Why the Secret to Growth May Be a 'Velvet Rope' Strategy

Sometimes, your best move is to give certain clients the boot and refuse to accept others.

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By Drew Kossoff

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Opinions expressed by Entrepreneur contributors are their own.

If you're an entrepreneur, your time is extremely limited. Not surprisingly, time management is one of the top challenges small business owners face, along with a lack of cash flow, according to recent research from Guidant Financial. Yet many entrepreneurs continue to trade time for money, acting as if time were an unlimited resource.

That's understandable: Who cares that you're overextended when your client base is growing, right? If your startup is still making a name for itself, saying yes to any customer who will have you may seem like the right choice.

But eventually, this kind of blind acceptance will backfire. What's more, it will actually impede your ability to grow.

That statement may seem counterintuitive, but to scale your startup effectively, the best move is often to give some clients the boot and refuse to accept others. Forget an open-door policy. Instead, put up a velvet rope and let only the right -- qualified -- clients in.

Related: To Make 1-800-Got-Junk A Success, Its Founder Had To Rethink Everything (Including Himself)

Value yourself and bring value to your clients.

Setting high standards for a client signals that a company understands its own worth. By adopting a velvet rope mentality -- offering selective availability and saying "no" to unqualified prospects -- I myself have found that you can often create more demand for your services or even increase the motivation to upgrade or pay a premium to access the service you offer.

In the same way that VIP rooms and private clubs build demand through selectivity, you can use a "velvet rope "mentality to attract the best opportunities, stay focused and deliver better value to clients.

This velvet rope strategy can help you focus your priorities and protect your limited bandwidth. If you keep your services general-admission, you'll spread yourself too thin and limit your ability to provide your best customers with the service they deserve.

Do business in the VIP section.

For a "boutique" agency owner, the velvet rope is both a growth strategy and a survival skill. The relationships you develop with clients have to benefit both of you, so unless you have a plan for maximizing your time and resources, I guarantee you'll be wasting time and losing money.

It's all about essentialism and opportunity cost. To stop wasting your time and to start optimizing your growth, follow these steps.

1. Create an ideal client avatar.

What does an ideal client look like? What are the minimum requirements a great client should have? To find out, create a customer avatar of that ideal client, laying out key details such as the type of company that client would be, the niche it's in, how difficult or easy it might be for you to work with and how financially stable the client company is.

It's easy to assume the right client is the one standing in front of you, but not understanding what you're actually looking for will eventually lead to "focus stall" and burnout later down the line.

Creating parameters for desirable clients up-front not only makes it easier to separate the whales from the minnows, but also helps you understand your actual goals for your company.

The requirements you create shouldn't be just sketchy guidelines either. Make them hard-and-fast rules. If clients want to get on board, they'll need to live up to your standards. If they're serious about working with you, they'll have to step up to meet them.

Related: How to Handle a Sudden Growth Spurt in Your Business

2. Integrate the velvet rope into your core values.

A velvet rope mentality is more than a PR stunt; it should affect the thinking in every facet of your startup, from marketing to communications to pitching. That way, you'll actually be living up to your ideal customer instead of wasting resources on people and projects that go nowhere.

This was something I actually experienced with a client who was hovering at a $20,000 per month spend for more than a year. This small client wasn't growing, so it didn't make sense for us to commit our limited resources to it. That's why we gave it to them straight: They needed to either commit to spending at least $50,000 each month or they needed to find a different agency.

After a difficult conversation, this client initially decided to take a break from working with us. However, a few months later, its principals came back to the table and said they were ready to scale. Today, they spend three times our minimum requirement, which means that we can really help them grow while they contribute to our growth, as well. It's a win-win relationship.

3. Design exclusivity into your services.

Scarcity marketing is a powerful force because it creates a feeling of exclusivity. Luxury perfume Le Labo, for example, handcrafts a scent for each customer at the time of purchase. The perfumer also offers a range of scents, inspired by such global cities as London and Paris, most of which are available for purchase only in the city of inspiration.

Take a page from Le Labo and stake out market share by flouting mass-marketing conventions and building some exclusivity into your services.

If you think of yourself as a luxury brand, your services are both exclusive and aspirational. That means clients will aspire to be one of the select few who can meet your criteria and get onto the list for the VIP room. Making the cut will be a source of pride for your clients.

Related: Marketing To A High-End Consumer, Using The Luxury Strategy

To grow, you have to learn to say no. When you turn away clients who don't fit your criteria, you build in more bandwidth for the clients who do. The sooner you put up that velvet rope and signal to prospective clients that you're a valuable partner, the faster you'll position your business for meaningful growth.

Drew Kossoff


Drew Kossoff is an entrepreneur, conscious capitalist and CEO of Rainmaker Ad Ventures, one of the fastest-growing U.S. digital media buying agencies.

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