When companies plan for organic growth, they often look exclusively at customer acquisition (the “hunter”/Sales function) and overlook account growth (a “farmer”/Account Management function). In this look back, a company that compensated salespeople (hunters) based on new-customer acquisition did not correspondingly incent the account managers (farmers) for finding the full revenue potential of each customer relationship. Instead, the account managers oversaw the equivalent of taking repeat orders and resolving customer complaints. With very little additional training and the addition of partnership-oriented leadership, this function can often fully exploit the beachhead established by Sales.
“Are there products or services you’d like to see ‘LiteManufacturing’ add?”
Operations Manager: “We buy kits from LiteManufacturing, but we have to buy components from another vendor. I’d like LiteManufacturing to start offering components.”
The Client’s Quandary
This was a simple baseline feedback project, not a treasure hunt designed to grow revenue, yet there it was: money being left on the table. I knew LiteManufacturing sold kits and components; was there a reason they hadn’t told this customer? I called the account manager. He immediately walked his customer through LiteManufacturing’s full offering and picked up that company’s component business. The president then mandated all account managers reorient the 80% of customers who represented 20% of revenues.
It’s common for customers to only know what they already buy from you. This can happen when:
- The prospective customer wasn’t listening during the sales process.
- The salesperson stuck with details about the initial product or service for fear of “talking past the sale.”
- There was turnover on the customer side, and the new contact person only knows about current purchases.
As part of on-boarding and the formal/informal account review process, the relationship owner should review everything the vendor offers. When there is a personnel change on the customer side anywhere along the chain of command from the day-to-day contact to the owner of the budget, it’s smart to treat the new person as a new customer. You want them to be familiar with your entire offering and to recognize that their relationship is important to your company. When there is turnover in relevant positions on your side of the relationship, it’s smart (and often strategic) to have the new person introduce him/herself up and down the customers’ chains of command.
There are three costs to underselling to existing accounts:
- Leaving money on the table today (loss of incremental revenue).
- Creating a “beachhead” opportunity for competitors (failure to develop and defend one-stop relationships).
- Weak positioning (failure to create partnership-level standing with customers).
Vendors unintentionally pass on the opportunity to shift from vendor to partner when they fail to incent account managers to fully develop customer relationships. This can also slow the development of new products or services leaving the company to play catch-up with more aggressive competitors. The first step is to put a partner-oriented leader in charge of Account Management.
Ann’s note: I categorize projects as assessments, investigations, treasure hunts or rescue missions. This project was an assessment-turned-treasure hunt. The client’s question was “Where do we stand with our customers?” I’m always on the alert for outliers, because I’m trying to have the same conversation with customers as the company president would if he/she had the time. No president is going to overlook money that’s being left on the table!