I would like to start this week’s blog with two simple truths:
1. The toughest thing to do in sales is to win a new customer
1A. The second toughest thing to do is to keep that customer
Notice I numbered them 1 and 1A?
Most companies spend an inordinate amount of dollars trying to acquire key account customers and by comparison, provide significantly less in tools and training to retain and expand in existing key accounts.
Fact: if you want to grow 15% annually, with 90% client retention, you have to actually grow 27.7%! In an era where it costs approximately 6-7X more to acquire a new customer than it does to retain an existing one, and the probability of selling into an existing customer has a 60-70% win rate v. 5-20% for a new customer,* companies need to re-think their approach to client development.
Here are four key mistakes companies make with their key accounts.
1. They buy into the “Hunter/Farmer” concept
They put their best and most talented salespeople in a hunter role, designed to win big multi-million-dollar deals. They get the best tools, lead gen, and sales training—strategic selling, negotiation skills, etc. When they win the deal, they turn the account over to a “farmer,” who is supposed to nurture and manage the account. This person most likely has basic sales skills and had difficulty opening new accounts, but the leaders feel that they are better suited to “manage” key accounts.
If you believe in the fact that contracts are nothing more than a string of 90-day escape clauses, consider this: Your newly acquired account is being courted by your competitors’ best hunters! While you rationalize that the account is already sold, you think you need more account management skills than selling skills.
Wrong! Today, the “Farmer” must HUNT ON THE FARM! They need the best tools and sales training to be successful in creating value for their customer. Client retention and expansion is the NEW acquisition and should be invested in and treated as such.
2. They don’t have a Key Account Plan
They spend all that money acquiring the customer, and there is not a formal account planning process designed to retain and expand. If there is a planning process, it is most likely “optional.” See the client retention/expansion statement below:
What is your share? How do you map relationships? Which initiatives should you proactively work on, and with whom? Without a key account plan and key account training, you put your sales team (and your company) at risk. Leveraging an account planning tool will go a long way to have your teams effectively manage your largest customers proactively.
3. They don’t measure client risk
How would you answer the question, “Are your clients at risk?” Maybe. Some. All. The fact is you really don’t know. Most companies are at the mercy of their account manager to answer the question.
According to our SAMA research, 58% of your clients are at risk, with 8% near exit. There are several indicators of client risk, with the most prevalent being a key decision-maker change on the client side. Without a proactive client risk process, the chance of client retention drops off significantly.
4. They don’t have a formal cross-selling strategy
They talk the talk, but their actions don’t match their words.Going back to 1A of the Simple Truths, one way to improve client retention is to cross-sell additional services creating more “economic entanglement.” Where value is equal or better, customers would prefer to deal with less suppliers. That makes cross-selling a proactive form of customer service.
As the graphic below illustrates, we must take as much friction out of cross-selling as possible. This is done through addressing the four areas outline below.
At Butler Street, strategic selling and key account management are core to our training.
Client retention and expansion is the new acquisition. If your sales team is not leveraging the best tools (ClientFit® 2.0) and best training (Strategic Selling and Key Account Management), please contact us to learn more about how we can help you improve client retention.
* Harvard Business Review