For private companies, acquiring a new customer involves serious investments of time and money. Success rates are generally low. Competition is fierce – particularly where public sector procurement rules demand open tendering processes. Rival bidders dangle all manner of carrots to tempt unwary clients. So isn’t there a better way of gaining new business, to avoid committing significant expenditure which, too often, benefits neither suppliers nor buyers?
There is: optimised account development, whereby existing customers are ‘courted’, for the purpose of retaining – indeed enhancing – the revenue stream they provide, year-on-year. The ensuing outcomes for a selling organisation are well worth the efforts applied, as long as individual employee ambitions don’t get in the way.
Realising the opportunity
At any time a supplying business works with a specific set of clients. Deals won result in delivery against agreed contracts. But a purchasing organisation’s requirements don’t stop at what was originally negotiated. Ahead lie a whole host of opportunities to be exploited by an astute vendor: from implementation of new systems and services, to advising on emerging legislation or supporting the achievement of efficiency gains. The key to identifying and realising such openings is trust.
Building valuable relationships with customers demands integrity, even when this means admitting shortcomings and failures. A difficult balance has to be maintained between honesty and hiding the truth for fear of appearing incompetent. Client and company loyalty must be kept in suitable equilibrium. An operating framework – underpinned by the principles of partnership working – has to be established and embedded. Vitally, good associations are reliant on timely, quality delivery to cost – the basics remain constant.
Relationships aren’t built overnight; they require ongoing investments of time and energy. Neither are they constant. As a first-rate provider supports and influences his clients, they mature. Consciously and unconsciously, skills are transferred across organisational boundaries. Customers become increasingly able to recognise their own needs and how best to address these. While on the one hand making a supplier’s selling job easier, a more aware client equally understands how to demand improved value for money. The stakes get higher, and a good business developer has to remain one step ahead, progressively adjusting how the game is played.
To maximise revenue from each source, a competent business development consultant networks across a buying organisation, building multiple relationships with as many relevant decision makers and influencers as possible. Relevance is important; there is no point in a supplier wasting effort on parts of an enterprise with which his own company has no synergies. Neither should energy be squandered on those with no power or budget. The aim should be to capitalise on an initial connection, using it as a launch pad to identify further needs and pains within other parts of a client’s business – ensuring that prospects revealed are successfully turned into sales.
As the network grows, the business developer must bring in other specialists, to demonstrate a wide organisational capability. To remain credible, it is imperative that strategic advice provided to a customer is offered from a suitably knowledgeable and skilled source. For a breadth of expertise, this means multiple contacts. Poor quality advice weakens a relationship; trust is lost.
Business development skills
The traditional salesman is fine for selling commodities, but valuable commerce isn’t about simply defined products. Good account development involves indepth analysis of a client’s enterprise, aims and ability to deliver – baselining performance against that of other comparable organisations, with due consideration to recognised ‘best practice’. Having identified areas for improvement, opportunities are created by convincing the client of the necessity to address these. Further, the business developer provides mechanisms for achieving required goals and for measuring successful outcomes.
Effective account development therefore demands experience and skills: business analysis, strategic planning, benefits realisation. Sales people generally operate in the ‘here and now’, supplying to current customer needs. Business development consultants, on the other hand, look to the future – formulating and selling visions. The consultant’s ‘big picture’ thinking generates the significant prospects, which the stereotypical sales person doesn’t have the long-term, objective thinking to visualise. Well executed account development provides clients with strategic planning and programme leadership – from a ‘trusted advisor’ – while offering suppliers sought after prospects and insights.
Leaving aside the skills gap, an additional disadvantage for the generic sales person is perceptions. Clients know that a sales person has only one objective: selling. By contrast the same customer openly welcomes in – even pays for the services of – the business development consultant, perceiving him as adding value. The consultant’s dedication to his solutioning and planning role disguises the sales activity running in parallel.
Account development offers a fortuitous win-win. Suppliers gain a well thought-through sale; clients receive quality advice, coupled with their provider’s commitment to deliver.
Reaping the benefits
So what are the benefits of successful account development? Steady, year-on-year orders are achieved, providing high probability of a continuing order book into the future. Rewards may generally be smaller than the big deals won through open tenders, profit margins lower, but the continuity of orders offers a security into the future which any supplier appreciates.
In addition, account development generates low risk work, as a customer is a known quantity. Due diligence has long since been completed and good relationships – the buffer to the trials and tribulations of any project – are firmly in place.
Minimal expenditure is usually needed to win work through account development. When a business consultant – on behalf of a client – formulates strategy, defines a vision and translates this into a solution with clear benefits and an implementation plan, he is able to prepare a winning sales proposal – at the same time and for little extra effort. Substantial prices are paid for consultancy, so any business developer worth their weight should be able to bundle sales work and strategic consulting into a single package, funded by the customer.
The quality of work available in projects arising through optimised account development can be very high. In an environment of trust, customers are more prepared to embark on leading-edge advances and challenges, generating high levels of change, confident that their provider will support them and stay the course. The result for the supplier is fulfilled staff, with increased skills and experience, and excellent up to date collateral – positively impacting future sales to a wider consumer base.
In trusted relationships, commercialism is more tolerated. Clients recognise and may support the building of transferable solutions and skills. Negotiations around ownership, shared and outsourced services can take place more readily when, rather than being wary or even hostile, the purchaser believes at the outset that the aim is a win-win.
In short, account development often benefits everyone involved, enhancing the reputations across the market place, for both the buying and selling organisations.
Recognising the pitfalls
Nothing in life is all good news. There are pitfalls. Most importantly, an enterprise can become too dependent on a small handful of good business development consultants. Such people, mindful of the value of their skills and the customer relationships that they’ve cultivated using these, can create and exploit over-powerful positions, holding their employer to ransom. Thus, a situation that initially held the promise of a reliable revenue stream, requiring minimal higher-level management, becomes quite the reverse. The demands and ego of an employee, who commands too much control, have to be attended to – just as carefully as the most petulant customers.
Even with the most attentively nurtured relationships, customers can be lost. Openings dry up, budgets are cut, personalities change. It is vital therefore that no supplier sits back and relies on existing accounts too completely. Customer churn may well be significantly reduced and a healthy forward order book in place but, at the very least, for every departed customer, a replacement is needed to make up the income shortfall. The processes of following up new leads and competitively bidding must remain firmly in place, even if scaled down. Account development is a basis for a company’s survival, not for its growth.
The impact on staff, assigned longer term, can be detrimental. They may grow too settled into one environment, becoming sluggish and stagnant, reluctant to move on as their comfort zone closes in around them. Worse still, staff ‘go native’ – they forget the commercial necessities of the company that employs them.
Avoiding the pitfalls
The pitfalls of account development are avoided – and the greatest benefits realised – when activities are planned and co-ordinated across the full existing customer base, by a strategic business leader. Left to their own devices, many able business developers will operate in their own self-interest. Resulting behaviours challenge the fundamentals of account development. Once personal greed takes over, short term gains are achieved at the price of long term sustainability.
An overly hungry business development consultant can quickly lose integrity in a thirst for sales. Customer strategy setting becomes influenced more by the consultant’s career and individual wealth aspirations, than by the genuine requirements of the client. In such situations the good relationship between customer and supplier sours, as trust declines, and the potential for easily winnable opportunities erodes away. A client, once suspicious of the honesty of their so-called ‘trusted advisor’, either seeks advice elsewhere, quite possibly forging links into a competitor company, or returns to the scenario of open tendering. The message is loud and clear: successful account development cannot be rushed, through an over focus on personal aims.
Despite the apparent gentle nature of growing an account, it in fact takes a strong leader to manage the activities of an effective group of business developers. These people are highly motivated, proactive and very confident. Reining them in, to operate for the greater good of the overall department or organisation, is no easy feat. Re-aligning bonuses away from simplistic individual performance towards departmental performance can be a useful start point, encouraging individuals to think and work as a team together, instead of at odds with one another.
As soon as an initiating business development consultant is securely in place, an experienced leader needs to ensure that other suitably skilled professionals are integrated into the account, taking forward identified prospects. The original relationship, on which the account was opened, is thus shored up with further connections across the customer organisation. Such tactics avoid the pitfalls of any account becoming too dependent on single representatives from either the buyer’s side or the vendor’s side. Multiple strong associations significantly reduce the risk of losing valuable linkages, while maximising the chances for fresh prospects; the customer is exposed to a wide range of capable consultants from a variety of disciplines.
Why the missed opportunity?
So, if good account development offers such rich benefits, and any pitfalls are avoidable through good leadership, why is this valuable opportunity too often missed or abused?
Two clear reasons: the first is short-term focus. Bonus criteria for senior staff, both business developers and their leaders, too often encourage maximising sales within the forward twelve month period. Inevitably, against such incentives, ‘slash and burn’ behaviours dominate. The initially right-minded business development consultant is driven to exploit his customers as quickly as possible, with insufficient regard to the longer-term consequences. What had been a steady revenue stream year-on-year, accelerates into a flood for a short period, drying up into lean times further ahead.
Another consequence of short-term focus is lack of commitment to account development. Cross-fertilisation of solutions between potential buyers takes time to generate meaningful sales figures. Clients need to be coaxed into visualising the benefits of what is being offered, moving onto small work packages and feasibility studies, before becoming receptive to the big sales.
The second reason for missing out on account development opportunities is that many people, even senior consultants, just do not possess the required skill set. The customer wants to see: integrity, ownership, passion, respect, delivery capability, strategic thinking.
Too many keen business developers – seeing the chance for personal power and gain – believe that they can bluff their way through, appearing to hold the above qualities when they don’t. They can’t. If the consultant doesn’t genuinely respect his customer, that customer will know. If the consultant tries to manipulate for commercial ends, his influence will fade. If poor advice is provided rather than involving another – for fear of loosening personal grip on a client – the consultant’s advice won’t be sought next time.
Building long-term, good relationships isn’t easy. Continually recognising the benefits of symbiosis, calls for a degree of humility. Generating win-win scenarios time and again requires creativity and empathy. Maintaining trust in a customer-supplier situation is demanding. Since even many good intentioned business developers can’t live up to the challenge, those abusing their position will most certainly be found out very quickly, though possibly not before they have irreversibly damaged an account.
Where public meets private
It would be all too easy to attribute the poor behaviours exhibited in business development solely to the private sector but in reality the same issues can all too frequently arise in public sector organisations as well. Government agendas increasingly encourage state employees to act in more commercial ways and to reduce the openings in which private companies can gain profits out of tax-payers’ money. Perhaps inevitably the result is a growth in protectionism, empire building and self-interest – the unhelpful characteristics associated with abusing account development.
A perfect example is the IT function of an organisation which, not infrequently, spawns a ‘cottage industry’ of software system development. At the outset systems are carefully designed to meet the needs of a business, supporting and enabling realisation of corporate goals. However, as time passes, an astute software engineering team may recognise that the system being built has commercial value. Onward selling is fine, as long as the system stays true to its original purpose, but difficulties arise if options are seen for widening the sales opportunity by modifying the design onto a divergent path. Then alignment with an organisational direction is lost, for the benefit of marketing an ever more successful software product. Thus a government establishment starts to morph into a money-making IT development enterprise – losing focus on its reason for being, which is servicing citizens and communities.
The situation is made worse if individuals, or groups, within the IT function perceive greater personal advantage in modifying the course of activities even further, such as by embracing emerging technologies. While career prospects for a few may be strengthened and more satisfying work undertaken, the gains for the funding public sector administration begin to diminish.
A further interesting example is government’s drive for developing and providing ‘shared service’ offerings, within the closed sphere of the public sector. The aim is to achieve cost savings by one government department acting as a non-profit- making supplier to other departments for, typically, financial and HR services. While the theory is sound, in practice an open invitation is given to proactive organisations to establish a commercial arm.
Predictably, ‘shared service’ functions can become businesses in their own right, competing against other ‘shared service’ divisions. This emulation of the private sector marketplace – although leaving profit out of the equation – encourages account development behaviours. Key players may see the opportunity to boost power, influence and status, not just for themselves but also for the ‘shared service’ unit of which they form a part. Hence the ‘shared service’ arm of an organisation can drift away from the corporate goals of its ‘parent’, instead creating its own – often conflicting – objectives that better reflect the ambitions of its directors.
Simply being part of the public sector no longer protects organisations from the dangers of confident employees exploiting their circumstances, through self-seeking account development, for the purpose of personal gain. As long as governments associate efficiencies with more commercial methods of operating, the conduct of some individuals will progressively mirror that of private sector employees.
Optimising account development
Account development offers a company a secure future and a solid backbone from which to grow, through provision of a continuing year-on-year order book, low risk work and minimised pre-sales costs. This is coupled with the development of leading-edge, widely sellable solutions and an enhanced reputation.
To optimise opportunities for his organisation and maximise success, a leader needs to develop a strategic Account Development Plan, employ suitably skilled business developers and manage their activities against the Plan. Most importantly, no single player must be permitted to dominate a customer relationship to such an extent that leadership control slips away and personal aims, rather than corporate goals, drive behaviours.
© 2011 – 2014, Sandy Arpino. All rights reserved.