Who's your biggest customer?
Now, who's your favorite customer?
If you came up with two different names, you're not alone.
A lot of owners treat their biggest customer like the one they can't live without. So they give them the discount. They eat the last-minute changes. They wait on the payment.
And they never ask whether that customer is actually making them any money.
Because what if the answer is no?
That was the starting point for a recent episode of the Planting Seeds Podcast, where Nick and I talked about how to tell when a customer is costing you more than they're worth.
Meet Bob and His "Bread and Butter" Customer
Nick brought back Bob, our completely fictional business owner. This time, Bob runs a cabinet shop.
About a third of Bob's work comes from one home builder. Bob calls them his bread and butter.
But on every job, the builder wants 10% off, because "we send you a lot of work." Bob eats the cost when something has to be redone. And the builder pays about 75 days after the job is finished, so Bob is carrying the cost of lumber on his credit card in the meantime.
He's tired of it.
So one Friday, Bob sits down and compares two kitchens: one for the builder and one for a retired couple.
Once he accounts for the discount, the redo, and the interest on his card, the builder's kitchen left him about $70 an hour.
The retired couple paid full price, made no changes, and paid the day the job was finished. That kitchen left him about $100 an hour.
Bob had been working hardest for the customer who paid him the least.
As Nick put it, the builder keeps Bob busy. The retired couple keeps Bob in business.
If you're reading this and feel a little seen, you're in good company. I could name three different situations I've been in with this exact scenario. It might be the most relatable thing we've talked about on the show.
You Don't Have to Fire Them
So at what point do you decide a customer isn't worth it anymore?
Nick's first answer was that you don't have to make that call at all. Nothing in business is binary. It's rarely just keep or fire. There are almost always more options than that.
What it comes down to for most owners is what you can afford and what you're comfortable with. Sometimes the stress a client brings isn't worth the money they bring in. Where that line sits is different for every business, and it can change over time.
Be Careful Calling Anyone Your Bread and Butter
I think owners need to rethink the "bread and butter" label.
You don't want your whole business resting on one client. And if you ever slip and call them your bread and butter where they can hear it, they now know they hold the power in the relationship.
It doesn't have to be malicious. But once a customer knows you need them, it gets easier for them to assume you'll swap out the cabinets they ordered wrong and skip the restocking fee.
Nick said this happens in every industry, whether you sell products or services. Dealing with customers is partly negotiation and partly self-preservation. And because so many owners already underprice their work, a customer who figures out you rely on them tends to push for more: discounts, changes, and "I'll get you paid when I get you paid."
Personally, I want every client to feel like they get the attention they'd get if they were our only client. I just never want to depend on any single one of them.
How Do You Know Which Customers Are Actually Profitable?
This question came from our resource guide, and Nick's answer was job costing. You compare what it actually cost you to serve a customer, or to complete a specific job, against what you actually received.
You don't need fancy software. Here's the simple version Nick walked through:
Pull a sales-by-customer report for the last quarter or year.
Take your top 10 customers. Keep it simple.
Next to each one, write down how many hours the work took and what you spent on materials. Use what you actually paid, not retail.
Figure out what each customer leaves you per hour of work.
Re-sort the list by that number instead of by sales.
That's your real customer list.
The ones at the top are the customers you want more of. The ones at the bottom are the work you want less of.
In Bob's case, the builder is probably at the top of his sales report. On this list, the builder lands near the bottom.
How Often Should You Check?
Nick said at least once a year, at a minimum.
Beyond that, run the numbers whenever you start feeling pinched. Did costs go up? Did revenue go down? Are changes and extra materials eating into certain jobs? Find out why.
That's a lot easier if you're writing things down as you go. At Harvest, we make notes on just about everything: phone calls, meetings, follow-ups. Meetings get transcribed and summarized so the important details don't get lost.
Nick also pointed out that most owners didn't go to school to run a business. They got good at a trade and realized they could do it on their own. Some learned from someone who was very organized and already track their costs. A lot of construction folks know their costs well before they bid a job. But if you don't have that habit yet, start simple. Track what jobs cost, write it down, and compare.
One Customer Worth 25% or 25 Smaller Customers?
In our rapid-fire segment, I asked Nick whether he'd rather have one customer worth 25% of his revenue or 25 smaller customers.
He'd take the 25 smaller customers.
One big customer is a big chunk of your business, and they usually know it. That's why Bob's builder asks for 10% off every job. He knows Bob won't fire him.
Nick's advice: Bob doesn't need to fire the builder. He needs to need him less. If the builder pays him $10,000 a month, what Bob really wants is two customers paying him $5,000 each.
That's concentration risk. If 25% of your income comes from one customer and that customer leaves, you just lost 25% of your income. It can hit fast and hard.
For us, it wouldn't have to be 25 tiny customers, either. Nick framed it as five customers at 5% each instead of one at 25%. Real numbers never break down that neatly, but the point is to spread the risk out.
A Demanding Customer Who Pays or an Easy One Who Pays Late?
Next question: what's worse, a demanding customer who pays on time, or an easy customer who always pays late?
Nick said they're both bad, just in different ways. With the demanding customer, you know you're getting the money, but you're also getting the stress. With the easy one, you know you're getting the late payment, if you get paid at all. He doesn't want either.
In theory, I think the late payer is worse. A demanding customer is something I might be able to manage by setting some guardrails, or by charging them more.
At Harvest, this one mostly doesn't come up because we work on a prepaid basis. It works like electricity. If the bill isn't paid, the lights don't stay on.
But in a business that isn't set up that way, the customer who always pays late becomes extra work. I'd have to build time into every job just to chase the money. Did they cut the check? Did it go in the mail? Let me know if it doesn't show up by Friday. At least the demanding customer is paying.
Nick compared my "maybe I can fix them" answer to the high school girl who's sure she can change the bad boy. Sometimes it works out that way in the movies. Usually, the bad boy just drags her down.
Clients work the same way. And in Bob's case, the builder is both. He's demanding and he pays late.
Nick's suggestion: finish the work you've promised, then tell the client you'll have to pass on the next job. There are customers in every industry who'll pay fairly for good work, pay on time, and have their act together. It doesn't make sense to keep putting up with one who doesn't appreciate what you do.
If you don't, you'll probably end up resenting them, whether you realize it or not.
One caution Nick added: if you do move on from a difficult client, don't rush to replace them with the first new client who comes along. You could end up with one who's five times worse. How to find the right clients is a topic we'll cover in a future episode.
"I Dread Seeing Their Name Pop Up on My Phone"
Our question from the field fit right into that:
They're one of my biggest customers. I also dread seeing their name pop up on my phone.
Nick's response: the dread is telling you something. Your gut ran the numbers before your brain did.
That doesn't automatically mean you have to lose the customer. It means something has to change.
Nick suggested picking the thing that bothers you most about the relationship and working to fix it. In our work, that's often documentation. If we've asked for something over and over, the next step isn't another text. It's a phone call that says, "We need this in order to keep doing your work."
If I had to sum up this whole series, it would be planning, execution, and communication. You set the expectations and stick with them. Whether people mean to or not, they'll see how far they can push if there aren't clear limits, especially in service work.
I've lived this one, too. At a marketing company I used to run, one client made up close to 30% of our income. They required a lot of work, and they were the worst about changes. They'd give us something vague to start, then follow it with what felt like 50 revisions.
"We want it to be blue."
Which blue? There are about a million of them.
Stump Josh: How Do I Find More Customers Like My Best Ones?
For Stump Josh, Nick asked how to find more customers like your best ones without spending a fortune on ads.
Talk to your best customers.
People tend to surround themselves with people who run their businesses the same way they do. Your best customers probably know others with similar values, even if they're in completely different industries.
And it's fine to ask directly. Depending on your relationship, you can simply say, "We're looking to grow, and we'd love some referrals." You can ask for a Google review, or ask if you can share something they posted about you. A lot of owners feel awkward asking, but there's nothing wrong with it.
It's the simplest marketing there is. If you have a client you love, start there.
What Should My Website Say to Keep the Wrong Customers Away?
Nick followed up: what should my website say so the wrong customers never call in the first place?
That one's tricky. Mostly, it comes down to communicating clearly what you do.
There's a big push to pack every possible keyword into your website for search. But when you throw everything at the wall to cast a wider net, you also pull in people who aren't a fit. The more specific you are about what you do, the clearer it becomes what you don't do.
At Harvest, we're geared toward businesses, not individuals. Every tax season, we still get calls from people looking for help with personal taxes. That'll probably always happen. But we can cut down on it by leaving personal tax language out of our keywords and off our homepage.
You don't need a wider net. You need a better net. If you're trying to catch small fish, a giant net with big holes won't help you. Get the right net for what you're trying to catch.
What Gets Measured Gets Managed
Nick pulled it all together: Bob thought his biggest customer was his best one. It turned out his best customer was the retired couple who paid full price and paid on time.
Bigger doesn't always mean better. And the only way to find out is to look.
What gets measured gets managed. Track your time, your materials, and the revenue each customer actually brings in. Keep notes, so when you look back at a job that didn't go well, you can figure out why.
Nick left listeners with one thing to do this week:
Write down your top five customers by sales. Next to each one, answer one question: yes or no, would I want five more just like them?
The ones you say yes to are who you should be marketing to.
Watch the Conversation
In this episode of the Planting Seeds Podcast, Nick and I talk about how to tell when a customer costs more than they're worth, how to figure out which customers are actually profitable, concentration risk, demanding clients versus late payers, what to do when you dread a customer's calls, finding more of your best customers, and using your website to keep the wrong ones away.
At Harvest Advisory Group, we help business owners see which customers and jobs are actually making them money, so they can decide who they want more of.
Because your busiest customer and your best customer aren't always the same one.