In any economic conditions, it can be an appealing strategy for a staffing firm to prioritize volume over value. To put it another way, firms may look to bring on the most clients rather than the right ones. While it might feel like the smart move at the time, this approach can erode profit margins, burden your team, and introduce long-term risk.
To achieve sustainable growth in staffing, agencies must evaluate new business opportunities strategically. Instituting a data-backed approach that weighs the long-term value of a potential client can help ensure that a client is aligned to your goals and matches your Ideal Customer Profile (ICP).
In this article we’ll discuss different factors staffing agencies should weigh when building an ICP and how to find clients for staffing agency profitability using key metrics.
ICP Factor #1: Financial Stability
One of the most important client evaluation metrics is financial health. Late or missed payments can quickly turn a profitable deal into a liability.
- Run credit checks and review payment histories before onboarding any new client. Additionally, make these credit checks a common practice to remain up to date on a client’s financial health over time.
- Investigate the company’s online reputation and make yourself aware of any red flags from industry peers.
- Use your staffing CRM or financial vetting tools to track these metrics and flag high-risk prospects early.
ICP Factor #2: Industry Alignment
Successful staffing agencies prioritize industry alignment to leverage internal expertise and existing talent pipelines.
- Focus on sectors where your recruiters have established networks and proven placement success.
- Avoid clients in unfamiliar industries unless you’re willing to build a dedicated sourcing strategy.
- Consider industry volatility. High-risk sectors may yield inconsistent orders, draining internal resources without delivering long-term value.
By targeting aligned industries, you enable your team to operate efficiently and confidently. Remember: specialization is key.
ICP Factor #3: Term Alignment
Chasing short-term wins by accepting poor terms can undercut your margins and create unbalanced relationships.
- Ensure clients are willing to meet your minimum margin thresholds. If a prospect immediately pushes back on price, it may signal trouble ahead.
- Include early payment incentives and late payment penalties in contracts to drive better financial behavior.
- Favor clients open to renegotiation clauses, signaling a willingness to invest in a long-term partnership.
ICP Factor #4: Strategic Fit
Not every interested client is a strategic fit for your staffing firm. Broader considerations can ensure long-term alignment.
- Assess the engagement timeline. If a prospective client isn’t hiring for another year, prioritize active prospects instead.
- Evaluate geographic fit. Clients in areas where you have sourcing capabilities are easier to serve with quality talent.
- Build relationships with key stakeholders to ensure cultural compatibility and smoother communication throughout the partnership.
What to Do With Your Ideal Customer Profile
Once your evaluation criteria are established, translate them into a client scoring system from 1 to 10 or A to F (or 1-100; the world is your oyster!).
With this client scoring system, you can audit your existing book of business to get a full understanding of the health of your clients, which can help guide your strategy as you bring on more clients. This audit can help determine how many of your accounts are truly A-level; those that drive profit, communicate clearly, and align with your ICP.
These A-level clients can not only be used as a template for the types of businesses you should be engaging as prospects, but can also emerge as partners willing to expand your relationship; offering exclusivity, higher rates for premium service, and more.
Getting Buy-In From Your Team
Even the best evaluation system won’t work if your account managers aren’t incentivized to prioritize quality over quantity. Ensure that your team understands the strategy you’re pursuing, and align your commission and compensation plans to reward your team for bringing in high-quality clients.
For more information on evaluating new business, how to optimize the contracting process to prioritize sustainable growth, implementing SOPs to set your team up for success, and much more, download our guide, Maximizing Margins in Challenging Economic Times.