Updated: Nov 29, 2020
This is a sad story. I received a gut-wrenching call from the CEO of a $50 million company on Thursday. He saw me speak at a conference back in September and was very intrigued by the fact that he could not answer the question, “Are your clients at risk?” He said my entire talk around “client retention being new acquisition and how it cost 6-7 times more to sell a new customer than and existing one” really resonated with him. He went on to say that he had every intention of calling Butler Street for some recommendations when he got back to his office. But he got caught in the “whirlwind” of running his company and days turned into weeks and then weeks to months.
Earlier this week, he lost his largest and most profitable account—slightly over $5.6 million in annual revenue, and significantly profitable. He said,
“Mike, I read Butler Street blogs most every week. I meant to reach out to you a number of times and unfortunately, I did not. On Monday, I was informed via email, our largest customer was terminating their contract with us. I don’t know if your blog is written for this Monday, but if you could share this with your readers as soon as possible, I would appreciate it. Maybe I can get some good karma out of it or something like that.”
So, it is only fitting, we scrapped our scheduled blog and talk this week about the consequences of inaction.
Of course, I felt horrible for him. I had a ton of questions, but did not want it to come across as an interrogation. I asked two simple questions:
How are you doing?
What are you going do?
We talked for over an hour. After the letter came in, he pulled together his sales and client services team for a debrief. As it turns out, all the signs were there:
They hadn’t had a business review “in over a year”
Their key contact started missing calls and cancelling meetings
It was harder to get in touch with their client (they didn’t answer calls or emails as quickly as they used to)
When they did get together, they avoided talking about any future plans or goals (“Don’t worry about it….” “We can go over that some other time….”)
The client started asking about specific services (that sounded a lot like the competition’s)
The client started to ask for copies of processes, workflows and other account setup information
The client wanted more information on key performance indicators
Several months back the client started questioning contract pricing and/or requesting discounts
When I asked what he would have done differently, knowing what he knows now? He responded, “I would have called you when I got back to my office after watching you speak. I knew my team did not have the proper tools and training to effectively manage our key accounts. I just got caught up in the day to day whirlwind and unfortunately, we’re now having a different conversation.”
The reality was this: He felt he did not put his team in position to be successful due to the lack of tools and training on key account management. The most difficult thing in business to business selling is acquiring a customer. Once you acquire that customer you must make a commitment to never, ever lose that customer.
The lesson learned here is this: A contract is nothing more than a string of 90-day escape clauses strung together. Every day the competition was pounding away at his customer introducing new technologies, new potential solutions, etc. Meanwhile his team was merely doing what they had done for the past 4 ½ years—managing the account and taking care of business. As you can see by the graphic below, for most companies, at any given time, nearly 2 out of 3 clients are at some level of risk.
It is your company’s ability to adapt to the changing needs of your client over time, personnel change, changing priorities and advancing technology that will ensure the relationship stays strong. Having the proper tools and process (key account plan, client risk analysis), proper reporting (regular business reviews) and proper training (how to advance the relationship) remains the foundation to effective key account management.
Are your clients at risk? If you cannot answer the question qualitatively and quantitatively, please give us a call before it is too late. Let’s not let our CEO's bad experience fall on “deaf ears” and hope some good karma does come out of his transparency.
At Butler Street, we specialize in client retention, expansion and client risk. There is never a better time than the present to engage us to help you retain your most important asset: Your EXISTING CUSTOMERS! Click on CONTACT and let’s arrange some time to talk.