In the Gartner 2018 CEO and Senior Business Executive Survey, growth remains the CEO’s biggest priority. Yet, only a small quantity of corporate leaders are successful in driving growth and sustaining that growth.
A company can grow in one of two ways. It can add new customers or it can generate more business from existing customers.
Leaders like to start with new business. I get it. It’s exciting. But considering it costs five times more to land a new customer than it does to keep an existing one and the odds of successfully selling to a prospect are between five and 20 percent, that’s not promising.
Now, consider your existing customers. Your customers know you and they think of you as their trusted advisor to help them meet their desired outcomes. In fact, the probability of successfully selling to your existing customer base is between 60 and 70 percent, and they’re also 50 percent more likely to try new products and spend 31 percent more compared to new customers. Focusing more resources on existing account expansion seems like a no brainer.
Yet, companies tend to prioritize acquisition over existing account expansion.
This is what Alpine Investors found. When it analyzed the priorities attributable to acquiring new customers and growing existing customers across its portfolio, it saw roughly 70% of revenue-oriented priorities were focused on attracting new customers while only 30% were focused on generating more revenue from existing customers.
A similar prioritization was identified in the Miller Heiman CSO Insights’ Selling in the Age of Ceaseless Change: The 2018-2019 Sales Performance Report. It found that capturing new accounts was the most often cited priority (57.3%) of almost 900 global sales leaders who participated in the study, even though revenue from new customers accounts for only 29.9%, on average, of total revenues.
However, the second most important objective for sales leaders to meet their goals was increasing the penetration into their existing accounts, comprising 70.1% of total revenue. This amount is larger than in previous years. Organizations continue to struggle with lead generation and new account capture, making them more reliant on existing relationships. The growth in existing-customer revenue comes from expanding existing accounts rather than improving account retention.
Despite the importance to the organization, leaders reported large and consistent gaps in the ability to expand existing accounts. In fact, only a third (34.6%) of respondents felt account expansion was a strength for their organization.
Successful Key Account Management is Necessary
Account management continues to be a vital element of sales strategy. However, competencies which drive successful account management need improvement or major redesign in half of the sales organizations.
The biggest driver of success in reaching sales goals is having a dynamic process for account management and sales. Sales and key account management need to rapidly adapt to new conditions, including more discerning buyers, disruptive or new technologies, marketplace uncertainty, changes in buyer needs, stay ahead of competitors, etc. Without this constant revision of the key account plan, you cannot expect to maintain your status with the customer in the long-term.
A dynamic process is a proactive way to avoid obstacles and tackle challenges before they become serious issues. By observing the relevant data, you can look into changes that are occurring and tweak your key account plan to make it more suitable for what’s to come.
Yet, according to the study, only 28.9% of companies are at that level of process maturity.
The companies operating at this level have the best performance in terms of meeting revenue goals and quotas, lowering customer churn, and increasing success rates of forecasted deals.
Key account manager’s (KAMs) thrive in this level because this is where most of the key account management process is meant to take place. Key account plans should be the dynamic processes for each account, guiding the relationship from a preferred supplier to a trusted advisor.
Because key accounts are so key, it takes more than your CRM to proactively and dynamically manage your sales engine.
CRM Software has its Limitations
Managing sales opportunities and acquiring new customers is CRM’s strength. Capturing key metrics, CRM solutions can pinpoint accurately where leads are in the sales pipeline. Thus, sales teams can take appropriate action to convert leads into sales.
However, even though CRM solutions may lay the basic foundation for customer relationships, this strong focus on new customer acquisition means that less focus is directed toward building lasting relationships with customers. CRM automates customer relationships, removing, to some extent, the personal high-touch approach needed for a company’s most valuable customers.
And, CRMs aren’t optimal for planning long-term strategies. You can’t accurately track the customer’s goals, experiences, and history. You might have the contact details of customers and when you last conducted a QBR, but other than that, you’re left in the dark when it comes to the customer’s long-term goals, their current challenges, and what products they need to improve their success. CRM can’t address the complexity, depth of analysis, planning, or governance required to successfully manage these accounts. Without this insight, you’ll be caught off guard during the next QBR. To genuinely show that your company is interested in providing the customer with tools for success you must be able to accurately track and monitor their changing goals and expectations.
KAM Software Drives Success
KAM solutions, on the other hand, focus strongly on building solid relationships with existing high-priority customers. KAM solutions encourage a more holistic approach. KAM software is designed to collect, save, and analyze very detailed and precise information about your key account customers.
To build a stronger relationship with these customer accounts, you have to stay up-to-date on a large amount of information associated with each separate key account. You’ll need a large collection of specific data to help you create forecasts, track milestones towards goals, and monitor threats or opportunities related to the account.
KAM software provides a more in-depth overview of customers and their needs. It captures highly personalized data for each customer. Account managers, armed with information about the goals of customers and their particular challenges, can more appropriately and effectively build stronger relationships with those customers.
High-priority customers need and expect specialized support. With KAM software, account managers can work with customers closely to design customer-specific goals and address any challenges that are specific to the customer.
This is important because high-priority customers need to perceive the value you provide. Clearly establishing goals and then working toward those goals enables you to demonstrate your company’s true worth to the customer. KAM solutions help you track your progress and keep your goals aligned with those of the customer. Armed with this vital information, account managers can continually strengthen your company’s ties with key customers by highlighting areas of success and quickly addressing areas of weakness.
Success can also be achieved by identifying and easing the specific pain points of your customers. KAM solutions help you prioritize the challenges your customer faces in order of perceived importance. Working diligently to address issues, account managers build trust and loyalty with high-priority customers, ensuring the continuation of a mutually beneficial relationship.
Practicing proactive account management is best. This enables you to provide maximum customer value and develop long-term strategies about how to advance each key account partnership. You’ll be in a mindset of continuously searching for ways to optimize accounts by identifying future obstacles, challenges, threats, and opportunities and planning your next steps. Doing so will help you build stronger relationships with your key accounts because you’ll be able to supply what they need before they ask for it. This will build even more trust and drive more value, which is a critical component of key account management.
KAM solutions offer account managers a holistic view of customer goals, challenges, and progress in real-time as well as these benefits:
-Consolidates all important data on key accounts
-Creates forecasts based on collected data
-Assess key account plans and progress at any time
-Manage organizational and customer metrics in real-time
-Collaborate on an engagement plan with partners
-Gain a deeper understanding of key accounts for marketing purposes
-Track contacts and org charts
-Receive notifications when attention or actions are needed in a specific area of the partnership
-Lower risk of key account customer turnover
Your goal is to help your customers achieve their desired outcomes and by doing so become their trusted advisor. CRM alone can’t get you there. To get to the next level, consider investing in KAM software to complement your sales stack to build stronger and more meaningful relationships with your existing customers.