In Major Account Relationships, Retention is not a Noun
We’ve all heard the sobering statistics that winning a new major account costs far more than keeping one – depending on the study you read, perhaps twenty times as much. And we’ve all heard how even a small increase in a firm’s overall major client retention rate has an exponentially positive effect on revenues and profits. We also know, of course, that, on the flip side, decreases in retention rates produce similarly negative impacts, often devastating and long-lasting. And we know that the trauma that follows major account losses is something to avoid. Given the crushing impact, it certainly makes strategic sense for selling organizations to focus intensely on retaining these valuable assets. The question is, what do we do with what we know?
In our first Sandler Research Center survey, we polled sales professionals globally regarding their organizations’ commitment to client retention. We asked, “How committed is your organization to the retention of existing client accounts?” and received the survey’s highest positive response – over 80%.
Yet those same retention-focused respondents also shared that only 50% of those respondents conduct regular account reviews with clients, and 40% have no formal process to maintain regular contact with these treasured assets. It doesn’t seem to make sense … until you think about it. At which point you realize that, in serving their major accounts, most organizations simply aren’t built on retention frameworks.
Consider: Retention is typically viewed as a long-term initiative. The short-term, dominant mantra is chasing the numbers: “What have you sold today?” Think of what most CRM systems track: opportunities, probabilities and weighted values, which feed forecasts, quotas and budgets. Those informational command centers have little connection to retention; organizations are structured to quickly take advantage of known opportunities and fix known problems, and just as quickly get paid.
Of course, reacting swiftly is important. But enterprise accounts are marketplaces in and of themselves, ecosystems demanding a focus far beyond the reactive. Clearly understanding what matters most to each major account is absolutely essential, and applying those insights to the critical factors that impact retention, customized to each account, earns us a much better chance of keeping the account for the long term.
The question is, how do you establish a retention framework, realistically integrating it into the “What have you sold today?” model? If that framework doesn’t align seamlessly with the everyday touchpoints your team already has with major accounts, it’s worthless. Many organizations include retention in the annual account plans, but these are often tucked away in binders that are read once and placed upon a shelf until next year. For something as critical as major account retention, we must do better than that.
Here is what “better” looks like. The retention framework must be built on the fundamental reasons major accounts partner with us for the long term, or part ways; in other words, why they stay or go. In Sandler Enterprise Selling, our Account Retention Tool provides that framework, by focusing closely on those “stay or go” reasons – the 16 “Critical Retention Factors”:
- Our Delivery of Real Value
- Ease of Communication with the Account
- Our Buyer Network Coverage
- High-Level Executive Relationships
- Our Relevance in the Account – Going Deep and Wide
- The Variety of Products/Services We Deliver
- Our Wallet Share of Winnable Business
- The Duration of Our Longest Current Contract
- Our Active Pipeline Opportunities with the Account
- Our Forecasted Account Revenue Growth
- Profitability Levels in Our Business with the Account
- Our Delivery Performance with the Account
- Our Account and Industry Understanding
- The Account’s Satisfaction Levels
- Trust Levels in the Relationship
- The Account’s Dependence on Us
If we’re not dynamically tracking our performance with a major account, gathering and utilizing intelligence, we are vulnerable and in serious jeopardy. For in the enterprise world, sophisticated competitors are constantly developing strategies to exploit your weaknesses and steal your key clients. We must not kid ourselves: they’re aware of our major accounts and they’re plotting to take them away. So when it comes to retaining major accounts, there’s no standing still – no status quo. There’s only action to be taken.
How does the ideal retention process work in an enterprise environment? The selling/service organization’s team, consisting of sales, delivery and others connected to the account, must take part in sessions that develop candid performance evaluations for each of those sixteen critical retention factors. Their assessments must represent our frank assessment of the current reality, based on collaboration and solid communication among all the relevant team members, not our hope for the future. The collaboration among our account team members must insure that these sessions truly make a difference.
In account retention, the real magic lies in forward action, in pinpointing the specific actions that drive improvement in each critical retention factor. And for each improvement action, our team must identify the accountable individual and the committed completion date.
Effectively utilizing a dynamic account retention vehicle is mandatory for enterprise account teams, because only such a toll will uncover the customized reasons each major account has for wanting to partner with you forever. Clearly understanding those reasons give you the information, and the right, to take the specific actions that make that kind of relationship happen.
The moral of this story is a simple one, a lesson confirmed by the findings of the Sandler Research Center responses: Retention is all about taking effective action, based on unique client information.
So forget your grammar lessons. When it comes to major accounts, retention is not a noun, it’s a verb. It’s not something you get. It’s something you do.
Click here to learn more about account retention and Sandler Enterprise Selling.