You depend on strategic accounts to deliver critical revenue — are you paying attention for signs that those valuable customers may be at risk?
Some say that strategic accounts follow the 80/20 rule — as in, 20% of an organization’s customers account for 80% of its business. Others calculate that 5% of your customer base provides 50% of your revenue. Regardless of the exact percentage, as a sales leader, you know your strategic accounts are critical to meeting forecasts and exceeding quotas.
It’s well known that it’s not only more profitable but more predictable to sell into existing accounts. Developing new accounts, on the other hand, requires your team to build credibility and relationships from scratch. Plus, you’re also likely competing on price. But when you’re negotiating from the inside of an account, you’re already intimately acquainted with the business and its key players. You can ask questions and make recommendations that an outsider can’t.
Of course, just like you won’t win every new deal you pitch, you can’t keep every strategic account. Even so, you need to do everything you can to protect them. If a red flag goes up with one, will you see it?
Here are five signs to watch for:
1. Your account’s growth and/or activity unexpectedly slows.
Something has changed to negatively affect the account’s performance. Possible explanations:
- Do they no longer need what you have to offer?
- Could it be that one of your competitors has moved in?
- What if your strategic account manager is to blame — has he/she taken his/her eye off the ball?
- Is the cause beyond your control, such as your customer losing a key account?
Whatever the cause, a change in buying patterns should get your attention.
2. Your strategic account manager’s (SAM) primary contact leaves or is planning to leave.
Sometimes, you’ll get some notice that a key contact is leaving before his/her departure, but more often, you won’t find out until that contact updates his/her LinkedIn profile. You want to avoid this situation at all costs — new people often come with their own resources and agendas, which may not include you. This is especially threatening to your company if your SAM has only one point of contact in an account. The customer relationship is now back at square one — or worse.
3. A key contact complains or falls silent.
While complaints are part of any productive business relationship, they may also be smokescreens for hidden agendas, such as a negotiating ploy or the desire to partner with a new supplier. Either way, you need to be responsive. However, in the case that your customer doesn’t say anything, which is common, and the frequency and/or tone of communication changes, you need to find out why.
4. The account undergoes a major change event.
Here are events that should set off alarms for you:
- A new CEO and/or senior-level executive
- Mergers and acquisitions
- Divestitures and/or restructurings
- Major market shifts
- New product introductions or existing product cancellations
- Litigation or consumer/government investigations
In these situations, people tend to hunker down and shift into self-preservation mode until the dust settles. That could take a long time and could result in the stagnation of the account. The good news is that there are usually warnings with these types of events. As soon as you get a hint that something is happening, it’s critical that you figure out how to weather the storm with your customer.
5. Your SAM is underperforming or leaves of his/her own accord.
You know people don’t buy from companies — they buy from people they know and trust. This principle generally works in your favor, except in the case that your SAM isn’t hitting quota, indicating that it’s time to transition the account to someone else—or if he/she accepts a position elsewhere. There’s no getting around it — change triggers insecurity. Even when a change in account management is handled well, this is an extremely vulnerable time for the relationship.
In my next post, I’ll discuss strategies you can implement when you notice that a strategic account is at risk.
Before that, I’d like to hear from you. In your experience, what other signs indicate that trouble may be brewing with a key account?
Every day, Richardson work with sales leaders to help them execute strategic account management initiatives in their organizations. We evaluate sales talent, create capability and consistency through world-class training, and drive change through your ranks. We know what works and what doesn’t. If you are a sales leader planning to implement a new strategic management initiative, please call us at 215-940-9255 and we will be pleased to share these insights with you. Visit us on the web at www.richardson.com.
Richardson’s eBook shares insights on the importance of Collaborative Account Development™ and provides pointers on how to provide an effective strategic account management approach. Click here to download today.