So, you’ve decided that a key account management program with an emphasis on customer success is the correct route your company should take. Instead of pushing as many products as possible, you’ll instead invest your efforts in the 20% of clients that bring in the most revenue and grow from there.
Key account management programs aren’t relatively new, but not all businesses are on board just yet. The ones that are, however, are finding great success when they put the customer first and work to achieve their goals.
It can be challenging for some executives to come around to the idea, so you need to have some solid data and ideas to back up your proposal. At Kapta, we’ve spent years championing key account management as the ultimate account management program. Here are some key points to bring to them, along with some tips to ensure your new key account management program starts off on the right foot.
Existing Customers Are More Profitable
One of the core principles of key account management is the 80/20 rule. You might have heard of it before, but in summary, it means that 20% of your inputs generate 80% of your outputs. In essence, in key account management, you’ll invest in the top 20% of your customers that generate 80% of your revenue. This isn’t just a theory either.
In fact, a study found that existing customers account for 68% of revenue in a typical B2B company. That’s a lot of value, and you should treat these customers well with a focus on their continued success using your organization’s products and services.
How do these existing customers generate so much value? Here are a few of the reasons:
- It’s costs less to sell to an existing customer
- They are more likely to purchase your premium services and products
- After seeing success with your products and services, existing customers will continue to buy more in the long-run.
- Your key accounts are more forgiving and won’t abandon ship for a small mistake as new clients would.
These are just a few of the many reasons that existing customers are much more valuable than new ones. In summary, selling to existing customers takes much less effort, and once they see you as a trusted business adviser and partner in their success, they’ll stick around for much longer.
It’s Easier to Grow Your Existing Accounts
With a new customer, a lot of time and effort is spent courting them and convincing them to come on board. Once they’re there, it can take a while before you see any real results. With existing customers, your history as partners in business success motivates them to continue growing with you. Think about it—if you’ve worked with a company for years and seen success, would you be so quick to leave them?
As your clients grow and see continued success with your products and services, your organization will grow too. With this in mind, your strategy should be almost entirely on increasing customer retention. If you can do this, you’ll start to see significant positive effects on your organization’s bottom line. Studies have shown that a 5% boost in client retention can equate to as much as a 75% gain in profits.
Don’t Chase Logos
A common trap that many executives fall into is the never-ending logo chase. They spend way too much time trying to bring in new, big-name clients that will look great under the “Our Clients” section of the homepage. The problem is, chasing new clients costs time and money. Instead, you should focus on growing existing revenues, not wasting resources recruiting.
This isn’t to say that you shouldn’t ever go after a big client. After all, your long-term goal should be growth. We’re suggesting that you scale back those efforts for more emphasis on working with your existing clients for revenue growth. Pitching this to executives can be challenging, but if you show them the hard data supporting customer retention, they should come around to see your point of view.
New Customers Aren’t Worth Much to Start
Did you know that it costs 6 to 7 times more to acquire a new customer than it does to simply retain one? Think about how much advertising alone costs. If you were to instead focus on retaining your customers, you’d not only save a ton of money, but you’d be bringing in even more revenue than before! Even if you manage to bring in a new customer without spending thousands recruiting them, they won’t be as profitable as your existing customers.
New customers won’t make significant purchases from you until they have seen real results from your products and services. This means that for each hour you work with them, you’re bringing in less revenue than you would when spending an hour with key accounts. New accounts take a lot of effort, and you’ll have to spend significant time learning about their goals while also developing strategic plans to help them achieve these goals.
Key Account Management Isn’t Challenging
Many are hesitant to implement a new platform in their company because they think it will be challenging and confusing to start. People don’t like change, but when it comes to key account management, implementing a new platform is relatively seamless. A study by the Rain Group found that 53% of companies found key account management systems easy for employees to learn and use. Especially if you use an intuitive system like Kapta to manage your key accounts, getting the team on board is simple.
How Kapta Can Help
Kapta makes key account management even easier than ever before. It’s a robust platform designed to help account managers accurately track and manage specific metrics crucial to their clients’ success. It isn’t designed to replace a human, but instead takes away much of the stress and tedious work of everyday work. With a set of powerful account management tools at your disposal, you can stop spending time staring at spreadsheets all day, and you can instead focus on nourishing and growing your relationships with accounts.
If this sounds like a platform your organization needs, get in touch with us today to schedule your free demo.
