In the mid-1990’s, when I was responsible for worldwide business development at Andersen Consulting (now Accenture), we were determined to find the key impediments to the firm’s long term growth and success. We concluded that our willingness to treat all clients and opportunities equally – in essence, our inability to prioritize client pursuits – was arguably the biggest business development issue we faced internally. How did we know? We looked at our track record and identified the following:
-
Among the clients that spent more than $1 million in fees with us in a given year, we were losing 50% the following year. It’s too hard and expensive to acquire clients to let them go that easily.
-
Our contracted revenue backlog was a meager 63 days – a strategic reason that Accenture shifted its focus to a far bigger balance of recurring annual revenue sources like outsourcing.
-
Less than 25% of the firm’s revenue at that time came from its 200 largest accounts globally – largely because the partners were able to sell and serve any client – large or small, strategic or not. Today I’d safely venture to say that far greater than 50% of Accenture’s revenues are derived from the top 200 clients.
-
When we assessed “projects gone wrong”, we found that unplanned fee adjustments, dissatisfied clients, and even litigious clients occurred not as a result of deficiencies in our delivery model but rather as a result of weaknesses in our selling process and client selection discipline.
The firm’s leadership group recognized that the days of unbridled demand in the 90’s would ultimately end (turned out to be the year 2000). The answer was more “sales” discipline. We defined a client segmentation strategy as part of a broader business development framework transformation, and the rest of the story is evident in Accenture’s performance since.
Based on a couple of decades of experience helping a dozen of the most well-known professional services firms to improve sales effectiveness, I’ve found several mistakes that even the smartest run firms make. There is an obvious opportunity for firms that can identify and overcome the challenges.
Pitfall #1 – Opportunity Assessment
All opportunities are also not created equal
The most common attributes of this pitfall include the following:
-
Lack of a firm-wide qualification screening criteria to determine whether an opportunity is worth pursuing.
-
Pursuit of any and all opportunities. This mistake is made repeatedly because this is an industry of entrepreneurial partners and practitioners who have made their livelihood as rainmakers without many rules about where to focus efforts.
-
Qualifying of opportunities only as a one-time event – at the beginning of the pursuit.
-
And underestimating the true business development cost in chasing new opportunities. Some measure actual payroll and “hard” costs; few measure “opportunity cost” (equivalent billable revenue for these resources), and others don’t measure these costs at all.
It’s easy to find examples of these common weaknesses:
-
I was coaching a team at Andersen Consulting several years ago that was sent a “blind” RFP from one of the largest consumer packaged goods companies in the world. This was likely a $60M + opportunity, and the pursuit team was intent on bidding for the work. The problem was that we had few executive relationships, the prospect wouldn’t give us access to information on their business case or value proposition, and Ernst and Young had won every major IT project at this company for the past 10 years (the CIO, Controller, and CFO were all E&Y alumni). Should we have proceeded? Only if we could get the rules of engagement changed or if we were willing to be the stalking horse for the competition. Sound familiar?
-
The last four major consulting/professional services firms I have worked with in the recent past have had little – or in some cases no – widely accepted and implemented opportunity qualification criteria established. I suspect the smaller firms are often guilty of the same oversight.
-
You might be surprised at the number of deal-coaching engagements that we get involved with at our clients where we find out, often at the end of the pursuit, that the firm had no logical reason to spend hundreds of man hours and tens of thousands of dollars in pursuits that they had no reasonable opportunity to win.
The recommendations: Establish tested, documented, and understood criteria for opportunity qualification that gives the “no”. Doing so shifts the go-no-go decision from an emotional thought process to an objective decision process and is likely to save most firms thousands of wasted business development hours and dollars.
-
Plan and measure your business development resources on the opportunity cost, not the payroll and hard costs. You’ll become more realistic and discerning about how and where you deploy these valuable people.
-
Don’t treat the universe of opportunities in your pipeline equally. If you maximize your “Return on Time Invested” (R.O.T.I.) you will ensure that the best resources are extraordinarily deployed to the best opportunities at the expense of the long shots.
-
Qualify opportunities continuously! Ask yourself: “Can I win?” If you can’t, deploy your finite resources elsewhere!
Pitfall #2 – Client Segmentation
All clients are not created equal
This all-too common error manifests itself in many ways:
-
Far too often, there is very little strategy and effort to distinguish among clients or to differentiate between clients and prospects, for that matter. That’s great for the small, nonstrategic client; not so great for your most important clients that warrant special focus.
-
Some firm’s suffer from “opportunistic” distractions, which are echoed by sentiments like “we never meet a prospect we don’t like.” Frequently, the behavior we witness suggests these firms rarely meet an opportunity they don’t pursue – even a blind RFP or unsolicited inquiry from a new, unqualified prospect. The discipline to say “no” is the missing ingredient, and nothing could be more damaging to your “worthy” clients and pursuits.
-
There is often no proactive strategy to sell and serve a well-defined and differentiated client segmentation strategy.
-
Once the segmentation is established, the hard part starts: Having the discipline to sustain a long-term commitment to your most strategic accounts with a resolve to be successful. Short-term quarterly earnings pressure often trumps the long term commitment and tempts you to re-deploy resources opportunistically – at the expense of your strategy.
The recommendation: A proactive, well-defined, and well-communicated client segmentation strategy that gives the organization the guard rails which dictate organizational behavior in selling and serving clients accordingly.
Some key steps in the process:
- Identify 3-5 key segments (strategic, emerging, target, and legacy would be reasonable labels for each) and also define the key criteria for a client’s being placed in that segment. Once the segments are identified, you can then assign the specific clients to each segment.
- Next, develop the structure for how you will serve these clients, the resources you will deploy, and the plans and priorities for each. This is all about being proactive, not reactive.
- Finally, ensure that the organization’s behavior, resource allocations, and opportunity pursuits are consistent with the segmentation strategy – it can’t become “shelfware”.
GET PDF