Every business needs to optimize its customer portfolio and detect the current and future value of its customers. Did you know that on average 20% of your turnover remains in your client portfolio? If all of your customers are important, we will see in this article that the importance of each customer is relative according to their history and potential.
The “Key Account Management” approach
When we work with companies, we often find the same thing: the management of client portfolios is not optimized. The consequence is that many companies put 20 to 25% of their energy (human resources, time and money), with 50% of their portfolio of customers who generate only the last 5% of their turnover. Many businesses are very busy doing the right things with low or no paying customers. The objective of the “Key Account Management” approach is precisely to correct this situation and to centralize your efforts on your current and future paying customers and therefore enable you to achieve your strategic objectives.
STEP 1: MAKE A PORTRAIT OF YOUR IDEAL CUSTOMER
First, you need to ask yourself what your ideal customer looks like. The realization of the latter’s portrait must be the central point of your strategy. Once you have established your portrait, you will need to analyze your client portfolio to determine which of your current and future clients are approaching this ideal client and which are moving away. According to the “Key Account Management” approach, the portrait of the ideal client is defined by criteria that are grouped into three main categories:
1. Client profile: This will determine what characterizes your ideal client: his size; its market; her values ; his mission ; its operation; its structure; its distribution network… These first criteria will make it possible to make a first qualification.
2. Customer History: This component focuses on your relationship with your current customers. This will involve identifying the criteria that are important to you such as: turnover; the profitability ; the success rate of submissions; its level of openness to new products / services; the level of effort – resources required to serve it; his level of loyalty; its appreciation of the added value provided versus the price; its purchase history.
3. Customer potential: This third aspect is particularly important since it is focused on the future. Here, you must define the potential of your current and future customers by identifying the criteria that will allow you to quantify their potential: the potential to sell more; adding new products / services; the dynamism; its growth in its markets … These criteria will be used to determine how much potential remains to be sought from each of the customers and its level of accessibility.
STEP 2: CLASSIFY YOUR CUSTOMERS BASED ON THEIR VALUE
Using the defined criteria, you are now able to classify your customers into 3 broad categories.
1. Loyal customers who come closest to your composite, who come back repeatedly and who generate good sales and profitability for your organization. For these customers, you are their first supplier or their sole supplier. It is important to identify these customers since they are the value of your business.
2. High-potential customers with whom you have started doing business, but with whom there is a lot of room for improvement, especially through cross-selling or up-selling. For this category of customers, you are not their primary supplier, but it is possible to be.
3. Small, no-potential, or occasional, customers are those customers with whom you are doing a small amount of business and for whom, in the medium term, you do not see any potential for sales growth. The purpose of classifying your customers is to help you identify customers who will help you achieve your goals. It also allows you to identify the customers with the greatest potential for your organization and ensure that the necessary efforts are made with those customers.
STEP 3: SERVE EACH CATEGORY OF CUSTOMERS DIFFERENTLY
According to the Key Account Management approach, after classifying your clients based on your history and their potential, you are now able to align a winning strategy across all departments in your organization:
1. For loyal customers, setting up a loyalty process across all of your departments to ensure they continue to retain them.
2. For your high potential clients, it will be about developing a seduction process or a zero error process. Since as we have seen previously, for these customers their potential is important and you still have to prove yourself to become the first supplier. We will have to limit errors with them as much as possible.
3. While for your small customers without potential, our approach advocates the implementation of an optimization process that is to say that you will deliver the value you have sold, but without spending additional energy. since these customers will not bring more value to the company. When we implement the Key Account Management approach, we create a paying customer culture in the organization with a focus of energies in the right place.
STEP 4: THE CUSTOMER FOCUS IN THE ORGANIZATION
Now that you have identified who you work for and how much effort you still have to make to develop your client portfolio, the last step in implementing this new client management framework will be to spread this approach to everyone. your departments. Whether it is sales, delivery, production, quotes, project management, each department must know, depending on the customer journey, which category it is dealing with and which process to follow. For example: You have a quote presented to a prospect. By ranking clients, you know they are a high potential client. You will therefore decide to put more energy into this submission to gain the trust of this prospect and will go and present the submission face to face when you would not have come for a Small Client Without Potential. This customer culture allows your team members who are not in direct contact to know who they work for and to adapt their way of doing things according to the current and future value of the customer.
FINDINGS AND RESULTS
Our experts have been implementing the “Key Account Management” approach for our clients for almost 10 years now. This experience has enabled us to develop Venturi, a tool for classification, evaluation of potential and definition of processes by department that allows us to support the implementation of this approach. Our various interventions and training have also enabled us to observe that among our clients, on average 20% of turnover remains in their portfolio of clients who are sleeping, that is to say who are not being exploited.
The first impact of the implementation of the “Key Account Management” approach is to refocus all energies to obtain this 20% of turnover. It is not uncommon for us to see during the first 12 to 18, a growth of 20% because sales opportunities were at hand, but they had not been detected because the energy of the sales force was put to low potential customers.
The “Key Account Management” approach is a real change in sales since it brings you to work according to the importance of your customers. From now on, when you go looking for a new client, who must of course get closer to your composite portrait, this client will enter your process. That is to say, he will go from prospect to high potential client and thus enter into a process of seduction or a process of zero errors. By adopting this approach, your entire organization will be focused on him, which will accelerate the growth of this new customer and retain them more quickly.