The Transformation of Accenture through Client Segmentation

Since we covered the indicators and dangers of lacking client segmentation in the last post, lets now look at a real life example of how, if done right, it can transform a business.

In the mid-1990’s when I was responsible for worldwide business development at Andersen Consulting (now Accenture) we found that client segmentation was arguably the biggest challenge we faced. How did we know? As part of our transformation process we discovered the following symptoms:

• Client “churn” as defined by the percent of clients that represented more than $1 Million with the firm in a given year who did so again the following year was roughly 50% (affectionately referred to as “hit and run” selling).
• 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 largest 200 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 discipline in the selection of who we chose to do business with.

The combination of these facts and a forward thinking leadership group at the firm who recognized that the days of unbridled demand in the 90’s would ultimately end (turned out to be 2000) -these revealed that clearly more “sales” discipline was required.  We defined a client segmentation strategy as part of a broader business development framework transformation and the rest of the story is evident in their performance since. Keep an eye out for the next post later this week where we’ll uncover the practical steps to how they did it.