Is Your Account Management Strategy Effective?
As a sales leader, have you ever calculated the cost of poor account management? For example, let’s suppose your superstar salesperson closes a big account. This could be an enterprise client with hundreds of locations worldwide. But this account is local in your hometown. The account stayed active for one year and then left for a competitor’s service. In hindsight, do you view this as a win by your star salesperson or a multi-million-dollar failure? In this article, we will explore why account management is a critical sales function and provide real-world examples of how your team can improve upon their account management strategy.
When Do Customers Become Clients?
Buyer’s remorse is an unspoken fear of every customer. We’ve all experienced a polished presentation that ended up being the best part of the product or service we purchased. As such, new customers are hyper-critical during the initial phase of any product or service. In fact, in many cases, instead of looking for reasons to support their buying decisions, they are viewing everything with an eye of skepticism. Thinking to themselves, “This is too good to be true, that salesperson exaggerated the benefits.” Skepticism is natural if you are a new solution provider, and the customer knows a salesperson was incentivized with a commission. In other words, they may be a paying customer, but they are not yet a client and they are far from being a champion. With a detailed account management strategy, you can transition new customers into happy clients and eventually brand champions.
Just because a customer signed a contract or purchased your solution does not make them a client you should take for granted. However, very often, salespeople will put the cart before the horse and think the relationship is a marriage made in heaven. But from the new customer’s perspective, they are just on their first real date with you. The customer is still in the feeling out process, while the sales rep is figuring out how to spend the commissions they have not yet received. This type of thinking ends up damaging the relationship for both parties. Here’s how.
Salesperson View of Account Management
As the salesperson, you prospected the account, followed-up, demonstrated the solution, and won the business. Now, customer number 35 has been activated, onboarded, trained, or otherwise supported per your typical customer service process. A few weeks or months go by, and as a salesperson, you’re looking at your numbers mid-month and think, “I need more opportunities in my pipeline or this could be ugly.” Then, you have a flash of genius and remember the great relationship you had with customer number 35. So, like the professional sales rep that you are, you pick up the phone and call your customer and say…
“Hey buddy, how’s it going? I’m just checking in. I was wondering if you knew anyone else who could benefit from our product/service?”
Hopefully, this is not your account management strategy, but sadly it is a strategy performed by plenty sales reps every day. The bad news is that these sales reps believe they are professional and doing their job. But in fact, the only thing they are doing is thinking about themselves and the customer can smell their commission breath through the phone. Let’s take a second and review this transaction through the eye of customer #35.
Customer View of Account Management
Customer 35 is a department head, responsible for specific projects, and manages a team of twenty-five people. Customer 35 selected your product because it fits the budget and has a high perceived likelihood your solution would help the team improve their outcomes. Customer 35 does not actually use your product or service daily, but his team does. However, Customer 35 receives feedback from his team on your solution, and it’s mostly when things are not working perfectly. Of course, the team is not explaining user errors because they do not like having to learn a new solution. As luck would have it, you, the salesperson, happened to follow-up on the day he received the first and only negative feedback from the team.
Raise your hand if you’ve ever contacted a customer hoping for a referral or to discuss other potential opportunities and the call turned into damage control. There’s a reason average sales reps do not ask for referrals and it’s often because they handle account management poorly. Good account management should be treated like a savings account–you want to make plenty of deposits before you make your first withdrawal.
The Beginning of the Relationship
A sale does not mark the end of the relationship, but just the beginning. Many customers’ first purchase is small and with the proper account management strategy, will grow over time. In the above example, the initial purchase was for only 25 users within a single branch that only represented 10% of the potential users’ base. Without a well-defined account management strategy, sales teams end up leaving 90% of the potential revenue on the table.
Ask a new sales rep what their responsibility is and you will likely hear a variety of answers. A few we’ve heard over the years include closing accounts, building relationships, winning new business, generating referrals, and creating rapport. Very rarely do we hear the correct answer–solve the customer’s problem. Sure, the other activities are important and part of the sales process, but if you fail to solve your customers’ problems, you will constantly be searching for new customers and eventually go out of business to competitors who are better at solving customer problems. It may be expensive to find and convert prospects into new customers, but remember it is fatal to lose your customers to the competition.
Winning By Not Losing
Account management is not about selling more stuff to current customers. It’s about protecting against buyer’s remorse, protecting against competitor encroachment, and expanding the opportunity over time. Imagine if every customer you sold to never left and consistently spent more with your company year over year. How would zero voluntary attrition impact your sales performance over the next five years? Account management is creating a long-term strategy to increase your customer’s life-time value.
To achieve this goal means that there must be a detailed plan that identifies specific actions, to turn small accounts into big accounts over a specific time frame. This is too valuable of a function to leave to chance or the whims of a sales team.
Let’s explore this concept a little deeper. In the past 12-months, how many companies have you personally recommended to other business associates within your organization? Likely it’s a number you can count on one hand. Why? Below are a few reason to consider:
- Because you value your reputation.
- You do not want to tarnish your reputation within your organization by recommending a solution that has the slightest possibility of reflecting poorly on you.
- Self-preservation rules human nature.
But the good news is that, if you discover a company that you are 100% certain would reflect positively on your business acumen, you will not only recommend the solution but be sure receive the credit for finding the solution. That’s how self-interest works and as sales leaders we can incorporate this into our account management plan. And here’s how:
The first step is recognizing that your work does not end with the closing of the sale, it just starts. The second step is training the team on how to design incremental value into the initial phase of the customer acquisition. Time delay is a value destroyer. The longer a new customer waits to receive their first benefit, the less value. Often a customer will purchase a solution for a big outcome that takes months or years to achieve. But during the process, there are short-term experiences that occur along the way that will create value for your solution. It’s critical your customers recognize these early wins.
For example, the big outcome clients retain our sales training services for, is increased sales performance from their sales team. The short-term outcomes they experience along the way are increased appointments and better show rates. These short-term wins reinforce why the client selected us and help motivate their sales team to follow the rest of our training.
The early emotional wins keep clients engaged on their way to the long-term outcome. A key aspect of account management is ensuring that your team is receiving credit for the wins you are delivering early. The faster and more clearly you can demonstrate early wins for your customer, the more value your team is providing. Hence, building loyalty and preventing competitors from getting their foot in the door.
As we have shown, account management is not something that happens by accident. Nor is it something you do to customers. It is a process you perform for customers, which creates value for your solution. It happens by deliberating following a sequence of activities during your customers’ life cycle. The faster you can provide value, the more valuable your solution will be. Knowing what your customers really value is key. Ensuring that your team is receiving credit is critical. By giving account management the attention it deserves, you are on your way to increasing profitability and client retention.
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