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Realise the Potential of your Key Accounts.

Planning

Pareto Law: The authority on sales, no less, since 1995.

Client accounts are a crucial business asset. An extension of the company brand, a strong portfolio of key accounts will have a powerful influence on the way a business is perceived… opening up potential for referrals and business pipeline within that account’s sector or industry.

LOVE ‘EM OR LOSE ‘EM:THE POWER AND VALUE OF YOUR ACCOUNTS

The value of strategic account management is accepted by most, but misunderstood by many. The potential for recurring revenue generation and increased profitability may be the primary end-goal for most, but additional value from investment in existing accounts far exceeds initial expectations. On the other hand, the cost to business by failing to place account management on the agenda is extensive.

Client accounts, once won, are a crucial business asset. An extension of the company brand, a strong portfolio of key accounts will have a powerful influence on the way a business is perceived, both internally and externally. Effective management and development will not only improve revenue generation from that individual account but will also open up potential for referrals and business pipeline within that account’s sector or industry: as any marketer will testify, the power of the word of mouth is priceless when seeking out new business opportunities. A first-hand testimonial is a holy grail for successful business strategy but in order to secure it, a business organisation must first look to the way it treats its existing client base. Poor management of existing accounts in favour of pursing new business can not only impact upon individual customer satisfaction and potential for re-purchase, but can have an extensive impact upon business reputation and standing.

Possession is nine-tenths of the law: and when it comes to key business accounts, the case is no different. It is generally accepted as being easier to maintain ownership once possession is acquired; and after actively investing considerable time and resource into prospecting, nurturing, pitching and winning an account, many assume the hard part is over. What’s more, research suggests that it is 4 to 7 times more expensive to acquire a new customer than to retain and develop an existing account, making their continued maintenance and growth a business strategy no-brainer.

Yet despite this figure, business organisations worldwide are consistently placing their accounts into a red danger-zone by failing to invest in effective account management. Essential not only for generating recurring, steady revenue streams but also commercial growth, the development of key strategic accounts in business is actually being neglected. Whether by becoming complacent, failing to realise their true value or simply taking an eye off the ball, a surprising number of account managers continue to lose customers each and every year to competitors who are able to swoop in and poach profitable accounts due to the failures of those charged with protecting them.

How can business professionals not only hold onto their accounts, but actively take steps to realising their true potential?

Where is the process of account management and development going wrong?

ACCOUNT MANAGEMENTAND DEVELOPMENT

The majority of business organisations will enter an account at the base of the relationship ladder, standing as a standard product or service provider.

At this point, the only key differentiator between that business and its competitors is price. The commodity supplier has a vulnerable and tentative relationship that can be easily substituted. Investment into developing that account will push the relationship further up the ladder, demonstrating the increased value that can be brought to the table by the supplier and, in turn, the value of that account. Those who step into the role of a value-added partner or business partner will realise longer contracts, increased re-purchasing and cross-selling across their product portfolio, deeper penetration of a client’s business and stronger, profitable relationships that are ‘future-proofed’ against potential poaching.

“CUP OF TEA ACCOUNT MANAGEMENT”

Recognising potential is often easier than identifying the failures preventing us from realising it. Research undertaken by the Rain Group of over 370 business organisations found that 60% of those questioned believed they should be generating 25% or more in revenue from existing accounts; 3 in 10 identified that figure to be at 50% or above. However, identifying the specific factors standing in the way of achieving that vision presented a far greater challenge. Account management is, by nature, regarded by many business organisations as an extended arm of the sales function. Whilst foundational principles shared across the two are inexplicably connected, it is a failure to realise the very definition of account management that stands in the way of so many. The specific characteristics and skills required make account management a unique profession that controversially, may not be suited to every sales professional. In particular, the perception that account management is centred solely around strong relationship-building skills is now a redundant stereotype that could be costing business in the long-term.

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With the right people in the right place, equipped with the tools they require to understand the nature, position and potential of each individual account on their books, there are three fundamental steps required for top performing account managers: penetrate, expand, protect.

Relationship skills should be considered a ‘given’ for the position; additional qualities including innovation, collaboration, project management, researching and consultancy are also roles that are commonly part and parcel of the account management process. Therefore recruiting the right people or equipping existing Account Managers with the tools and skills they require is essential. Relationship leaders will need to consistently adopt innovative and fresh means for creating value within their accounts, alongside the ability to drive and push through change or decisions in order to get things done.

Those who retain focus solely on periodically ‘touching base’ with the same person over and over, stopping by for a cup of tea and a chat about the status of an existing product or service, will only succeed in repeatedly farming the account for the same results. The profession requires hunters alongside farmers: those who can take that core of key accounts upon which the business relies, and pioneer them to the next level to realise the unlocked potential in their accounts.

Having worked hard to secure that account and push through the first deal, those account managers are actually engaging in a counterproductive process: without a finger on the pulse of changes and developments occurring across the business, this complacent approach leaves the account vulnerable to competitors who are able to identify alternative avenues to resolve the customer need. The work with that account has only just begun when the ink dries on the first contract: a proactive and on-going engagement with the account on a number of levels is paramount if the relationship is to continue.

A trend and misconception also occurs at the pursuit stage of the sale. Looking to secure a short-term sale, business professionals will identify a key decision maker, frequently positioned in a situation of power or influence and usually found higher up the managerial ladder. While this singular contact may be sufficient for pushing through a specific, short-term opportunity, the nature of business development inevitably sees diminished powers for decision-makers as growth and expansion occurs. Sign-off takes longer, requires additional people or authority, the red tape increases.

For those Account Managers who maintain contact with a singular sponsor within an account, the funnel of opportunity actually closes. While that single buyer may show traits of successful account management such as trust, deeper engagement or a more collaborative working partnership, their ability to actually pioneer that account from the position of a value added provider to a business or corporate partner is limited. In order to move up, a branching out process is required. When it comes to account development, it really is not just what you know, but who you know.

CHERRY PICKING In an ideal world, each and every account would be strategically managed to generate maximum value at every stage. However, the reality remains that not only will many organisations lack sufficient resource to actively invest time into every individual account, not all accounts will have potential for long-term repeat revenue. However, there is a point of differentiation between those accounts that are large in terms of revenue, and those that are worthy of further investment.

The first step to a successful account management strategy must be an audit and analysis of the current state of play. With a portfolio of accounts spanning a variety of industry sectors, stages of business relationship or sales process, the practice of account management is a true science that requires strong skills in project management. Equipping account managers and sales professionals with training in managing the logistics of their accounts is an essential minimal requirement. Only at this point will high performing sales people will able to determine:

• The current relationship level at which their individual accounts stand• The existing and potential value of those accounts, alongside potential gaps and needs that could be met by an existing or potential product from the business portfolio• The events, triggers and periods in the business calendar when each of those accounts is ‘ripe’ for promoting further purchasing decisions• The key points of contact, both existing and potential, within the network of those accounts• Each organisation’s individual culture, structure and market, alongside the factors impacting upon the decision and ability to purchase

With an account management strategy in place, business organisations are able to cherry pick those specific accounts on which to focus: whether it’s knowing to pinpoint the MD but not the Finance Manager during financial year end for the logistics sector or recognising that the flooding crisis has promoted a project management demand in the insurance industry, knowledge of where and when to strike is true power.

A TOUGH NUT TO CRACK:FUTURE-PROOFING YOUR ACCOUNTS

With the right people in the right place, equipped with the tools they require to understand the nature, position and potential of each individual account on their books, there are three fundamental steps required for top performing account managers: penetrate, expand, protect.

First, create a stakeholder map and leverage through your sponsors to gauge a network throughout the account. The initial sponsor should only ever be a stepping stone: maintaining a solid relationship and business partnership with that contact is important, but it is also vital to consider the opportunities that will open up upon widening that network funnel. A contact may be more receptive to further opportunities when influenced by internal contacts you’ve connected with; there may be additional needs that can be met in other departments or areas of the business, only identifiable once the account is penetrated further. Consider the pigeon hole that could be created if that single contact were to leave their position: where is the position of that account then? Business leaders generally understand the value of differentiation and setting themselves apart from the competition, but the ability to accelerate a client relationship to a stage of dependency or even interdependency is not only desirable, but essential for expansion and protection of an account.

TOGETHER, FOREVER The nature of account management, like any relationship in life, is that it will always be subject to the unexpected. The market changes, budgets are cut or expanded, contacts progress, move or leave. No relationship is immune to change. However, it is this very point that makes account management so lucrative to business. Those who stand still or take a complacent approach will find themselves undercut or falling down the relationship ladder; those who recognise accounts as a continual untapped source of opportunity and actively invest time in developing them will reap the rewards.

To make a marriage of two business organisations work, account managers must evolve and adapt, proactively responding to change to continually keep accounts fresh, current and profitable. Building a network and knowledge base, arming themselves with knowledge. And if all else fails, opting for a pint in the pub as an alternative to the courtesy touch-base quarterly call could just be the trigger needed to start the climb up that relationship ladder. After all, what do we have to lose by investing in what we already have at our disposal?

Integrating the values, goals and objectives of your organisation with selected accounts will embed those two companies’ interests. What’s more, positioning that account manager as a partner invested in the long-term success of a client or customers’ organisation will see that individual develop a position of authority and trust to become the ‘first port of call’ whenever need arises. If you are the consultant, the knowledge base and the problem solver, you become indispensable in the eyes of that account.

If the capacity is also available to integrate systems and processes across two organisations, the value of that partnership increases further still. Building innovation together and linking outcomes to mutual benefit creates a closely integrated partnership, with concepts, ideals and practices intertwined in a tight bond. No-one likes change; the greater the switching costs and potential logistics of moving from one business partnership to a new provider, the less likely that customer or client will be to leave, and the greater the threat of competition diminishes.

Initiate set account management processes that are systematic, structured and repeatable, preventing those valuable assets from slipping through the net due to lack of engagement or contact. Ensure those points of contact are valuable and in line with the account’s specific calendar and triggers. Ad-hoc ‘cup of tea’ meetings are an expensive waste that will be unlikely to generate further opportunity, unless tailored to specific times of need or in reaction to change within that account’s market that could ultimately trigger a buying response.

Confront conflict. Those who are most successful in maximising potential from accounts are not those who deliver a flawless service, but those who demonstrate successful management of conflict as and when it arises. When resolved quickly and in the right way, problems can actually enhance customer loyalty by offering reassurance and insight into customer service levels and collaboration between both organisations. Those who can work together to resolve conflict will not only survive, but thrive.

The nature of account management, like any relationship in life, is that it will always be subject to the unexpected. The market changes, budgets are cut or expanded, contacts progress, move or leave. No relationship is immune to change.

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Call Pareto today for more information on 08436 367 669 or email info@pareto.co.uk