More than 20 years ago, MDM had a wonderful contributing writer, Bill Hodgdon, who was a sales consultant and trainer with a deep knowledge in industrial product sales. Bill is no longer with us, but his advice in the pages of MDM over many years continues to resonate. Here’s a small bit of his timeless wisdom in how to bring more structure and process to your sales management efforts. It’s timelier than ever, with today’s digital competitors increasingly nipping at the heels or, in some cases, biting deeper.
Bill wrote an article in 1997 on how to win and keep key accounts, which he defined as any account that is vital to meeting the growth goals of the business, either already won and maintained or those that must be grown. The end goal was to grow the account to be a customer who was buying more than 74 percent of the products and services that they could buy from your company. He based that on the Lanchester Strategic Model, covered in 1996 by MDM, which says that an account will generate increasing profit for your company in direct proportion to account share from between 10 percent to 74 percent.
The model argues that your business won’t be profitable with a particular customer until you reach a 10-percent account share, because you have not factored in the true cost of the resources required to win and service those first few sales.
Bill argued that salespeople need to focus on improving and measuring the business results of customers. “Your company needs answers to all of the following questions on a regular basis to keep your winning position in key accounts,” he said:
- Who are the people directly measured on producing the business results your company has helped improve?
- What are their key measures of business performance?
- What are their most important business objectives for the coming year?
- What business results are they producing today because of your products and services?
- Are these people still satisfied with those results being produced?
Bill continued, the company that can answer these questions will not be displaced by any competitor. These answers are not the only learning required, but it is this learning that will cause sales to increase faster than any other knowledge about the account. “In my experience, not more than one salesperson in a hundred knows the numerical value of even one business result from even one key account,” Bill said.
Key Account Management Process Summary
Here’s a list of nine items Bill said are necessary to win and keep key accounts:
- Identify a list of the key accounts.
- Learn the relative account share for each competitor in each key account.
- Learn the names of the Evaluators and Producers. (Evaluators are those in an account that salespeople spend virtually all their time with: project/process engineers, maintenance, purchasing, information systems, consultants, etc. Producers are either in manufacturing or operations, and directly responsible for producing business results after the evaluators are out of the picture.)
- Learn the actual business results all the Producers are producing due to your products and services.
- Learn the key performance measures of all the Evaluators and Producers.
- Learn the current year’s business objectives for the Evaluators and Producers.
- Learn actual business results other companies like your key account are producing today because they buy from you (this learning gives guidance as to what you can confidently predict you can do for your key account).
- Develop a list of sales goals you will be pursuing in each key account.
- For each sales goal, develop a simple plan that includes who they will see and what they will learn to win each sales goal fast.
The gaps in the learning required become guidelines for who your company has to see and what your company has to learn to rapidly increase your share of your key account’s total business. The next step is to assign the right resources to call on the right people to acquire the necessary learning. The faster you can get answers to each of the above statements, the more quickly you will grow your share of your key account’s total business.
Bill summed up his article like this: “The best salespeople will be the ones who create the most selling opportunities within their key accounts. They do this by getting out with the people who do the work (Producers) and finding other ways to help these people produce better business results. Mediocre salespeople wait for opportunities to come to them by spending almost all their time with the Evaluators.”
Send me an email at [email protected] if you’d like a copy of the full article I’ve condensed here, as well as Bill’s article on the Lanchester Strategic Sales Model.