By: Feisal Hammude
Chances are that your largest customers make up a growing percentage of your company's revenue. In our work with clients, we find that the old 80/20 rule is actually edging closer to 90/10; in other words, just 10% of your customers account for 90% of your total revenue. Savvy companies are beginning to recognize this and are developing special programs dedicated to these few, select, important clients.
Losing large accounts because of customers’ apparent sagging loyalty can be even more devastating than ever. But there is a solid, proven way to grow and manage these relationships to reduce the risk. In the end, these customers can become as dependent on you as you are on them.
When companies focus resources on a select group of accounts, it pays off in a big way in both revenue and profits. Still, many executives question this approach because selling to customers varies so widely from account to account.
Understanding Buyers
In the case of strategic accounts, savy companies are looking for ways to create a situation where competitors will not be able to strip off their valuable customers. Doing so requires a much deeper understanding of the buying process every customer goes through, as well as learning more than other suppliers about each customer’s business and its specific problems. In so doing, smart executives find that their business is better positioned to take advantage of each opportunity;
How do companies achieve this? They transform the relationship they have with critical accounts to a cooperative process.
To be truly effective, managing strategic accounts goes far beyond the traditional sales function. It typically includes senior management, marketing, product development, R & D, logistics, customer service and other departments. The entire effort is directed at understanding how buyers think, uncovering their latent needs and learning what spurs them to act.
Changing Relationships
A common “building block” applies to both sellers and buyers, reflecting the quality of the relationship for both the supplier and customer. For example, suppliers could find that that their single, largest customers treat them simply as commodity suppliers. They are constantly being beaten up and feel vulnerable as a result. At the same time, a major customer might feel that the seller is always involved in tough negotiations over price and quantities, and is simply selling product based on price.
To cement the loyalty of a strategic account, the relationship needs to change and it is the seller who must lead the way in changing it. Sellers need to become much more “open book” and cooperative in dealing with the customer by delivering value-added services, showing how to integrate systems, and helping with business process re-engineering and similar activities that demonstrate clearly they view the buyer as more than a way to meet revenue projections.
Successful executives understand that the nature of seller-buyer relationships is undergoing a fundamental shift. To meet the challenges of cementing loyalty and increasing sales, they are following the guidance of experienced advisors who are showing them a new way to relate to all customers, but especially their best customers so they don’t become a competitor’s best customer.
