“We”™ve just lost two big accounts. The loss of revenue is hurting us big time. Even scarier, it”™s tough keeping business flowing in an upward trend. I know we”™re supposed to grow sales, but I don”™t know how we”™re going to make this up.”
Thoughts of the Day: Losing sales can be a waste of time and energy or a blessing. Find out what happened and fix it. Decide what has to be done to build sales for the next 12 months and get going on setting that up.
Keeping an account should be easier than selling a new opportunity. To get a new client someone has to identify and make contact with the decision maker, identify needs and obstacles, write a proposal and take a guess on pricing, follow up to negotiate and close the business, get set up as a vendor in the client”™s database, navigate the first time delivery issues and follow through to get paid.
To keep an existing customer, most of those steps disappear. Competition is much easier. The players are known, the client”™s business practices are understood and the client”™s needs and pricing constraints are already out on the table. You know how the client ticks.
In addition, because of switching costs, most customers are not eager to change suppliers. They find it”™s easier to stick with an imperfect solution than it is to implement a new, untested option.
A lost account can be a major warning to your business: what was so bad that the customer was driven to find another vendor? Or, was losing the account a blessing?
Be strategic in the way you react. Review your current customer list. Assess the profit, ease of handling and vulnerability of each client. Isolate customers that need to be fixed or eliminated because they are close to unprofitable or more trouble than they”™re worth. Focus on top-priority customers because of their profitability and strategic fit to the business now and in the future.
Debrief the lost account by a team from sales, marketing, operations and finance.
– Was this a strategic account?
– Was the client growing or declining?
– How will the loss in revenue and profit impact the business?
– What will the market think when it finds out?
– What went wrong that caused the client to seek an alternative?
– Who was babysitting the account and what did they know, when?
– Is your company better or worse off without the account?
Based on the debrief answers, formulate specific strategies for retaining the best of your business base. Keep in mind that if a competitor is successful grabbing one piece of business from your company, they may come looking for additional opportunities. When customers hear that a peer has sought out an alternative, they may be influenced to consider their options.
Once you know which accounts you want to keep, assign your best people to retention efforts. Make sure clients feel the connection to your company, not just from sales, but from finance, marketing and operations personnel as well. Fix overall issues related to perception and delivery. Reduce the burden on sales in the future by shoring up vulnerable areas now.
Next, set a goal for revenue for the next 12 months. Figure in a 10 percent to 15 percent increase in revenue. Compare that to the amount of recurring business that can be confirmed as secure and the revenue expected to come in from new sales efforts. Any gap either has to come from selling more things to existing clients, retaining marginal clients, getting new clients, buying market share or entering another business.
Set a goal and build a plan for each of those categories. Not sure how to do that? Just ask. We”™ll send you a business development framework to get you started on the path to a more secure future.
Looking for a good book? “Tilt: Shifting Your Strategy from Products to Customers” by Niraj Dawar.
Andi Gray is president of Strategy Leaders Inc., strategyleaders.com, a business-consulting firm that specializes in helping entrepreneurial firms grow. She can be reached by phone at (877) 238-3535. Do you have a question for Andi? Please send it to her via email at AskAndi@StrategyLeaders.com or by mail to Andi Gray, Strategy Leaders Inc., 5 Crossways, Chappaqua, NY 10514. Visit AskAndi.com for an entire library of Ask Andi articles.
