Small is Big
Why pursuing smaller clients equals revenue
By Craig Johnson
In almost every business segment and sector, a significant number of staffing firms generate half of their revenue or more from smaller buyers, according to a survey of 611 staffing firms by Staffing Industry Analysts.
“Thousands of small companies [those with fewer than 1,000 employees] buy staffing services, and though each typically represents a limited amount of revenue, in aggregate they are big business,” says Jon Osborne, vice president of research at Staffing Industry Analysts. “Smaller companies are more challenging to sell to, simply because there is less bang to buck for sales to chase down lots of dispersed small accounts versus fewer large ones. That said, smaller customers are much less likely to use a vendor management system or other sophisticated cost minimization strategies, so the pricing side of the equation can be more advantageous.”
Staffing firms selling to buyers in the manufacturing industry reported the largest percentage of sales to smaller firms. When asked what percentage of their business is to smaller companies, the median response for staffing firms selling to manufacturing reported 86 percent to 90 percent of its business came from smaller firms.
The median response for logistics and business services was also high, at 70 percent to 80 percent each.
On the low end were government and finance/insurance, each with a median response of 11 percent to 15 percent.
Industrial/logistics staffing firms and direct hire firms reported the highest level of sales to smaller buyers. The median response among firms in both segments was 81 percent to 85 percent of business coming from smaller client firms.
Staffing firms that provide information technology staffing reported the lowest level of sales to smaller customers. The median response among information technology staffing firms on percentage of sales to smaller buyers was 16 percent to 20 percent.
In general, the smaller the staffing firm, the greater percentage of its revenue came from smaller clients.