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Did You Know?
The Pareto Principle, also known as the 80/20 rule, states that, for many events, roughly 80% of the effects come from 20%
of the causes.
According to Wikipedia, business management thinker Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who observed in 1906 that 80% of the land in Italy was owned by 20% of the population; he developed the principle by observing that 20% of the pea pods in his garden contained 80% of the peas.
Wikipedia also refers to “a common rule of thumb in business that 80% of your sales come from 20% of your clients."
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Looking for fresh ideas to delight your customers?
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Learn more about this exceptional program, which will help your oganization to:
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Create a culture of ethics and values in customer service
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Impact decision-making
and develop strategic communication protocols
at all levels
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Enhance brand value
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Differentiate
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Become a supplier and an employer of choice
More...
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"An athlete may run ten thousand miles in order to prepare for one hundred yards. Quantity gives experience."
—Ray Bradbury
"You cannot escape the responsibility of tomorrow by evading it today."
—Abe Lincoln
"Action is a great restorer and builder of confidence. Inaction is not only the result of, but also the cause of fear."
—Norman Vincent Peale
"Prospecting in your own customer files has proven to be a strategy that consistently turns up diamonds in the rough."
—Author, Jack Falvey
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Paul Charles & Associates
519 Mammoth Rd - Londonderry, NH 03053
[603] 537-1190
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Key Accounts: Keys to Long-term Sales Success
Many business owners, managers and sales people tell us that eighty-percent of their business comes from twenty-percent of their customers. The Pareto principle…
Whether this perspective accurately describes your business situation or not, it is still likely that some concentrated percentage of your customer base generates the majority of your sales revenue. Similarly, some concentrated or relatively small percentage of your current and prospective customers most likely makes-up the majority of your new business pipeline.
Given these facts, it is wise to create a “Key Account Program,” which is simply an organized sales and marketing strategy that will ensure a sufficient amount of attention is being given to the concentrated group of customers and prospects that will, most likely, make-up the majority of your organization’s sales revenue and growth over the next twelve to twenty-four months.
Please note that we call this plan a “key account” program, not a “key customer” program, because it is important to pay an appropriate amount of attention (extra attention!) to these select customers and prospects alike.
Key Objectives
The primary objectives of a key account program are to retain your best customers, increase penetration within customers with whom your organization has only a small percentage of the potential business, and to win over high-potential prospects.
Consider the following three points:
- A customer who generates a relatively large percentage of your organization’s business is, obviously, of great value. The business relationship must be nurtured, and every effort must be made to retain this customer. In addition, if this customer generates a large amount of revenue for your organization, then it’s almost a sure thing that your competitors are working hard to earn that business too! Thus the extra attention.
- A customer with whom your organization does a small or moderate amount of business, but who has the potential to become a much larger customer must be treated with extra diligence as well, as this customer is a good source of potential sales growth. Since it is typically easier to leverage a current, albeit smaller-scale, relationship than to start from scratch, the extra sales effort is justifiable.
- A prospective customer with high-potential – possibly one of your biggest competitor’s top ten customers – is worthy of a more focused and larger-scale sales effort. Therefore “payoff” for success in this area might be greater in terms of both sales dollars and competitive position, thus justifying the extra effort.
Key Activities
Here’s a list of ideas on how you might create or improve your Key Account Program:
- Target a manageable number of engaged (top) customers, sub-optimally engaged customers (those with lots of potential) and high-potential prospects (your competition’s best customers).
- Conduct thorough research to make sure you understand each target’s needs, priorities and emerging needs.
- Conduct thorough research to identify the appropriate contacts within each organization – it’s often best to develop relationships with more than one person within each account.
- Set time-based activity and results goals for the program. These might include the number of value-added contacts (see related article below) you plan to make to each group throughout the year, the number of meetings you hope to schedule with prospects, and the dollar amount in incremental sales revenue you hope to gain from the under-engaged customers and high-potential prospects.
- Identify a marketing strategy – you might ask yourself, “Which components of your current collateral will send the right message? What additional pieces or letters might you create to support your key account effort? What promotional activities might be appropriate?”
- Identify a sales strategy that is integrated with your marketing plan – be sure to include a comprehensive contact strategy that makes use of all appropriate media (i.e., US Mail, e-mail, e-marketing, traditional marketing collateral, telephone calls, personal visits, invitations to lunches and / or promotional events, and so on) as well as a plan that will help the key accounts understand the value your organization offers; how your organization can meet their needs.
- Use or create an annualized contact management or organizational system that will help you keep track of your activity and progress.
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Contact Frequency
People often ask, "How many calls can we make on a prospect before going over the line?"
Here are a few guidelines...
First, consider the following facts, which we shared last year in a related article – studies show that approximately 80% of those involved in business development approach prospects two or three times and then give up.
Now, consider the importance of these National Sales Executive Association stats regarding the importance of following up:
- 2% of sales are made on the 1st contact
- 3% of sales are made on the 2nd contact
- 5% of sales are made on the 3rd contact
- 10% of sales are made on the 4th contact
- 80% of sales are made after the 5th contact
Next, consider the fact that sheer “frequency” does not guarantee success. Each contact must be “value-added” in order to properly impact your target prospects. This requires research, planning and good communication (probing and listening) skills.
Considering this information simultaneously, the best answer to the call frequency question is that we “cross the line” when our calls have no value for the prospect or customer. |
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