Don’t just retain your key accounts – Grow your revenue and profit as well!
One critical aspect of managing accounts more strategically is to retain them by increasing barriers to entry against competitors. However, what companies’ often overlook and misunderstand is the potential to grow revenue and profit.
Typically when companies begin a Strategic Account Management program, their objective is retaining their most important accounts. This includes defending share against aggressive competitors, reducing margin erosion, and creating a compelling value proposition that differentiates them from the market. However managing accounts more strategically also helps grow share of wallet and grow margins.
This is supported by the Strategic Account Management Association's (SAMA) 2012 Report on Current Trends & Practices in Strategic Account Management. SAMA surveyed 700+ global respondents across 30 industries. In the report, SAMA noted that “the average revenue growth in the strategic accounts surveyed in 2011 was 14%, up 2% from 2009”.Even with low growth in the economy, these accounts are beating the economic trend. SAMA reported improved profitability – showing growing revenue was not caused by discounting prices. If improved profitability was not enough, customer satisfaction scores also increased.
These findings make sense. Companies who manage accounts strategically understand their customers more deeply. So, they can identify problems that need solving for their accounts. Then they can solve the problems with their products and services, or find other ways to help their account solve the problem. Solving problems creates new revenue opportunities that would otherwise not have been obvious. Opportunities identified in this way are also unlikely to be offered to the market. So typically companies achieve better than average margins.
Also, companies that segment their customers using best practice segmentation tools can identify the small accounts most likely to grow. Small but fast-growing accounts get less focus from competitors, so you benefit from revenue growth and good profitability. In addition, you can position your organisation as a critical business partner. As a partner, you can provide fast-growing companies external expertise and insights to manage the challenges they encounter during their growth.
So when you consider a Strategic Account Management program, don’t just view the initiative as a way to defend key accounts. Also consider the potential to grow revenue and grow profit from the accounts that are most critical to the future of your company.
We have work with many companies in many industries and many geographies to help retain key accounts and grow revenue and profit. If you would like to discuss how we can help, please contact us on +61 2 9450 1040 or www.gordianbusiness.com.au.