Understand Your Best Customers to Win Long-Term Growth
For many of you, managing exceptional growth has become your most urgent priority. Challenges include supply chain issues, staff shortages, skill shortfalls and wicked competitive pressure. How can you take advantage of today’s opportunities and deliver long lasting growth and higher margins? One approach involves sharpening the focus on new account acquisition.
A new account is a strategic asset. New accounts closed this year can deliver revenue for years to come and the costs associated with supporting them will have a dramatic influence on your bottom line. Accounts that will be the most valuable over time are accounts that look a lot like your current “best” customers. If you ask your sales, marketing and service executives who your best customers are, they will most likely say those generate the most revenue.
However, high revenue accounts may not be your most profitable. They could be receiving substantial discounts or consuming a disproportionate share of sales and support resources. Don’t be surprised to find that they are not extracting all of the value that you could provide. This is often due to their internal organizational and political considerations. A side effect of not fully utilizing your value is that you will be more vulnerable to competitive displacement.
Your best customers will extract close to 100% of the value that you can provide. For them you are delivering a mission critical service/product and they view you as a valued business partner. Because they understand your “value” they will not try and extract the lowest possible price. They want you to be successful. Chances are that when they were originally signed that the sales cycle was fairly short – because they understood your value. They will be generous as a reference source and will not make unreasonable demands on your support resources.
What would it be worth to your enterprise to have the ability to profile your best accounts and target your marketing and sales efforts to opportunities that were close matches? Your best accounts likely make up 10% to 20% of your current customer base but deliver 60% + of your profits. If you doubled the percentage of your new accounts who were like your best customers, what would your P&L and balance sheet look like?
It is a guarantee that the extent to which opportunities in your CRM system map closely to the profile of your best customers is completely unknown. This is a safe bet because it is unlikely that you have a decent list of your best customers (as we have defined) and it is even more unlikely that anyone has created the analytics to evaluate opportunities versus your best customers.
Your CRM will most likely include the geography, title and level of contacts, company industry, company ownership, company headcount, company revenue range of opportunities. You are not likely to have a solid comparison of how these attributes, even though this is a simple list, map to your “best” customers. For sure you will know little to nothing about each opportunity firms’ culture. Even if you did, this data might not deliver much value because you do not have a solid overview of the culture associated with your “best” customers.
If you thought through the question asked previously concerning the value of signing new accounts that closely resemble your best current customers, you know the answer is that doing this consistently would be a game changer. In prior years this would have been very difficult but now if you create a new vision, analytics and AI can make your vision achievable.
Why now? Because all industries are undergoing massive change. If you can create a new vision of what your customers need to look like you can take advantage of the turbulence in the marketplace to augment your sales, marketing and technology skills and create not just a winning 2021 but powerful long term competitive barriers.
If you would like to discuss how you can be a long-term winner and transform your business let’s chat.