The State of Affairs
I’m sure you’ve noticed that words like “recession” and “slow-down” are becoming more commonplace as business confidence wobbles and volatility in capital markets increases.
Those unlucky enough to run businesses during the 2007-08 crisis know exactly what comes with a recession—tough times and high risk. Consumer spending slows, new business disappears, and profit margins dwindle.
For business leaders, it takes guts, grit, and determination to survive economic perils like recessions and depressions.
It takes something else too—existing customers.
Existing customers are the fruit of time, money, and careful cultivation. They are an existing asset, an investment in your economic future, and that makes them immensely valuable for your businesses, be it large or small.
During times of slow or regressing economic development, new revenue sources dry up, making the preservation of existing resources absolutely essential.
How important are existing customers to the longevity of your business? Let’s take a look…
Why Do Current Customers Matter?
Higher close rates
It shouldn’t come as a surprise that it’s far easier to sell to an existing customer than a brand new prospect.
They know you, your business, your products, and your services. They already see the value in what you provide and are willing to hand over money in exchange.
There’s a sense of trust that creates comfort and security—two things integral to securing “wins” during tough economic times. Because your value is proven, your close rates can remain resilient even in the face of a recession.
Spend more, spend faster
Current customers have an established relationship with you and your business. That relationship means more comfort and less resistance to spending.
Data from marketing consultant Laura Lake suggests existing customers spend nearly 1/3rd more per close than new customers.
Not only do they spend more, existing customers spend faster, with lower turnaround time between proposal and close.
As pointed out by sales consultant Ago Cluytens, roughly 50% existing clients will sign-off on a deal in the same fiscal quarter they are presented with a contract.
When dealing with brand new customers, that percentage takes a 30% nosedive.
In spite of these findings, many B2B sales teams still invest more energy in targeting new prospects than they do upselling and retaining current clients.
Shifting your company’s focus to existing customers will increase the size, scope, and frequency of the deals you close. And when the door closes on new business opportunities, you can always mine existing clients to find the revenue you need.
High profits, lower costs
New customers cost money – lead generation, marketing, sales teams, onboarding – and when your business is spending money to make money, your profit margins are taking a hit.
Existing customers, however, are cheaper to win which means “big gains to your profit margins.”
A study by consulting company Bain and the Harvard Business School suggests new customers are actually unprofitable for the first 12+ months of any relationship. According to the research, it’s only later on when “the volume of purchases rise, do relationships generate big returns.”
Translation?—by keeping current customers happy and retargeting sales efforts at those existing clients, your company can significantly and “simultaneously reduce costs [thereby] increase[ing] profits.”
If your organization keeps clients happy by consistently delivering value and trust, profits will remain stable in the face of economic uncertainty.
Keeping Customers Happy with Key Account Management
Be a strategic partner
In tumultuous economic environments, vendors get crushed while strategic partners grow, it’s just that simple.
Strategic partners are human enterprises rather than robotic operations. They’re not interested in transactional behavior and absent-minded product sales, rather they build robust relationships that drives comprehensive customer success for key accounts.
Take the time to completely immerse your business in the operations and objectives of your clients.
Don’t deliver on the “order”, deliver on the goals of your customer. When you do, you’ll create a level of worth your customers won’t want to part ways with, even if the economy is weakening.
Create a sense of “we’re in this together” and your customers will hold on for the long haul.
An agile Account Manager will play an absolutely integral role in cultivating the type of partnership required to endure economic slow-down.
Key Account Managers start building sturdy relationships with clients on Day 1. Using a combination of active listening and exploratory questioning, KAM’s identify client goals that go beyond what’s outlined in the contract, and speak to those goals with eloquence and acuity.
Most importantly, Key Account Managers make the client feel as though they have an “inside man”. They provide premium, personalized service that helps spawn strong bonds of trust between the client and your company.
Add value every step of the way
Flood your customers with value every step of the way. Give them everything they bargained for and then some more.
This doesn’t need to come in the form of free or discounted product—it can be something as simple as demonstrating a real commitment to relationship development.
How do you demonstrate that commitment?—with talented Account Managers.
Key Account Managers put the customer’s success before their own. They take the time to deeply understand what your customer is after in the big picture and commit themselves (and your company’s resources) to delivering on those expectations at all reasonable cost.
When clients can enjoy that type of dedication from your employees, three things happen:
- Clients smile
- Client feel understood
- Clients keep spending
Account Managers are your golden parachute when the economy slows. They make sure when the going gets tough, good things still happen for your clients and your company.
Show your customer that you understand their goals
Putting your customer first means understanding their goals, which is easier said than done.
It requires excellent listening and clear communication skills.
It requires Key Account Managers.
Only KAM’s have conversations that go beyond specific campaign targets and dive deeply into the mind of your client. They ask thoughtful questions that communicate a desire to walk a mile in the client’s shoes.
That type of engagement creates companionship and respect.
It also lets the client know you understand their company as well as they do, which makes it THAT much easier to secure future business.
Remember, it’s a domino effect.
- Key Account Managers have high-level client comprehension
- High-level comprehension allows for high-level client service
- High-level service facilitates robust client retention
- Client retention keeps your company open while the competition closes its doors
Fail to Prepare, Prepare to Fail
When it comes to weathering severe economic storms, businesses with the best preparation are those that come out on top.
Great companies know their most valuable asset for longevity isn’t the prospect pipeline or sales team, it’s the relationship Key Account Managers can forge with existing clients.
Devote the time, money, and energy to develop a talented Account Management Team, and your company will cultivating the strong client relationships necessary to not only make it through an economic downturn, but come out booming on the other side.