Recruiters: How to make money NOW. Use the ABC Analysis to increase your billings

ABC analysis recruitment

It’s almost the end of January, and you didn’t do as many placements in the new year as you would have hoped to? At the same time, you want to build a healthy pipeline so that your sales don’t take a dip in 2-3 months? Sound familiar? Here is how to make more money by using the ABC analysis (we’ll focus on perm recruitment).

Use the ABC analysis to focus on the right clients

What is the ABC analysis?

The ABC analysis is a form of analysis based on the Pareto principle, also known as the 80/20 rule. It is a tool to prioritise different items and separate the important from the marginally important items. In the case of recruitment, the items are clients.

A clients = very important:

Very important - recruitment“A clients” are clients where a high amount of revenue is earnt, but don’t require a high amount of your time. This could be a client that you have a strong relationship with, that you get repeat business from and that is relatively easy to place with. Relatively easy to place, means that you don’t have to invest a significant amount of time into placing with them. This might be because their interview process is straight forward and they don’t have too many interview stages, the hiring manager is very good, and candidates are easily convinced to work for them and the company. They might also use you exclusively (or at least not a lot of agencies) and are not overly picky when hiring candidates. In a nutshell: “A clients” are clients that give you high return for relatively little input. Focus on them and make sure that you give them your A-grade service.

B clients = important:

These are your average clients. You get a decent amount of work from them, you have an established relationship with them, and you need to invest a good but reasonable amount of time to place with them. It’s a good idea to develop “B clients” – they have the potential to become A clients.

C clients = marginally important:

ABC analysis recruitingThese are the companies that you have signed terms with, but you don’t get a high amount of jobs from. Or you have jobs with them constantly, but it’s too difficult to place with them, and they are high maintenance. This might be because they are small or because they have a big internal recruitment team whose KPIs are to use as little agencies as possible, no matter what. These “C clients” require a proportionally high amount of time to look after e.g. have to call them often to get jobs from them, and when you get jobs their brief is not realistic, and they are overly picky when interviewing your candidates. You end up investing a lot of time in them only to find out that at the second stage interview they suddenly have an internal candidate that magically appeared out of thin air that got the job. And then you wonder if all they did was use you to benchmark the market and only wanted to compare their internal candidate with what else is out there. While it’s important to maintain those clients, don’t focus on them and don’t waste too much time on servicing them. And if a client is clearly using you for benchmarking purposes repeatedly, then have an open conversation with them and stop working for them if they don’t change. You owe it to your candidates and to yourself.

What can the numbers look like? I want to see some examples!

Here are some example numbers:

A clients: 60% of revenue comes from 10% of clients

B clients: 30% of revenue comes from 20% of clients

C clients: 10% of revenue comes from 70% of clients

These numbers are of course only an example. In this example, 90% of your revenue came from 30% of your clients. It’s worth focusing on them, and making sure that they get an A-class service, don’t you think so? And maybe it is time to stop working with this one, high maintenance client that gives you jobs, but you barely place with them? (I bet that you are thinking of at least one particular client right now!) You can use the time saved to generate new business with clients that will actually generate you money.

I highly encourage you to run the numbers for yourself! If you are the Director or Business owner then you can run it for your whole company – if you are a recruiter, then you can run it for your desk.

How to implement the ABC analysis to make more placements NOW

There are a lot of things that can go wrong with a pipeline. Let’s have a look at some of them and see how the ABC analysis can help you to make more placements NOW and build a strong pipeline. I also added a couple of general tips.

How to make placements NOW: prioritise

prioritize clients recruitment

  • Prioritise clients by their urgency to fill the position. The more desperate your clients, and the bigger the negative impact for the hiring manager if the position doesn’t get filled, the better. Bonus question to ask the hiring manager: ‘What happens if the position doesn’t get filled within X amount of time?’
  • Prioritise clients by their commitment to you and the number of recruitment agencies that have the position.
  • Prioritise positions that have a rather quick turnaround. Fewer interview stages and hiring managers that are available for interviews on relatively short notice are your friends.

Need more jobs?

  • more jobs recruitmentStart with making sure that you have your A and B clients fully covered and that you have all their jobs that you can get.
  • Assuming your market is not extremely niche, do not go to your usual C clients next but instead look for patterns in A and B clients. This could be the size of the companies, office locations, set up of their recruitment (internal HR team, no internal recruiters, RPO, …), etc. And then have a look which potential new client is out there that might be your new A or B client. This could be a completely new client, or it might also be a C client that got lost in the database – you might have done some work with them 1 or 2 years ago, but then for whatever reason, they went under the radar. What a great opportunity to reconnect with them! See if they are currently advertising jobs (ad chase) and speak with them about a particularly strong candidate that you have (reverse market). Of course without mentioning the name of the candidate and without getting their permission first.
  • Listen to candidates: The candidate that you are interviewing wants to leave their current employer because half the team left already, and who remains is completely overworked, and their manager is struggling to hire new staff? Just out of curiosity: what is the name of the hiring manager? And which company is the candidate interviewing with? Those are very interesting pieces of information!
  • Follow industry news specific to your sector. You will come across useful information such as companies that are looking to expand this year, companies that are extremely successful (high revenue growth usually means that they will want to take the money to invest in growth), companies that are moving offices, etc. All of those are great leads that you will want to look into.

Broaden the job brief

Focus on the clients with the highest urgency to fill the position. Do your market research and give them an estimate with how many candidates that match the initial brief exist. Then work with them on broadening the job brief: is X amount of years of experience really necessary, and is this one hard to find skill really a must? And suddenly you’ll have a bigger pool of candidates to choose from.

Speed things up

Time kills deals. And you don’t want your candidates to accept another offer – just because it came in first. And yes, quite a lot of candidates tend just to accept the first offer that they get. You do want your offer to come in first.

  • Speed up recruitment processSpeed up your internal interview with the candidate. You speak with the candidate over the phone, and the candidate can’t talk right now. You ask them when they are available for a more in-depth phone call or for a meeting, and they suggest sometime next week. What works quite well is a simple ‘How about tonight?’. The same when you ask them when you can expect their CV. The phrases ‘How about tonight’ or ‘how about tomorrow’ make them think how they can achieve that. And you’ll be surprised how often it actually is doable for them.
  • Speed up the interview process: Let’s say the client is available for an interview in 4 weeks. Tell them that this is not an option. If the person who does the 1st stage interview is on leave, ask them to do the interview with the interviewers from the 2nd stage interview first.
  • It’s Monday, and your client gives you interview spots for Wednesday and Friday in the same week and Tuesday and Thursday in the following week. Only mention Wednesday and Friday to your candidate. Only if they really can’t do this week bring up the interview slots of the next week. Otherwise, the candidate might pick Thursday next week, just because it’s a tiny little bit more convenient for them – but Wednesday this week would have just been completely fine as well.

In the end, there is one thing to remember: don’t forget the clients & positions that will take longer to fill – they’re your placements in the following months.

Did I forget a point of how to make placements NOW? Please let us know in the comments below!

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About Claudius Reinert

Claudius has 8 years of recruitment experience and placed candidates in Australia, APAC, Europe and the USA. He is the director of Open Sky Recruitment, a recruitment to recruitment agency. His passion is to help recruiters to achieve their goals.

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