By Mike Jacoutot, Managing Partner
“I didn’t know you did that.”
The six nightmare words every sales manager, VP and CEO hate to hear from their customers. Unfortunately, this was the case when the Vice President of Client Development accompanied their salesperson to a meeting with one of their key customers. Ten minutes in to the meeting, the customer explained that she had just given a $1.3 million contract to one of their most hotly-contested competitors.
Consider how the Vice President of Client Development felt after informing the customer that was their largest revenue-producing service offering. To which the customer said, “I didn’t know you did that. I absolutely would have given you first look at it. However, it is good to know. I will certainly keep you in mind when the contract is up.” (In three years!)
Later, when the salesperson was asked by the Vice President of Client Development why the customer was not aware of all of the services their company offered, the situation became even more strained. The salesperson’s response was, “I wasn’t aware that they were interested in those services. But even if I was, why would I want to risk MY business by bringing another one of our divisions into MY customer?”
BOOM! A two for one response! The bomb has been dropped AND the elephant in the kitchen has been uncovered!
And therein lies the not so uncommon problem!
Our company was asked to assess this organization’s client development capabilities, tools, processes and people. You are probably thinking that the results would have been very negative regarding the salesperson. Actually, results clearly showed that this was not a “he” or “she” problem. This is a “we” problem. And here’s why:
The salesperson was not aware of all of the services their loyal customer purchases
The salesperson is not measured, recognized and rewarded for cross-selling
As we completed our Client Development Diagnostic we learned the following about this company:
Their top sales priority was winning new customers. A dollar of revenue from a new account was much more celebrated than a dollar of revenue from an existing account.
They had no formal key account management process or client risk assessment resulting in low client retention year over year—a key metric they did not measure!
They did not measure, recognize and reward cross-selling new products and services into existing customers
Clearly, the salesperson needs to hold herself accountable for not knowing their customer had a $1.3 million need that her company could have filled. Customers are constantly trying to reduce the number of suppliers they deal with. Unfortunately, the salesperson now has her toughest competitor walking the halls trying to advance the relationship with “her” customer.
The company, however, needs to be held accountable for not providing the tools, training, measurement, recognition and reward for cross-selling new products and services into existing customers.
In this case, if the salesperson had brought her divisional counterpart in to “her” customer, the company would have most likely been successful in winning the $1.3 million contract. The salesperson would have done the right thing, but would have received nothing in return in terms of compensation, quota achievement and most likely would have received little in terms of recognition and thanks. This salesperson was constantly working to acquire new customers because the company’s current compensation plan, quotas, recognition and rewards are clearly aligned to drive this type of behavior. Is this wrong? No, it is not. But it does not have to be an either/or as we recommended a “both/and” approach.
A couple of foundational things we asked our client to consider:
A dollar of revenue is a dollar of revenue.
It costs 6-7x more to sell a new customer than to sell into an existing one.
Client retention and expansion is the NEW acquisition. Customers want to deal with less suppliers. Align your goals with their goals.
Cross-selling can be a crucial revenue-boosting tool when properly implemented
Cross-selling can increase customer loyalty, improve customer retention AND provide additional references and referrals.
Who would you rather have calling on your customer? Someone else from your company or a competitor? Cross-selling programs are marathons, not sprints. They require a system of reinforcing activities that include the tools, training, reporting, recognition and rewards to drive the desired behavior. If your company is not growing at the rate you want to be, you most likely have not made cross-selling a top priority. We can help.
At Butler Street, we have built best-in-class Key Account Management tools, our proprietary Client Risk Analysis and a Cross-Selling Roadmap that can be embedded into your current CRM system. Our Managing Partners have led national sales and customer services organizations across four industries with a history of industry leading growth. You don’t have to do this alone. Click on the CONTACT button and let’s talk. We would love to help!