
The difference between the two is whether losing them would be a setback you can weather or an extinction event. That’s the potential risk you may be planning for. The day the account walks out the door.
But the real risk isn’t just that they may leave. It’s what the revenue concentration and resulting account arrangements do to you when they stay.
When one account is 40% of your revenue, you don’t really have a “big client.” You have a client who sets all the terms, and they often know that.
You provide them with discounts. You jump when they say jump. You put your best recruiters onto their orders and deprioritize the other clients who want (and probably need) more of your attention. You are losing pricing power and negotiating leverage, because “we’ll walk away” isn’t a card you can play.
Here are two other ways to consider it:
1. A big client is a powerful revenue source.
2. A big client you can’t afford to lose is a leash.
The solution isn’t firing your top three clients. It’s building a diversified client list so that you’re never held hostage by any one client. Know your client concentration number and set a ceiling you won’t cross.
Everyone loves to hunt elephants, but not everyone considers what that elephant would do to them if they landed one.
Be the staffing firm/leader that builds for the day the big client exits, because eventually, one of them will. The firms that survive shocks aren’t the ones with the largest clients.
They’re the ones that no single client can take down.