Having worked with more than two dozen different professional services firms (including IBM and Accenture), I’ve seen my share of common sales and business development pitfalls. Among the most prevalent: Weakness in account management and account planning effectiveness — even with a firm’s largest and most strategic clients. Client churn, poor penetration at top accounts, and lack of sales predictability are all the result of poor account management.
How do smart firms find themselves in these predicaments?
- Firms too often try to treat all clients equally well – whether the client warrants it or not. Without a client segmentation schema, there are no ground rules to avoid this problem.
- Firms tend to overly focus on the short term (quarterly at best). By over deploying resources on opportunistic (and often new account) pursuits, too few resources are spent on more strategic accounts.
- Compensation plans, by and large, are inconsistent with the goal of strategic, sustainable relationships with your most important clients. The biggest rewards tend to go to those with the greatest amount of business developed and delivered in the shortest timeframe, which is not always in synch with long-term relationship investments.
- Turnover of key account management professionals undermines client relationships. Few things will injure a client’s confidence in your firm more than the revolving door of account managers assigned to them
- 90%+ of the business development time spent, even with large accounts is typically spent in reacting to demand, not creating demand. The latter takes more time and effort to accomplish but is rewarded by less competition, better margins and a client perception of value brought to the relationship, not just a vendor relationship
- Even the largest firms in this industry often lack key, “C” level relationships — the prerequisite to effective account management.
- And finally, there are no goals, no strategies and often no action plans to execute account management effectively.
You should worry about effective account management because large, strategic relationships with a select set of clients that you serve and sell extraordinarily well deliver value to a firm in several ways:
More predictable revenue and returns.
Less costly business development expense. Selling to new accounts is much more expensive (with a lower probability of success) than selling to existing clients.
Better margins. Some would argue that a large volume of engagements with one client will lead to excessive squeezing of fee rates. But I’d argue, based on the firms I’ve worked with, that the “net” margins (including all costs, like unplanned fee adjustments) are as much as 20% higher at your large, strategic clients.
And, the references that stem from these relationships are invaluable in selling work to new clients.
So then, how do you get it right? Based on seeing most firms struggle and a few executing account management well, I’d summarize the key success factors as follows:
Segment your clients and then be willing to act on it. Sometimes the smartest move is to
say no to a client or opportunity and instead focusing on a more valuable, long-term
Commit leadership to invest and focus on selected relationships. In most cases it will take 18+ months to see the fruits of this resolve in a significant way.
Develop “C” level client relationships before you actually need them. The hardest and least genuine time to create these relationships is in the middle of a key opportunity pursuit.
Document and communicate the value your firm is delivering to your clients. If you don’t, the client won’t either. And when value goes unnoticed, there is little hope that your client will have an appreciation for the value they are deriving from the work that you do and you’re relegated to the dreaded commodity vendor status.
Monitor client satisfaction and receptivity through a formalized and continuous process. Clients both appreciate the caring attitude and will tell you much more about how they feel if this is done properly.
Ensure that you leverage your whole team, including the delivery team at the client, to help the account manager know what competitive threats are prevalent.