*This was originally published on Synap Software Labs’ blog.
At the end of 2015 I made a prediction that 2016 would be the year of customer success. Looking back on the year, I can confidently say it had its biggest year to date. Companies released reports on the state of customer success and it seems like every few months there was another customer success conference or event happening around the country. So, if Customer Success is now becoming the norm, what will 2017 hold?
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Looking into my crystal ball, I (and the rest of the Synap team), predict in 2017 we’ll see the rise of key account planning and management. And not just for enterprise companies who have large teams and resources to devote to the process. 2017 resolution: Key account planning
What is key account planning?
Before I dig any deeper into key account planning (KAP) I’d like to offer a basic definition. KAP or key account growth planning (KAGP) is a thoughtful approach to both managing and nurturing a company’s most important customers, maximizing the value of the relationship for both the vendor and customer. It relies on each customer-facing team to listen to the customer’s needs and come together to formulate and execute a specific plan to grow the relationship.
Several years ago, Gartner released an eye-opening statistic for B2B companies: 80% of a company’s future profits come from 20% of its existing customers. Let me repeat that, 80 percent of a company’s future revenue stream comes from 20 percent of its existing customers. Not new acquisitions, not the majority of your customers.
With so much of a company’s recurring revenue riding on existing customer relationships, why does it seem like only large enterprises are taking the time to focus on KAP?
Who should be account planning?
The long and the short of this is everyone. Unfortunately, there seems to be a school of thought that only enterprise or well established companies should be key account planning. Smaller companies may feel they haven’t matured enough to focus on something as strategic as KAP. Others worry about bandwidth and resources and ultimately choose to focus on growing the business through acquisition as it often takes less time than building out KAP processes. For many young companies, they’re worried their customer-base isn’t large enough for them to truly benefit from upsells and cross sales. So, if the Gartner statistic doesn’t sway you, let me provide another statistic to support the value of KAP. Bain & Co. found that as little as a 5% increase in customer retention can lead to an increase of a company’s profitability by up to 75%. Taking into account the massive revenue potential from even the smallest of client-bases, every single company can benefit from KAP.
To break things down a bit further, who exactly in your organization should be part of the KAP process? At Synap we’re big believers in treating customer success and key account planning like a team sport. Key Account Planning is a collaborative effort that achieves the best results when everyone at your organization who interacts with customers can participate. Each person and team holds unique perspectives on the customer’s experience with your company. They hold valuable feedback and insight and should thus be included in developing the strategy.
With 2017 just around the corner, it’s the perfect time to kickstart your key account planning and key account growth. Take the time to time to focus on your most valuable customers by providing more personalized attention and account strategy. The small amount of additional time and effort it takes will pay off in spades. You’ll maintain your competitive edge, your revenue will spike and most importantly, you will strengthen the relationships with your most valuable customers.