Our research shows that 9 out of 10 companies continue to make this mistake over and over again every single day with no plan to change.
How could that be?
Having started my career in sales and with 35+ years of experience, I can say unequivocally that acquiring a new customer, getting them to sign on with you, is the toughest thing a sales person has to do! Don’t believe me?
Let’s just look at the cost and associated defect with acquiring a new customer:
Bain & Company research states that it is 6-7X more expensive to sell a new customer compared to resell into an existing customer
The probability of selling into a new customer is 60-70%
The probability of selling a new prospect is 5-20%
The second toughest thing a sales person has to do is to retain their existing customers.
So, what is the biggest mistake companies make?
The mistake: not giving their people the collaboration tools and training by way of a key account plan for client retention and expansion. Companies spend all that money acquiring a customer, signing a contract and 90% don’t have a collaborative plan for customer retention and expansion.
Why is client retention so important? Because the longer your loyal customers stay with your company, you have the ability to:
Strong client retention results in a higher value company—that is a fact!A 2% increase in client retention is the equivalent of reducing overall costs by 10%!
Most companies relate to client retention as a direct correlation of your company’s ability to deliver on what you promised during the sales process. The key to client retention is building a structured, repeatable and scalable methodology that enables your team to adapt to the changing needs of your client over time, personnel change, changing priorities and advancing technology.
The graphic below demonstrates The Basics of Key Account Management:
Customer Operating Reality: you must truly take the time to understand your customer and your customer’s business. What are the key drivers, pressures, needs and wants as they appear through your customer’s eyes?
Alignment with Changing Customer Priorities and Initiatives: one thing is for certain, when people change the entire relationship has the capability to change. Company initiatives and priorities can change month to month or year over year.
Understanding Customer Risk Factors: 38% of client defections occur be cause of a new key decision maker change, followed by lack of innovation and performance to the service level agreement. Understanding these risks enable your account team to effectively manage those risks.
Proactive Customer Relationship Strategies: once you understand your client’s needs, you can develop a plan to proactively advance customer relationships and align resources accordingly.
Weekly Accountability through an Inspection Process: it is imperative every company has a Client Risk Analysis ready and available every Monday morning (or every morning for that matter). It is your weekly report card for your key accounts! Remember how much it cost to acquire these accounts!
At Butler Street, we believe building long-term collaborative relationships with customers is a journey, not a destination. It takes communication and a real focus on helping our customers grow their business! If you would like to learn more about ClientFit® or best practices in Key Account Management, click CONTACT and let’s arrange some time to talk. Don’t make the same mistake! Arm your team with the collaboration tools and training needed to retain and grow your customers.