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Protecting client relationships
Many companies make the mistake of concentrating too hard on winning new business instead of cultivating additional business with their existing clients.
The matrix below explains the notion that selling existing products and services into existing relationships is the easiest sale to make.
After all, if your client is familiar and comfortable with your offering, they’re more likely to increase their business with you. Furthermore, selling new products and services into these existing accounts is also a relatively easy sale to make.
Strategic investment in existing accounts makes good business sense for a number of reasons:
- Existing accounts tend to be more profitable than new business
- Key accounts are usually large generators of top-line revenue for companies
- Long-held, prestigious accounts may enhance credibility with potential new clients
- There may be strong personal relationships in place at high levels
Whatever the reason, these are the accounts that you never want to lose. They are accounts that are extremely valuable to your business both now and in an uncertain future.
How do you protect these important accounts?
When it comes to the protection and growth of your key accounts, a positive move is to ask your clients the following questions:
- Where is their business going?
- How can you help them get there?
- What can you do together to make it happen?
By leveraging your existing relationship with this type of analysis, you can really focus on building a partnership with your client.
Great accounts that turn bad
Clients often tell us about once-great accounts not being what they used to be because the account has become purely price-driven. Invariably, they find themselves facing a ruthless tender process where all the value-adds have been forgotten.
In many cases, the relationships they had with senior management are gone and they tend to now only liaise with procurement departments. All businesses are under pressure to strip out unnecessary costs and improve profits. Good procurement practitioners do this by simplifying the supply chain and creating as much supplier rivalry as possible. Chances are, your business is doing this right now to many of your suppliers.
Of course, some suppliers are more important than others either because they offer a unique service or product, or because they are so deeply embedded in the business. Some business inputs can be treated as a commodity where a quick tender can yield a nice result, while other suppliers are treated as business partners.
Where do you stand with your key accounts?
Procurement practitioners sort suppliers into categories and adopt a different approach for each. There are many models used but they usually look something like the below matrix.
In our Clients-For-Life engagements, we help clients correctly position themselves on this matrix. Where you sit on this matrix is a function of how important your products/services are to your account and how difficult it would be to replace you. You will often find yourself in different quadrants for different accounts.
It’s important to respond to the account with a relationship strategy that is appropriate to where you sit in their buyer/seller matrix. It’s an expensive and futile strategy to try and partner with an account where you are positioned as a commodity. Similarly, behaving like a commodity when you could be a partner to your client is a missed opportunity.
A systematic approach to client for life
When working with our clients, we promote a systematic approach to account management. Once our client has recognised the importance of developing existing accounts, there is usually a willingness to invest. It’s then critical to choose the right account, make the right investment and get the account to support the investment strategy.
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Eddie Smith is the Founder of Sales Schematics Australia, and an accredited MathMarketing Funnel Coach. To read more of his insights, go to the SSA Technical - Sales Insights blog.