As the head of your company, you know larger projects are vital to keeping your business afloat and growing. After all, not closing more significant deals is frustrating, and smaller deals become time-consuming. But with account growth strategy, you can develop a successful plan to help close larger deals and maximize profits. And while it can be a daunting task to take on, it doesn't have to be. There are 6 practical steps to help you with your account growth strategy and increase your success rate. By following these steps, you'll be well on your way to achieving your business goals.
Sales Excellence Model
This model will help you understand how to structure your process and what needs to happen at each stage. Second, it will help you determine what resources you'll need to take on the challenge.
Step 1: Target new major accounts
Focus your time and effort on finding and opening accounts with bigger deals. Don't be afraid to chase the big fish. Remember to be diligent, attentive, accessible, and flexible to any new prospective client. Ask them to meet with you and follow up diligently, prepare for your meetings, and follow up afterward. It will be a lot of work, but it pays off tenfold!
Step 2: Segment your account management
There shouldn’t be just one strategy for all accounts, as this will allow for more effective cross-selling and upselling. Top-tier accounts should get elite treatment, and you should have a strategic approach to account management to ensure you retain and expand them. Key accounts should get more attention because it shows they are essential, and this helps you focus on retention and growth. Third-tier accounts, therefore, should get less attention, and you should not warrant them the same level of effort.
Step 3: Conduct proactive lead generation
RFPs augment demand but can't be relied upon for growth. This is because RFPs are reactive, there is little influence on the RFP criteria, and the decision-making process is difficult to understand. Instead, it would help if you worked toward creating demand with your clients. Look for areas where you are the sole source, and you are the only company being considered. Furthermore, use rigorous, ruthless qualifications for each opportunity.
Step 4: Strategic vs. nonstrategic deals
Strategic deals should get a disproportionate amount of effort and significantly more sales effort. In these deals, sales pursuit intensity is higher, and you should put more resources into winning them. Contrastingly, it would be best to put much less effort into nonstrategic deals. After all, they are not as important if you don't win them.
Step 5: Leakage
Focus on the right customers with suitable projects and ensure the value you provide is clear to the client. It is essential to show high conviction in proving your value because when your value is clear, the more likely it will be that your customer will repeat purchases. It also is crucial to focus on repeating deals with existing clients.
Step 6: Strong Partner / Strategic Advisor Ecosystem
This last step includes a few things to consider as you enter new partnerships. It would help if you first focused on strategically entering accounts with new partners. It also helps if you have direct access to the company's senior executives. Next, you should have an active inside sales organization to help generate demand.
Example 1: Weak Hunting, Weak Farming = Zero Growth
Let's review one service firm example. Suppose you have $100M in annual revenue, and 50% of the revenue is lost due to weak account management (farming) because your sales process isn't systematized. If only 20% of gross growth comes from existing accounts, the rest comes from new hunting.
So, to grow, you will have to replace it with new accounts. Over 4 years, the $100M in revenue only grows to $101M because it's hard to replace the lost revenue due to weak farming. This results in flat revenue growth.
Example 2: Quality Hunting Backed by Programmatic Mining = Industry-leading Growth
Suppose again you have $100M in annual revenue. With programmatic mining, you are bringing ideas to clients and being proactive with demand generation inside your accounts as part of account management. If your account management (farming) is seen as highly valuable to your clients, more clients will stay with you. Even if you lost 20% of the revenue, your account retention is high.
Increasing gross growth from existing accounts by 85% leaves less reliance on hunting to replace that revenue. Therefore, over 4 years, the $100M in revenue grows to $198.4M due to better practices, discipline, and focus on hunting and farming. This is almost a 100% growth.
The Economics of Small vs. Large Deals
Accounts opened with larger deals also grow better
Let’s look at this case where the company had accounts opening deals of <$100K with 0% compound annual growth. As the deal size increases, so does the compound annual growth. Additionally, in following years, small- and medium-sized deals have negative compound annual growth, but larger deals have significant positive compound annual growth. The key takeaway is the bigger the entry deal, the bigger the long-term account growth you'll experience.
Accounts opened with larger deals tend to be more sticky
We also find that bigger initial deals with new customers leads to bigger account growth once they become customers. The bottom line is more significant deals make new customers stickier, and accounts where the initial deal was minor tend to be inactive after 4 years. In fact, 33% of accounts with initial small deals are lost in years 1–3 because there needs to be follow-on work in those accounts. Small accounts also tend not to be active after 4 years. 0% of accounts with medium-sized deals are lost in years 1–3, and 10% of accounts with large deals are lost in years 1–3. Therefore, medium and large deal accounts have significantly less loss of accounts over the same time period.
Proactive pitching unlocks growth
You must bring ideas to the client and not wait for them to ask you. Whether a large, medium, or small account, proactive pitching will lead to growth. You will enjoy higher growth when you can create a process around regular proactive pitching in your accounts.
Poor qualification leads to significant wasted effort
When qualification is weak, 30% of TCV (total client value) lost is ascribed to poor qualification. There is significant potential to optimize effort through effective opportunity qualification. Therefore, professional services firms must spend a lot of time qualifying their clients. The fact is rigorous qualification leads to less wasted effort.
How To Make Sure You’re Focused on Larger Projects
Use rigorous qualification
Always qualify if you want to proceed to the next step in the sales process and use mechanisms to ensure that opportunities meet the criteria.
Bring ideas and insights to clients
Please don't wait for them! Go to them even if they hesitate. This helps create a trusted relationship and helps clients feel they're getting more value from their account team.
Have a clear definition of your ideal client
We are not talking about the industry and role; we mean the definition of the relationship you want with the person. Define the types of people who are your biggest, juiciest customers, and clearly understand what that is. Then, have a marketing engine and point messages directly to your ideal client.
Be disciplined
Service firms often need help saying no, even to RFPs and small deals. Use qualification and focus on bigger deals.
Establish an account planning process
Develop a system that includes an effective account plan, a structured account planning document, and a set cadence. Think strategically about your accounts.
The value of selling larger, more strategic deals goes beyond just the dollar value of any one single contract. It also increases your firm's profit margin and the likelihood of your clients staying with your firm for the long term.
We Can Help
Working with ALTA Consulting gives you access to effective account growth strategy tips to have in your tool belt. Book a call with us here.
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