A client portfolio is a tool for B2B companies to develop client relationships that are profitable and sustainable. The process starts by identifying all your company’s clients and evaluating them using meaningful criteria.

To analyze your company’s clients and client relationships, you’ll first have to define the evaluation criteria. The criteria should cover the most important aspects that tell you whether a client relationship is worth pursuing.

The evaluation criteria

Here is, for example, a list of criteria you might consider:

Basic information of the client

• Name of the company
• Client’s business—investor, governmental organization, municipal organization, manufacturer, contractor, consultant, etc.
• Persons who are involved in the relationship on your client’s and on your company’s side

Evaluation criteria

• Type of the client relationship—a partnership, recurring, occasional, or endangered
• Client service needs—total service, specialized, or basic service
• Client’s decision criteria when selecting suppliers—price of purchase, total lifecycle cost, ease of purchase, trust, quality of the supplier, etc.
• Our portion of the client’s related purchases—small, medium, large
• Client profitability—high, moderate, low (if you have actual figures of the profitability, use them)
• Potential of additional sales—high, moderate, low, none
• Ease of collaboration with the client—easy, average, challenging
• Client’s own business prospects—failing, stabile, growing
• R&D collaboration with the client—ongoing, emerging, none
• Learning opportunities for us—high, moderate, low

Financial information

• Billings—total billing or billing broken down to service categories
• Change in billings—billing compared to the previous year and projection for the next 12 months

The evaluation

A simple method for presenting the client evaluation information is to use a spreadsheet. Once you have all the information in one place, you can do various types of analysis. The purpose of the analysis is to discover differences and similarities among different clients. This helps determine your business strategy, client portfolio, and client relationship plan.

When analyzing their client portfolio companies, it can often be seen how a small number of clients are actually creating the profits. On the other hand, less profitable clients can be necessary for other reasons.

Most companies lose 45 to 50 percent of their clients in five years. Acquiring new clients can cost 20 times more than does retaining the existing ones.  A five percent increase in customer retention can increase the companies’ profits by 25 to 85 percent. It is therefore important to carefully analyze if and how low-performance client relationships could be improved.

If you finally conclude that some client relationships are never going to be valuable, make a clear decision to break them off. Underperforming client relationships steal time and money from more productive business endeavors. They are not good for the client either. When you are not able and willing to give your fullest to clients, they will notice.