How to thrive during a recession and times of economic uncertaintyin Strategic Account Management, Account Management, Key Account Management /
There’s so much uncertainty in the marketplace now. With a pending recession and economic downturn, the question for account managers is what they can do to survive this difficult time and thrive by coming out stronger.
To thrive, it’s necessary for account managers to make some mindset shifts to master the current reality. Changing the way you think, sets you and your company up for the best possible outcome as you experience this recession or economic downturn.
A new era of B2B success
Things have changed in the B2B world. What we’ve done with customers in the past, no longer works. We can’t rely on having the best product, or service. It’s too easy for competitors to catch up with us in those areas. We can’t rely on just having great relationships with our customers any longer either. Relationships are important but they don’t drive long-term customer success anymore. The game has changed and the way we think about our customers needs to change too.
Outcomes matter most to our customers
Today, our customers care more about the outcomes they get from working with us. It’s not about them being friends with their account managers. They want to know that we are helping them accomplish what they set out to do when they bought our product or service.
It's essential, as account managers, to understand the customers’ desired outcomes and how they perceive value around them. It’s especially important during a recession or difficult economic time. And even in the best of times, AMs must remember that customers are hard to engage and easy to lose.
According to Gallup, only 31% of our customers believe that account managers understand their needs or what they are trying to accomplish. This doesn’t establish trust or set you up for success. Being in this kind of situation means there’s a misalignment between you and where your customers think you should be going. This puts your accounts at risk.
Gallup also found that less than half of customers believe we have adequately delivered on the promises that were made to them during the sale cycle—the transformational expectations created by the account executive. This is what the customer bought and expects account managers to help them attain.
It's also been found that 71% of our customers are indifferent to our offerings with 11% actively seeking a new vendor to replace us. This is true even when things are good, so during an economic downturn, we need to be focused on understanding:
- What the customer cares about
- What their goals are
- How to deliver value to them
- What we must do to become a trusted advisor instead of just another vendor
And the biggest risk we have in this current scenario is churn.
Why do customers churn?
Customers churn when a customer leaves us either completely or partially. Churn can appear as a down-sell, where an account decreases in value, like a million-dollar customer decreasing in value to $800,000 per year. It also shows up in accounts not growing as fast as they should.
Churn happens because we are not using the right measurements to determine how our customers are doing and where they’re headed. We think about relationships as being a key source of glue with our customers, but all they really want is value. When we’re misaligned and don’t understand what the customer actually wants, frustration happens, and churn typically follows. So, we must change our thinking to best match what our customers are trying to accomplish.
Value vs Relationship
There's a really helpful model (which I learned from Jay Nathan’s presentation at KAMCon a few years ago, and that originally came from Damien Howley), which shows that it matters how we think about value and relationships in terms of our customers.
For example, a customer who is getting no value from you will eventually churn regardless of how strong the relationship. By contrast, if a customer is getting tons of value from using your product or service and they are meeting their goals, even if there is zero relationship, they will stick with you and probably grow over time. You still want to develop the relationship, but it isn’t as critical if you are delivering value to the customer.
So, think about your portfolio of accounts in these terms. Where are they on this spectrum?
Categorize accounts as follows:
- High value, high relationship are growth accounts with the greatest potential and profitability. This is where we want all our accounts.
- Low value, high relationship accounts are where many account managers are stuck spending a lot of time not understanding the customer well enough to deliver value and a ton of time trying to build the relationship. These accounts are destined to die a slow, painful death unless you can increase the value these customers are receiving.
- High value, low relationship accounts have a lot of potential. Here you should strive to increase the relationship to accelerate value for the customer and convert them to high value, high relationship accounts.
- No value, no relationship accounts are ones you should ask yourself if it’s worth focusing on. And the answer is probably no.
The accounts at greatest risk to churn are the low value, high relationship. So, it’s a good idea to work on boosting their value to increase your odds of retention.
A framework to deliver customer value
At this point, you understand that customers expect you to deliver value by helping them achieve their goals with your product or service. When you do this, you prevent churn, get customers for life, see revenue, profitability, and customer advocacy increase, and sales cycles get shorter.
Leveraging a framework like Kapta’s KAM process helps you better understand where your customer is going, how you can help them get there, and how to show the customer the value you’re providing.
KAM stands for Know, Act, Measure
Know involves actions like mapping out org charts, doing Voice of Customer (VOC) interviews, and completing SWOT analyses. This enables you to understand what the customer’s reality is.
Act takes the information you gathered during the Know step and brings it to life. It’s where we create an action plan to help the customer attain their desired outcomes or goals. These don’t need to be complex plans. They can be quite simple. The most important thing is to develop a plan that’s aligned with the customer’s goals and outcomes.
Measure is where you determine what progress we’ve made toward the customer’s goals. Did the customer receive the value they were looking for? Measurement means looking at things like financial, usage, operational, CSAT, or customer feedback data to gauge progress and attainment. And then you share these measurements with the customer as proof of progress and to facilitate adjustments as you move forward together.
The KAM process is an excellent way to start changing how you think about your customers. It facilitates identifying customer outcomes, creating plans to help them achieve them, and measuring progress toward these goals.
What you’ve done in the past isn’t going to work anymore. You’ve got to shift your mindset to focus on customer outcomes and value delivery. A great product, service, or strong client relationship alone, does not result in life-long customers. To not only survive, but thrive throughout the economic downturn, shift your focus to delivering customer outcomes and value.
To facilitate delivering customer value, give your KAMs the training they need. Register for KAMGenius, the only online video course taught by KAM experts in easy-to-consume bite-sized videos full of actionable tips.
Alex Raymond is the CEO of Kapta.