A Strategic Approach to Exploring the Customer’s White Space
Research from Bain shows that it is six to seven times more expensive to acquire a new customer than to retain an existing one.
In fact, boosting customer retention by just five per cent increases profits by 25 to 95 per cent. These findings illustrate the importance of strategic account planning.
Strategic account planning is a customer-centric approach to identifying priority accounts, capturing and analyzing critical information and developing a strategy to expand and grow existing customer relationships. This strategy seeks to improve business results by analyzing key information about the customer, industry, stakeholders and competitive landscape. In doing so, sales professionals identify the “white space” in customer accounts.
It’s incumbent upon the sales professional to identify this white space. Today, the stakes are higher, the buyer’s decision process is more complicated, and competition is escalating. More power is in the customers’ hands, and sales professionals can no longer rest assured that existing customers represent ongoing relationships. Strategic account planning embraces this truth by building from previous wins with the customer to safeguard against competitors.
Here, we look at three key components of strategic account planning.
Choosing Customers That Have Unfulfilled Needs
Sales professionals must begin by reviewing their accounts and determining which customers represent the highest potential for new business. It’s easy to gravitate toward customers who have spent the most. However, a high-dollar account doesn’t always represent a good strategic account planning opportunity. The idea is to look for the accounts with the greatest potential for future purchases. Choosing these accounts helps the sales professional prioritize their efforts and focus their time on opportunities most likely to yield revenue.
Many sales professionals start this process by listing the criteria that represent a growth account. Each factor appearing on this list is either qualitative or quantitative. The quantitative factors include metrics like revenue generation and the customer’s growth trajectory. Qualitative characteristics include level of access, relationships and buying behavior. To gain a dimensional view, sales professionals need both “hard” and “soft” measurements.
This level of research takes time. The benefits of these front-loaded efforts are worthwhile. Those who use an analytic approach “achieve up to 10 per cent sales growth, up to 5 per cent higher return on sales, and a margin uplift of 1 to 2 per cent,” according to McKinsey.
Creating Customized Value
Effective sales professionals use their research to develop a plan. The plan must consist of a realistic goal or set of goals achieved through positioning customized value to the customer. Examples include replacing a competitors’ product or offering additional solutions to an existing relationship. It’s essential that each of the listed goals coalesce to one picture of value for the customer.
Even though the sales professional has engaged with the customer during a previous sale, it’s important to remember that growing the account can mean starting a dialogue with a new set of stakeholders. Positioning solutions for a different division will involve addressing new goals, challenges and perceptions of value. What worked in the first sale will not necessarily work in the second one.
Even with the familiarity of an existing account, sales professionals need an action plan. This step clarifies strategic objectives. This blueprint gives structure to the strategic account planning process and solidifies goals so that sales professionals can track their progress. If the intended outcome is not clear to the sales professional, it will not be clear to the customer.
Align with the Customer’s Buying Process
Sales professionals must be able to align their activities to the customer’s stage in the buying journey. The buying journey is the process by which a customer advances to a purchase. Effective sales professionals can trigger the buying journey by helping the customer recognize unmet challenges. Being present at this early stage is an advantage because the sales professional has the full scope of the process. Early engagement results in better alignment.
Moreover, achieving alignment with the customer is critical because fully engaged customers are more profitable than average customers, according to findings from Gallup. Engaged customers offer 23 per cent more “in terms of share of wallet, profitability, revenue and relationship growth compared with the average customer.” Additionally, these customers represent this level of value in times of a good or bad economy. In contrast, customers who are actively disengaged exhibit a 13 per cent discount in the same areas.
Seek early, regular engagement to gain alignment with the customer’s buying process and to drive revenue gains.
Strategic account planning is like fishing with a spear instead of a net. The process is intensive and informed by the sales professional’s findings in the research process. It is a repeatable method built upon a consistent set of best practices. Sales professionals gain insight into their strengths and develop a plan designed to protect and expand the relationship.
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